JAR­GON: DARK POOLS

Finweek English Edition - - INVESTMENT -

Dark liq­uid­ity pools, or sim­ply “dark pools”, have been grow­ing in both num­ber and depth over the past sev­eral years. The term refers to any share trade con­ducted di­rectly be­tween in­vest­ing in­sti­tu­tions, such as banks and hedge funds, rather than via a reg­u­lated ex­change, such as the Lon­don Stock Ex­change. Ac­cord­ing to MoneyWeek, the ben­e­fit for those in­volved is se­crecy: there is no re­quire­ment to pub­lish de­tails of dark pool trades, as there would be in a tra­di­tional ex­change. An­other ad­van­tage is the pos­si­bil­ity of faster trades and bet­ter prices, par­tic­u­larly if the deal is sub­stan­tial. The down­side (at least one of them) is that dark pools make it more likely that those who trade via ex­changes/nor­mal routes, in­clud­ing most re­tail in­vestors, will miss out on the best prices.

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