We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Are Dark Pools?

Mary McMahon
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Dark pools are anonymous investment venues not open to members of the general public. Institutional and large investors are the most likely to be active in these alternative investment vehicles. While not illegal, they can cause concern for regulators, and in some nations agencies monitor activities in this area of the investment community with care. Access to these investments can be limited by capital requirements and other measures, ensuring that only large scale, experienced investors can be active in a dark pool.

Within the pool, which may be run by a brokerage or another financial institution, buyers and sellers match up anonymously through the pool's trading system. Keeping identities concealed can allow investors to make big buys and sales without necessarily triggering market movements. This can be a concern on open markets, where a large trade will be noticed by other investors and can cause panic or disruption. Investors who want to act without tipping their hand may do so through a dark pool.

No quotes are published about current prices in dark pools, and members of the public cannot freely access trades in the pool, let alone the details of the investment vehicle. To enter, investors may do so through a broker or private institution that runs the pool or has connections to it. Essentially, the dark pool acts as a private trading venue for those who need to execute large, complex, or confidential trades for any number of reasons. Private trading is permitted under securities regulations in most nations, and dark pools provide an organized method for doing so.

Concerns about dark pools surround the potential inequality that could be set up with such systems. When not every trader has access to information, some traders may be able to act on news that is not available to members of the general public. This could create an unfair advantage and in some cases might constitute insider trading. Speculation in dark pools can create bubbles and other events just as it can on the open market, but regular investors might be caught entirely unaware because the trades took place behind closed doors.

The numbers of these investment vehicles grew dramatically in the early 2000s, attracting attention from well outside the investment community. Examples can be seen in both US and European markets. Agencies with an interest in this subject have used rule making abilities to set some guidelines for activity within dark pools to minimize potential concerns.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Link to Sources
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.