Glossary · Defined term
Dark pool
A dark pool is a private trading venue where large orders are matched without publicly displaying bids and offers.
Last updated Oct 2, 2026
What it means
A dark pool is a private trading venue where large orders are matched without displaying bids and offers to the public. Unlike a stock exchange, where the order book is visible to everyone, a dark pool keeps pending orders hidden until after they execute. They are operated by brokers and exchange groups and are used mainly by institutional investors.
The appeal is straightforward: an institution trying to buy or sell a huge block of shares does not want the market to see the order coming. A visible order of that size would move the price against them before the trade completes. In a dark pool, the order can be filled in pieces or matched with opposing flow without tipping off other traders. Executed trades are still reported to the public tape afterward.
Dark pools are regulated, but their opacity makes them controversial. Critics argue they drain activity from public exchanges, leaving retail investors with thinner visible markets. Supporters counter that without them, institutions would simply slice orders more aggressively or trade elsewhere, and the price impact would be worse.
An example
For illustration, a fund wants to sell 500,000 shares of a stock. Placing that on a lit exchange would show up in the order book and likely drive the price down first. Routing it through a dark pool lets the shares change hands without a public quote advertising the sale in advance.