To most people " Dark Pools " are a mystery. Heck, most people don't even know what they are. In a nutshell it's Wall Street slang for private stock trading platforms operated mostly by brokerages.
Dark Pools are electronic Alternative Trading Systems, very similar to stock exchanges where trades can be matched. The big difference of course is that the orders are dark, meaning that the size and price of the orders are not revealed to other participants. This limits the amount of interaction because the participants don't know when to move their price up or down to find the contra side of their trade or when the contra side may be present in the pool. These pools are mostly used by sophisticated professional traders.
Nevertheless, there is a lot of criticism about them lately. Odd, since in many cases the critics are not the users. In fact, the actual users of dark pools seem to be happy because they keep sending them more and more volume; clearly they are having a satisfactory experience.
(Read More: Dark Pools: Letting Some Light in Now? )
With so much uncertainty, I think it's time to set the record straight and deal with the significant amount of misunderstanding about how they operate. So in David Letterman fashion I have created a list:
"Top Ten things people don't understand about Dark Pools"Page 1 of 4 | Next Page