What Is a Dark Pool Order?

What is Dark Pool Flow?

Chat icon

Dark pool orders can only be found on private exchanges and are only accessible to institutions that cannot be accessed by the general public. At the moment, it is estimated that about 40% of all institutional trading happens on these “shadow” exchanges. When large investors are looking to trade massive equity blocks, they’ll look to buy or sell their positions to major banks or firms who can take on that large premium and provide faster liquidity while also providing lower transaction costs.

One major benefit of dark pools is that institutions who would like to sell one million shares of AAPL for example, can do so without impacting the public markets in a negative way. Something to understand is that there is not a public order book available. What this means is that the buyers and sellers of these large blocks remain hidden and do not disclose their trading intentions. Only after some time are the actual details of the trade released to all the major exchanges and made available on the tape.