bryanz

Dark Pools of Liquidity Are Coming Around Again

@ghamilton
The way I understand it, and someone can correct me if I'm wrong, is that the stock markets provide a means of centralization, which in turn provides liquidity. They allow a large number of market participants to easily communicate and coordinate the buys and sells that move the markets. The "dark pools" are basically institutions that trade outside of the market. From what I understand there's nothing necessarily wrong with that, it's basically over-the-counter trades of stocks that also trade on the public markets. If you wanted to sell a position that you hold you don't have to go through your brokerage, you could - theoretically - find a buyer without the coordination of a securities exchange and arrange that transaction. This is what the dark pools are, except on a much larger scale.