KEY TAKEAWAYS

Dark pools are private asset exchanges designed to provide additional liquidity and anonymity for trading large blocks of securities away from the public eye.

Dark pools provide pricing and cost advantages to buy-side institutions such as mutual funds, and pension funds, which claim that these benefits ultimately accrue to the retail investors who invest in these funds.

However, dark pools’ lack of transparency makes them susceptible to conflicts of interest by their owners and predatory trading practices by HFT firms.