Wall Street’s Secretive and Dangerous Dark Pools

Few things on Wall Street are as secretive and mysterious as “Dark Pools” – stock crossing networks that provide liquidity not displayed in market order books. The biggest implication of this is that an outsized bid can be matched up with an offer in a private transaction without disclosing the transaction at all.

Traditional financial markets generate liquidity by openly advertising buy and sell interest in a given venue, with real time liquidity data provided by publishing market depth (think Level 2). Dark Pools, or Dark Liquidity, as they are sometimes known, have been used more and more by brokers and funds in transacting off market in increasingly greater volume. Read more about dark pools…