Dark Pool

A dark pool is a private trading venue that matches orders without displaying them beforehand. No quotes appear on Level 2; the trade only becomes public after it executes, printing to the consolidated tape through a Trade Reporting Facility (TRF).

The point is footprint control. An institution that needs to sell 2 million shares would crater the price if it showed that order on a lit exchange, so it works the position in the dark, typically executing at the midpoint of the public bid and ask. Registered as Alternative Trading Systems (ATS), dark pools handle roughly 10-15% of US equity volume, and total off-exchange trading — dark pools plus wholesalers — runs above 40%.

Traders watch dark pool prints on time and sales for clues: a string of large midpoint prints at one price level suggests an institution quietly building or unloading a position there.