Photo Credit: Gracey
Dark pools, also known as dark pools of liquidity or dark liquidity pools, are a frequent topic of discussion for financial advisors and clients. Since dark pools create trading volume from institutional clients that isn't counted and published for general consumption, clients wonder what impact dark pools have on prices of their stocks and financial instruments. Because there's so much discussion about dark pools these days, some regulators believe that trading information should become public in order to make the markets safe and fair for all investors.
Dark pools are sometimes called "dark liquidity"--so investors associate dark with mysterious or covert activities and processes.
Some of us think of Harry Potter and the dark lord, but in reality traders have crossed large orders off of the exchange for many years without substantial impact on the trading markets.
Financial advisors continue to discuss the present and future impact of the Dodd Frank Act as it continues to be written, interpreted, and enforced by regulators.