Dark Pools is a type of trading few outside of Wall Street know of or understand. Despite the doomy name, dark pools play a very important role in helping institutional investors trade large blocks of stocks and bonds. Dark pools are not open to the public, or average investors. The pools are operated by broker-dealers who match buyers and sellers but don't publish the trade information in real time to the public.
Institutional investors and trading funds use dark pools to reduce their trading costs and to trade securities anonymously. This is accomplished through hidden electronic platforms.
Though devised mainly for use by large institutions, dark pools are now used by many different kinds of investor. In 2014, according to Reuters, about 40 percent of all U.S. stock trades, including almost all orders from institutional investors, occur "off exchange," up from around 16 percent in 2008.