Dark Pools are private exchanges generally hosted by large brokerages.

They are called dark pools because access to these venues is determined by the owner(s) of the dark pool. Typically hedge funds are the primary groups given access to this dark pool liquidity. This is in contrast to public exchanges (or “lit” exchanges) which are available to all traders.

Hedge funds will often chose to trade in Dark Pools as it limits visibility into their activity. This can be advantageous if, for example, they are building a large position in a thinly traded stock. Because they are buying in a Dark Pool, their volume will not be as visible as if they were transacting on a public exchange. This may prevent other traders from detecting this buying.

Transactions in Dark Pools are generally not made available to the public in real time, but FINRA (Financial Industry Regulatory Authority) requires all dark pool transactions to be reported each night. These reports are then made publicly available.

SpotGamma Pro and SpotGamma Alpha subscribers can access SpotGamma's Dark Pool Indicator (DPI) data in Equity Hub™ here.