Today the stockmarket is dominated by High Frequency Trading and Algorithmic Trading operations. Both these types of trading have made the global stock markets very volatile, but also investors trying to buy or sell securities (shares or bonds) such as long term investors like pension funds, can have their trade distorted by high frequency or algorithmic trading computers, which means the investor trying to buy or sell, may not get best pricing.

Thus, as global stock markets gyrate wildly in these volatile times, institutional investors like pension funds or unit trust managers, have had to shift trading from public stock exchanges to private networks that are called dark pools. These “Dark Pools” are specialist communities that are known in the industry as “electronic crossing networks ” that offer the institutional investors many of the same benefits associated with making buy or sell trades on the public stock exchange but all done in a private environment, so the price is never publicly disclosed, as when one trades publicly on a stock exchange, as this tells the whole public market the buy or sell price, thus potentially tips platforms like an Algorithmic platform, that could negatively affect the trading price. So these Dark Pools are effectively a private market, thus meaning publicly quoted prices aren’t affected. This is the capital markets’ version of a godsend – especially for traders who desire to move large blocks of shares without the public investors ever knowing and getting an agreed price that can not be affected by other players in the market like a high frequency trading platform.

Some examples of Dark Pools are Liquidnet Inc and the SIGMA X unit of Goldman Sachs.
In simple terms, Dark Pools bring buyers and sellers together in a private environment, to trade and only the two parties know the price.