NYSE Floor Trader Explains How Stocks Are Traded In Dark Pools Dark Pools vs. Lit Markets: Dark Pools Explained
If a trader, presenting a big pension fund or other large institution, wants to sell a large number of a particular stock, but doesn’t want to raise a red flag among other traders and disturb the market, he or she may chose to make the trade anonymously.
‘Dark Pools,’ or private trading venues frequently used by large financial institutions, have become an increasingly powerful force in today’s global economy and financial markets.
The private trading venues, are often criticized for a lack of transparency and have become a major threat to the business interests of public exchanges as more and more transactions are taking place in these dark pools.
Lit Markets, like the NYSE Euronext, have recently stepped up their efforts to regulate dark pools. To learn more about how Lit Markets and Dark Pools function, watch the explainer in this video produced by Daniel Goodman and Kamelia Angelova