# Dark pool

> A private trading venue that matches buy and sell orders without displaying quotes publicly, reporting trades only after they execute.

Source: https://www.quantisnow.com/glossary/dark-pool
Topic: Glossary / Market structure
Also known as: dark pools, alternative trading system, ATS, off-exchange trading venue
Last updated: 2026-10-27

A dark pool is a private trading venue, registered in the US as an alternative trading system (ATS), that matches buy and sell orders without publicly displaying them beforehand. Trades become visible only after execution, when they are reported to the tape.

## How it works

Dark pools are operated by banks, brokers and independent firms. Institutions use them to buy or sell large blocks without revealing their intentions, which could move the price against them on a lit exchange.

Key mechanics:

- **Pricing.** Most dark pool trades execute at or within the [NBBO](https://www.quantisnow.com/glossary/nbbo), often at the midpoint, so they reference prices set on public exchanges.
- **Reporting.** Trades are reported to a [FINRA](https://www.quantisnow.com/glossary/finra) trade reporting facility and appear on the consolidated tape, but the tape does not identify which dark pool executed them.
- **Disclosure.** NMS stock ATSs file Form ATS-N with the SEC describing how they operate. FINRA publishes weekly ATS volume by stock on a delay of a few weeks.

Dark pools are one part of off-exchange trading. The other large part is wholesalers filling retail orders, which is also reported through FINRA facilities.

## Why it matters for traders

Off-exchange trading accounts for a large share of US equity volume, so the lit order book shows only part of the real supply and demand. Large prints at round sizes reported off-exchange are sometimes read as institutional accumulation or distribution, though without direction (buy or sell) they are hard to interpret.

FINRA's daily [short volume](https://www.quantisnow.com/glossary/short-volume) files cover off-exchange trades, including dark pool activity. A high short volume reading largely reflects market maker and dark pool mechanics, not necessarily bearish bets.

## FAQ

### Are dark pools legal?

Yes. Dark pools are regulated as alternative trading systems by the SEC, and operators must register as broker-dealers and file disclosures about how they operate.

### Can I see dark pool trades?

You can see the prints after they happen, marked as off-exchange trades on the tape, but not the orders resting in the pool beforehand.

## Related terms

- [NBBO (national best bid and offer)](https://www.quantisnow.com/glossary/nbbo.md): The highest bid and lowest offer for a stock across all US exchanges, the benchmark brokers use for best execution.
- [FINRA](https://www.quantisnow.com/glossary/finra.md): The self-regulatory organization that oversees US broker-dealers, licenses their representatives and collects short interest and off-exchange trade data.
- [Market maker](https://www.quantisnow.com/glossary/market-maker.md): A firm that continuously quotes both a buy and a sell price in a security, earning the spread in exchange for supplying liquidity.
- [Short volume](https://www.quantisnow.com/glossary/short-volume.md): The number of shares sold short during a single trading day, as published daily by FINRA for trades reported to its facilities.
- [Payment for order flow](https://www.quantisnow.com/glossary/payment-for-order-flow.md): Compensation a broker receives from a market maker for routing customer orders to it for execution, common in commission-free US retail brokerage.

## On Quantisnow

- [Short volume screener](https://www.quantisnow.com/screener/short-volume)
- [Stock exchanges explained](https://www.quantisnow.com/guides/stock-exchanges-explained)
- [Short volume screener](https://www.quantisnow.com/docs/short-volume-screener)