[atemerev]

A "dark pool", despite an ominous-sounding name, is just a type of exchange which does not display order prices and sizes. It is something in between of a regular exchange and an auction, better suited for posting and executing large orders. There is nothing shady in it; it helps larger players (like retirement / index funds) to obtain better prices for their large orders.

[jmrobertson]

Yes, not shady, but it totally unravels the argument concerning HFTs helping price discovery. I know the "hey retirement and index funds are doing it, think of the pensioners!" argument is common defense of it, but that's not at all the target audience of DPs. It's liquidity going off exchange, which hurts price discovery, simple as that. Considering how competent trade execution/slippage capabilities are for the types of broker-dealers that would be handling index/ret/pension volumes, that argument is nonsense

[atemerev]

Well, dark pools are a counter-HFT measure, of course they have limited price discovery. If you want price discovery, you can go to lit markets. If you want matching without showing your orders, you can put orders to the lit book algorithmically, or go to a dark pool. It's not that there is no choice. And people traded off-exchange like forever, OTC market still exists and predates exchanges.

[mruts]

There's been a lot of lying by multiple banks to customers about the property of their dark pools. Saying they ban HFTs, or categorize them as "aggressive" when actually doing nothing, or having hidden order types for HFTs, etc etc.

Just to be clear, I mostly think that's fine and whatever, who cares, but there has been a lot of deception in the space.