Forex glossary
Dark pools in forex
A dark pool is a trading arrangement whose orders or available liquidity are not publicly displayed before execution. OTC FX is fragmented and also uses private pools and dealer internalisation. The absence of a central exchange does not establish that hidden execution arrangements cannot exist; last look is a separate order-checking mechanism.
Illustrative example
How does it work in practice?
At a fictional bank, a client's order to buy 1 million EUR is matched with another client's sale internally. Other participants do not see these orders on a public order book; this illustrates internalisation.
A case to work through
Some flow stays internal
At a fictional bank, customers buy 800,000 EUR and sell 500,000 EUR on matching terms.
- The simplified matched amount is 500,000 EUR.
- Residual directional flow is 300,000 EUR.
What follows? Do not equate all customer turnover with visible inter-dealer turnover.
Example boundary: This illustrates internalisation, not every dark-pool platform's definition.
A useful distinction
Dark pools in forex / Interbank Market
Interbank identifies counterparties; dark pool concerns visibility of particular liquidity.
Check your understanding
Explain how matching flows can reduce publicly visible turnover.
Show the answer and explanation
No, examine specific rules and conduct
The label alone establishes no violation.
FX participants, access and execution
Step 9 / 10 · 0 / 10 reviewed
View the full sequence →Progress is saved only in this browser.
Read the fuller explanation
Related terms
Sources and documentation
- The FX trade execution landscape through the prism of the 2025 BIS Triennial Survey
Describes fragmented FX execution, dealers, non-bank providers and internalised flows.
Document read: - bis.org
- FX trade execution: complex and highly fragmented – BIS
Describes dealer-customer segments, platforms and prime-brokerage credit relationships.
Document read:
The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.