The consolidation of public stock exchanges, the rise of slice-and-dice algorithmic trading, and new regulations—including order-handling rules—have had the effect of reducing liquidity, or ease of trading, in the public markets.

They have also led to a shrinkage of order size, so it has become increasingly difficult to buy or sell a large block of stock without being noticed—and thereby, often, moving the price of the underlying security.

Meanwhile, sophisticated electronic-trading systems have made buying and selling away from public markets both easier and more efficient. There are even new systems aimed at providing access to large numbers of dark pools.

For hedge funds, pension funds, and other big traders, the beauty of the system is that it can often allow these institutional investors to use the public markets to set stock prices while they buy and sell stock discreetly and at set terms in a private market.

"The public exchange is mandated to be equal and fair and open," says Jeromee Johnson, a senior analyst at Tabb Group, a firm that conducts research into and provides advice about financial markets. "The dark pools don't have to provide equal and fair access or, necessarily, a level playing field."

"And for institutions," he adds, "it can mean a better execution because they are able to protect the information about the size and type of their order and negotiate with the other counterparties."

It can also be cheaper than having a broker-dealer route the order onto the public market.

As an example, Johnson uses a simple scenario in which a relatively illiquid—that is, infrequently traded—stock has a three-cent spread between the bid and the ask price. An institution wanting to buy or sell a quarter-million shares would save several thousand dollars (the difference between the public bid and ask prices) by making the trade in a dark pool.

Of even greater importance would be the additional value of eliminating the spike in supply or demand caused by its big order, which would lead to a swing in the stock's price. "The potential value of savings on the transaction could be in the 80 or 90 percent range," Johnson says. "These are significant savings."

The hunger for anonymous block trading has caused the field to explode. There are about 40 active pools, double the number just last year. New pools and services to aggregate them are announced almost every month.