Off-exchange trading in equity markets, including broker/dealer internalization and dark pools in which prices are not displayed prior to execution, has grown significantly in recent years. An examination of the relationship between such “dark” trading and market quality shows that increases in dark pool activity and internalization are initially associated with declining bid–offer spreads and increasing depth. But when a majority of trading occurs in undisplayed venues, the benefits of competition are eroded and market quality deteriorates. Public policy considerations for market integrity are addressed on the basis of these findings.