From Wikipedia, the free encyclopedia Alternative Trading Systems
Alternative Trading Systems
Alternative Trading Systems (ATS), are United States Se- the system reaches more than 5% of the trading volume
curities and Exchange Commission approved non-ex- for any given security.
change trading venues specifically designed to match Specifically, it requires that an alternative trading
buyers and sellers to find counterparties for transactions, system comply with the reporting and record keeping
instead of trading large blocks of shares on the normal requirements Rule 301 (b)(5)(ii) of Reg ATS, if during at
exchange, a practice that can skew the market price in least 4 of the preceding 6 calendar months, such alterna-
a particular direction, depending on a security’s market tive trading system had:
capitalization and trading volume. • With respect to any NMS stock, 5 percent or more of
ATS have to be distinguished from electronic commu- the average daily volume in that security reported
nication networks (ECNs), that are a "fully electronic sub- by an effective transaction reporting plan;
set of ATSs that automatically and anonymously match • With respect to an equity security that is not an NMS
orders".[1] The equivalent term of ECN under European stock and for which transactions are reported to a
legislation is a Multilateral Trading Facility (MTF). These self-regulatory organization, 5 percent or more of
venues play an important role in public markets for al- the average daily trading volume in that security as
lowing alternative means of accessing liquidity. calculated by the self-regulatory organization to
Rule 300(a) of the SEC’s Regulation ATS provides the which such transactions are reported;
following legal definition of an "alternative trading sys- • With respect to municipal securities, 5 percent or
tem": more of the average daily volume traded in the
Any organization, association, person, group of per- United States; or
sons, or system: • With respect to corporate debt securities, 5 percent
• That constitutes, maintains, or provides a market or more of the average daily volume traded in the
place or facilities for bringing together purchasers United States.
and sellers of securities or for otherwise performing
with respect to securities the functions commonly
performed by a stock exchange within the meaning
Examples of ATS
of Rule 3b-16 of this chapter; and • Electronic communication networks
• That does not: • Call markets - An auction market where orders are
1. Set rules governing the conduct of subscribers other grouped until they reach a certain amount, and then
than the conduct of such subscribers’ trading on executed together at a predetermined time.
such organization, association, person, group of • Electronic trade matching
persons, or system; or • Crossing networks
2. Discipline subscribers other than by exclusion from • Dark pools
trading.
Regulation ATS was introduced by the SEC in 1998 and is
designed to protect investors and resolve any concerns
References
arising from this type of trading system. Regulation ATS [1] Lee/Zubulake, The High Frequency Game Changer
requires stricter record keeping and demands more in- (2011), p. 17
tensive reporting on issues such as transparency once
Retrieved from "http://en.wikipedia.org/w/index.php?title=Alternative_Trading_Systems&oldid=465627854"
Categories:
• Financial markets
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