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Alternative Trading System (ATS)

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Segmentation Costing US Investors Billions – CMCRC
Mondo Visione  8 hrs ago  Comment 
Capital Markets Cooperative Research Centre (CMCRC), the Australian independent academic centre for capital market research, has found that segmentation to the extent that it has experienced in the U.S. has led to a deterioration of market...
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Well, this ought to be interesting - not for what might be revealed, but for what will likely remain in the shadows. One of the weakest, least effective regulatory bodies around, the Financial Industry Regulatory Authority (FINRA), is now...
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[$] Regulators Ramp Up Scrutiny of 'Dark Pools'
Wall Street Journal  Jun 6  Comment 
Officials are increasing their scrutiny of an opaque corner of the market where stocks change hands in the dark.
New rules to help dark pools
The Australian  May 26  Comment 
AUSTRALIA'S corporate regulator hopes new share trading rules will help shed light on "dark pools".
New dark pool rules called into question
The Globe and Mail  May 23  Comment 
ITG study found they raised hidden costs, not market quality
NYSE's Niederauer urges review of dark pools
MarketWatch  May 1  Comment 
NYSE Euronext CEO Duncan Niederauer on Wednesday urged regulators to conduct a thorough review of the expansion of dark pools, which are trading systems that are not openly available to the public where buyers and sellers submit orders...
NYSE Floor Trader Explains How Stocks Are Traded In Dark Pools
Clusterstock  Apr 23  Comment 
If a trader, presenting a big pension fund or other large institution, wants to sell a large number of a particular stock, but doesn't want to raise a red flag among other traders and disturb the market, he or she may chose to make the trade...
[$] Exchanges Step Up Bid to Curb Dark Pools
Wall Street Journal  Apr 16  Comment 
The three largest U.S. stock exchanges stepped up their bid to curb private trading venues, urging the SEC to require them to provide more pricing information.
U.S. stock exchanges call for new rules on "dark pools"
Reuters  Apr 16  Comment 




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An alternative trading system (ATS) is a non-exchange trading venue approved by regulatory authorities like the Securities and Exchange Commission (SEC) and Financial Services Authority (FSA). In the broadest sense, an ATS is an alternative venue - usually an electronic system - where buyers and sellers can execute trades in existing financial instruments. Instruments may include shares, bonds and derivatives. An ATS provides an additional pool of liquidity to trade in existing instruments. No new securities can be listed on an ATS.

There are predominantly two types of ATS: a) matching systems; and b) crossing networks. An ATS can be started by a proprietary firm or even an exchange. For example, the London Stock Exchange has plans to introduce an ATS of its own called Baikal.

Alternative Trading Systems are examples of dark pools i.e. private markets where the trading of securities is not visible to the public eye. These systems are popular among large, institutional buyers, such as hedge funds, because it allows them to purchase or liquidate large portfolios without others becoming aware of this and front-running their trades. Trades executed in dark pools do not report data back to the market and therefore do not affect prices listed on exchanges.

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