Alternative Trading Systems: Description of ATS Trading in National Market System Stocks
Oct. 1, 2013
This paper discusses descriptive statistics on U.S. equity Alternative Trading Systems (ATSs, some of which are referred to as “dark pools”).2 The paper is intended to inform public discussion of the role and regulation of ATSs.
While ATSs operate markets similar in some ways to the registered exchanges, there are important institutional differences. Although both exchanges and ATSs provide marketplaces for buyers and sellers to transact in securities, ATSs do not necessarily provide public information on the best prices available to traders within their system. They also do not set rules governing the conduct of subscribers and they perform no self-regulation, while exchanges perform all of these functions. Additionally, because ATSs are regulated as broker-dealers, they comply with a different set of regulations than traditional exchanges.3