Glossary

What Is an Alternative Trading System (ATS)?

An Alternative Trading System (ATS) is an electronic trading venue that matches buyers and sellers of securities outside traditional stock exchanges.

Luca Moschini

— 1 min read
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Definition

An Alternative Trading System (ATS) is a platform where securities are traded outside of formal stock exchanges. These systems electronically match buy and sell orders and operate separately from traditional exchange order books.

ATSs are commonly used for trading both listed and unlisted securities and are structured to function as broker-dealers rather than exchanges.

How It Works

ATSs match buyers and sellers electronically without displaying orders on public exchange books. Transactions occur within the system, often providing participants with greater privacy around trade size and timing.

Many ATSs are used by institutional participants to execute large transactions while limiting visible market impact.

Why the Term Matters

Alternative Trading Systems help explain how a significant portion of securities trading occurs outside traditional exchanges. They are an important part of modern market structure and influence how liquidity and price discovery function.

Understanding ATSs provides context for differences in transparency, regulation, and execution venues across financial markets.

  • Dark pools
  • Electronic Communication Networks (ECNs)
  • Over-the-counter (OTC) trading
  • Broker-dealer
  • Stock exchange
  • Market transparency

FAQs

What is an Alternative Trading System (ATS)?
An Alternative Trading System is an electronic platform that matches buyers and sellers of securities outside traditional stock exchanges.

How is an ATS different from a stock exchange?
An ATS operates as a broker-dealer with fewer regulatory responsibilities, while a stock exchange is a highly regulated marketplace for listed securities.

What types of securities trade on ATSs?
ATSs trade both listed and unlisted securities, including many over-the-counter securities.

What is a dark pool?
A dark pool is a type of ATS that allows participants to execute trades without displaying orders publicly.

How are ATSs regulated?
ATSs are regulated by the U.S. Securities and Exchange Commission under Regulation ATS and must register as broker-dealers.

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Risk Disclosure

All content is provided for educational purposes only and does not constitute investment advice. Trading involves risk, and past performance is not indicative of future results. Please review our full Risk Disclosure for additional details.

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