Alternative trading system (ATS)
Quick definition
An alternative trading system (ATS) is a non-exchange trading venue that matches buyers and sellers to counterparties for transactions. ATSs are usually regulated as broker-dealers instead of as exchanges.
What is Alternative trading system (ATS)?
ATSes meet the definition of exchange under federal securities law. They aren't required to register as a national securities exchange, as long as the ATS operates under the exemption provided under Exchange Act Rule 3a1-1(a). Since ATSes are non-exchanges, ATS transactions don't appear on national exchange order books. Some traders use this advantage to conceal trading from public view, and reduce the effect of large trades.
An ATS must be approved by the United States Securities and Exchange Commission (SEC). For a current list of SEC-recognized ATSes, see here. The equivalent term under European legislation is a multilateral trading facility (MTF). ATSes are inclusive of electronic communications networks (ECNs), cross networks, call networks, and dark pools.