An ATS is a regulated electronic marketplace where securities are traded without going through major exchanges like the NYSE or Nasdaq. These platforms match buy and sell orders using their own internal systems and often offer different trading rules, fee structures, or access models.

Many ATSs focus on providing faster execution, lower fees, or trading environments that attract institutional investors. Some specialize in specific types of assets or strategies. Others focus on private markets or less liquid securities that may not trade efficiently on major exchanges.

A common type of ATS is a dark pool, which allows large institutional orders to be executed without revealing order size or intent to the broader market. There are also ATSs built for digital assets, private securities, or niche markets. Regardless of the type, every ATS must register with the SEC and follow strict reporting and compliance requirements.

Why It Matters

ATSs expand market access, increase competition, and provide additional options for trading outside standard exchanges. They are widely used by institutions that need efficiency, flexibility, and alternative liquidity sources.

How is an ATS different from a traditional exchange?

An ATS matches trades electronically but is not considered a national securities exchange. It offers more flexible rules and often serves institutional or specialized trading needs.

What is traded on an ATS?

ATSs can trade stocks, bonds, private securities, digital assets, or other financial instruments depending on their design and regulatory approvals.

Real-World Example

A large asset manager wants to execute a multi-million-dollar stock trade without affecting public market prices. The firm routes the order through a regulated ATS, which matches the trade internally with another participant.

Related Terms

• Dark Pool
• Liquidity
• Order Routing