Regulation ATS
The SEC regulation governing alternative trading systems including ECNs and dark pools.
What is Reg ATS?
Regulation ATS (Alternative Trading Systems), adopted by the SEC in 1998, establishes the regulatory framework for electronic trading systems that bring together buyers and sellers of securities but are not registered as national securities exchanges. These systems — including electronic communications networks (ECNs), dark pools, and crossing networks — must register as broker-dealers and either comply with Reg ATS requirements or register as exchanges. Key Reg ATS obligations include: notifying the SEC of operation, fair access requirements for ATSs above certain volume thresholds, filing order display and execution access rules, and enhanced disclosure requirements. The rule was significantly amended in 2018 to require greater transparency for dark pool operations.
Example
Liquidnet, a dark pool that enables institutional investors to trade large blocks of stock anonymously, is registered as an ATS under Regulation ATS. Because Liquidnet's volume in certain securities exceeds 5% of average daily volume, it must comply with enhanced fair access requirements — ensuring that similarly situated institutional investors can access its matching system on equivalent terms, per Reg ATS Section 301(b)(5).
Source: SEC — Regulation ATS