REGISTRATION OF AN ALTERNATIVE TRADING SYSTEM

An Alternative Trading System (ATS) is a trading floor, a “market” that brings together several buyers and several sellers of securities. The function that ATS now performs has historically belonged to stock exchanges. ATS can be described as electronic trading systems (electronic trading systems (ETS), which provide automated trade matching and process buy and sell orders using predefined, non-discretionary trading methods.

The main advantages of ATS is that this system can provide competitive pricing, long-term trading, real-time trade execution, access to a wide range of markets, specialized market data, and provide new or unique investment strategies and trading options.

It should be noted that ATS registration is typical for the US and Canada, in Europe it is known as the Multilateral Trading Facility (MTF).

In the 1970s, the United States Congress authorized the Securities and Exchange Commission (SEC) to assist in the creation of a national market system, which was to improve the system of pricing on several trading floors.

In 2007, the rules that had governed the national market system since the 1970s were consolidated by the SEC into the Regulation of the National Market System (REG NMS).

The REG NMS sets out requirements for market access, inter-market price priority for displayed and available quotes, pricing and market data dissemination. The rules require malls to establish policies and procedures to prevent certain pass-through transactions.

In 2009, the SEC released a proposal to regulate dark pools, though it has yet to go into effect. It is worth noting that this proposal will primarily address a review of the order display requirement, including a significant reduction in the trading volume threshold that gives rise to obligations for the public display of ATS, as well as amendments to joint industry plans for the public distribution of consolidated trading data. to require the real-time disclosure of the identity of dark pools and other ATCs in the reports of their completed transactions.

For example, in the 1990s, Canadian regulators of the paper market recognized the potential of ATS to compete with traditional exchanges and expanded the regulatory framework to minimize negative impacts. This model followed the US approach, reflecting the nutrition typical for Canadian markets.

Of Canada (IIROC), as of today, a single self-regulatory organization that controls the activity of investment dealers and trading in shares (and, theoretically, goiter) in Canada.

In 2004, the European Union issued the Markets in Financial Instruments Directive (MiFID) with the aim of increasing competition while maintaining consumer protection. Under MiFID, investment firms are governed by the laws of the state in which they have their registered office, but are generally permitted to provide services to clients in any state in the European Union. MiFID emphasizes transparency and requires investment firms to strive for the “best execution” of their clients’ orders. MiFID’s Best Execution requirement, described by the Committee of European Securities Regulators (CESR) as “overarching”, requires investment firms to take all reasonable steps to obtain the best possible outcome for their clients in terms of price and cost, speed, the probability of execution and settlement, size, nature, or any other factors relevant to the execution of orders The CESR explains that it is the responsibility of the investment firm to assess the relative importance of these factors, taking into account the characteristics of the client, the order, the financial instrument that is the subject of the order, and places of fulfillment or entities to which the order may be directed, and for retail customers, the “total remuneration”.