On July 18th, the SEC announced it will adopt amendments to Regulation ATS to enhance operational transparency and regulatory oversight of alternative trading systems (ATSs). This pertains to such systems that trade stocks listed on a national securities exchange (NMS Stock ATSs).
SEC Adopts Rules to Enhance Transparency and Oversight of Alternative Trading Systems
In addition, the information on Form ATS-N will also inform investors about how the ATS operates by providing related data, such as its order types and other market data used on the ATS itself. Other information on the new form includes fees, the ATS’ execution and priority procedures, and procedures to segment orders on the ATS. This information should aid market participants in comparing ATS stock to other trading venues and determine if an NMS Stock ATS is an appropriate venue for their orders.
The amendments also provide a process for the SEC to review Form ATS-N filings and declare a Form ATS-N ineffective if need be after notice and based upon certain findings. All ATSs are required to have written safeguards and procedures in place to protect subscribers’ confidential information.
Form ATS-N will become publicly available through the EDGAR system. These amendments will be published in the Federal Register and will become effective 60 days from the date of that publication. An ATS that lists on a national securities exchange that is operating pursuant to an initial operation report on Form ATS as of January 7th, 2019 will be required to file Form ATS-N no earlier than January 7th, 2019 and no later than February 8th, 2019. As of January 7th, 2019, an entity seeking to operate as an NMS stock ATS will be required to file Form ATS-N.