--- title: "Alternative Trading Systems: An Overview for Investors" description: Alternative Trading Systems (ATS) offer a different avenue for trading securities than traditional exchanges, serving as regulated platforms that connect potential buyers and sellers. image: https://www.realized1031.com/hubfs/iStock-1299881295.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap) - [Our Process](https://www.realized1031.com/how-realized-works) - [Financial Advisors](https://www.realized1031.com/advisor) - [Resources](https://www.realized1031.com/resources) - [The Company](https://www.realized1031.com/about-us) - [Articles](https://www.realized1031.com/blog) [Register](https://www.realized1031.com/marketplace) [Log In](https://www.realized1031.com/login) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # Alternative Trading Systems: An Overview for Investors Posted Oct 10, 2023 ![iStock-1299881295](https://www.realized1031.com/hs-fs/hubfs/iStock-1299881295.jpg?width=1254&height=836&name=iStock-1299881295.jpg) Alternative Trading Systems (ATS) offer a different avenue for trading securities than traditional exchanges, serving as regulated platforms that connect potential buyers and sellers. While they function similarly to national securities exchanges in matching orders, they are not classified as such. Unlike national securities exchanges, they provide a less formal, more flexible market structure. Although under the regulation of the SEC, an ATS maintains its unique identity by operating under its own set of rules, creating a niche marketplace for certain types of securities. It is noteworthy, however, that an ATS can apply to the SEC to upgrade its status to a national securities exchange if it wishes to adhere to more formal structures. ### Mechanics of Alternative Trading Systems As mentioned above, an alternative trading system is registered with the SEC ([Securities and Exchange Commission](https://www.realized1031.com/glossary/securities-and-exchange-commission-sec)). It is registered as a [broker-dealer](https://www.realized1031.com/glossary/broker-dealer), allowing it to trade exchange-listed stocks (i.e., publicly listed stocks). The SEC regulates ATSs but not as heavily as national exchanges such as the NYSE or NASDAQ. An ATS is different from an OTC (over-the-counter) system. An OTC trades unlisted stocks rather than listed. The Financial Industry Regulatory Authority (FINRA) regulates OTCs. When a trade is placed on a national exchange, the order is visible for all to see. That visibility provides an opportunity for other trades to front-run the price with a smaller order. This tactic will likely push the price higher for the original trader, potentially resulting in a lower return. If enough traders join in, the original trader might even suffer a loss if they are selling.  The term alternative trading system is specific to North America. Europe has a similar system but calls it a Multilateral Trading Facility (MTF). ATSs are made up of different subsystems. Some examples include ECNs, Dark Pools, and Call Markets. #### Electronic Communication Networks An Electronic Communication Network (ECN) is full digital trading. No human intervention is needed. Trades executed on an ECN can occur outside of regular market hours. ECNs do charge commissions, which can negatively impact returns for high-volume traders. #### Dark Pools Dark Pools get their name because they completely hide trades from the public or obscure the size of trades. A trade may display 1,000 shares when the entire trade is 10,000 shares. This type of trade is called an iceberg because it only shows a small part of the trade. By not revealing the full size of the trade, the market is likely to move less against the trader. Institutional traders utilize dark pools. They trade in large blocks and generally make arrangements with market makers who can find buyers and sellers for the other side of these large trades. Cross Networks are another type of ATS similar to Dark Pools. #### Call Markets A Call Market waits until there is a certain amount of trades before trying to execute them. For that reason, trades do not execute continuously but instead at predetermined intervals or when the price reaches the clearing price. That price is determined by the securities being offered and the bids by buyers on the network. Alternative trading systems are largely used by institutional traders trading in large sizes (called block trades). ATSs allow institutional traders to privately seek out buyers and sellers who might be a good match for larger trades. This is unlike a public exchange, which broadcasts trades to everyone on the exchange. This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. 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("Realized Holdings"). Check the background of this firm on [FINRA's BrokerCheck](https://brokercheck.finra.org/firm/summary/22333). Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment. Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments are often sold by prospectus that discloses all risks, fees, and expenses. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain and should not be deemed a complete investment program. The value of the investment may fall as well as rise and investors may get back less than they invested. This site is published for residents of the United States who are accredited investors only. Registered Representatives and Investment Advisor Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all of services referenced on this site are available in every state and through every representative listed. For additional information, please contact the Realized Compliance department at 512-472-7171 or info@realized1031.com. - [Terms & Conditions](https://www.realized1031.com/terms-and-conditions) - [Privacy Policy](https://www.realized1031.com/privacy-policy) - [Form CRS](https://www.realized1031.com/hubfs/common-files/disclosures/FormCRS.pdf) - [ADV 2A](https://www.realized1031.com/hubfs/common-files/disclosures/ADV2A.pdf) - [Reg BI Disclosures](https://www.realized1031.com/hubfs/common-files/disclosures/RegBI.pdf) -   © 2026 Realized Holdings, Inc. ```json { "@context" : "http://schema.org/", "@type" : "BlogPosting", "articleBody" : "Alternative Trading Systems (ATS) offer a different avenue for trading securities than traditional exchanges, serving as regulated platforms that connect potential buyers and sellers. While they function similarly to national securities exchanges in matching orders, they are not classified as such. Unlike national securities exchanges, they provide a less formal, more flexible market structure. Although under the regulation of the SEC, an ATS maintains its unique identity by operating under its own set of rules, creating a niche marketplace for certain types of securities. It is noteworthy, however, that an ATS can apply to the SEC to upgrade its status to a national securities exchange if it wishes to adhere to more formal structures. Mechanics of Alternative Trading Systems As mentioned above, an alternative trading system is registered with the SEC (Securities and Exchange Commission). It is registered as a broker-dealer, allowing it to trade exchange-listed stocks (i.e., publicly listed stocks). The SEC regulates ATSs but not as heavily as national exchanges such as the NYSE or NASDAQ. An ATS is different from an OTC (over-the-counter) system. An OTC trades unlisted stocks rather than listed. The Financial Industry Regulatory Authority (FINRA) regulates OTCs. When a trade is placed on a national exchange, the order is visible for all to see. That visibility provides an opportunity for other trades to front-run the price with a smaller order. This tactic will likely push the price higher for the original trader, potentially resulting in a lower return. If enough traders join in, the original trader might even suffer a loss if they are selling. The term alternative trading system is specific to North America. Europe has a similar system but calls it a Multilateral Trading Facility (MTF). ATSs are made up of different subsystems. Some examples include ECNs, Dark Pools, and Call Markets. Electronic Communication Networks An Electronic Communication Network (ECN) is full digital trading. No human intervention is needed. Trades executed on an ECN can occur outside of regular market hours. ECNs do charge commissions, which can negatively impact returns for high-volume traders. Dark Pools Dark Pools get their name because they completely hide trades from the public or obscure the size of trades. A trade may display 1,000 shares when the entire trade is 10,000 shares. This type of trade is called an iceberg because it only shows a small part of the trade. By not revealing the full size of the trade, the market is likely to move less against the trader. Institutional traders utilize dark pools. They trade in large blocks and generally make arrangements with market makers who can find buyers and sellers for the other side of these large trades. Cross Networks are another type of ATS similar to Dark Pools. Call Markets A Call Market waits until there is a certain amount of trades before trying to execute them. For that reason, trades do not execute continuously but instead at predetermined intervals or when the price reaches the clearing price. That price is determined by the securities being offered and the bids by buyers on the network. Alternative trading systems are largely used by institutional traders trading in large sizes (called block trades). ATSs allow institutional traders to privately seek out buyers and sellers who might be a good match for larger trades. 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