What ATSs Are
An ATS is a trading venue that matches buyers and sellers of securities but is not a registered national securities exchange. ATSs include dark pools, crossing networks, and electronic communication networks (ECNs). They must register with the SEC and comply with Regulation ATS.
Market Makers and ATSs
Market makers interact with ATSs in multiple ways: routing orders to ATSs when it serves their execution strategy, operating their own ATSs, or providing liquidity to ATS participants. These interactions are part of the complex multi-venue trading ecosystem in which Citadel Securities operates.
Transparency in ATSs
ATSs have historically been less transparent than exchanges. Reg ATS requires disclosure of ATS practices to investors and regulators, but the pre-trade transparency of ATS trading is typically lower than exchange trading. This opacity has attracted regulatory attention, particularly for ATSs that trade large institutional orders.
Regulatory Evolution
The SEC has updated Regulation ATS over the years to address emerging transparency and fairness concerns. Understanding the regulatory framework for ATSs is part of understanding the broader market structure in which Citadel Securities operates.