SEC Form ATS-R

SEC Form ATS-R is a quarterly update that alternative trading systems (ATS) are required to file with the Securities and Exchange Commission (SEC). It reports the volume and dollar amount of all trades in securities conducted through the trading system during the previous quarter.

Key Takeaways

  • SEC Form ATS-R is used by alternative trading systems to report the volume and dollar amount of securities transactions it enabled in the previous quarter.
  • Alternative trading systems enable private purchases and sales of large blocks of securities, primarily for institutional investors.
  • An alternative trading system is not a securities exchange although it may apply to become one.

An alternative trading system is defined by the government as an SEC-regulated electronic platform for securities. It is by definition a "dark pool." That is, the price and size of a user's order are not displayed to other users.

An alternative trading system is not a securities exchange but may apply to the SEC to become one.

Understanding Form ATS-R

SEC Form ATS-R reports the alternative trading system's quarterly activities in terms of both the unit volume and dollar volume of trades in every type of security it handles. An ATS must file the form within 30 days of the end of each calendar quarter.

The SEC defines an alternative trading system as "any organization, association, person, group of persons, or systems (1) that constitutes, maintains, or provides a market place or facilities for bringing together purchasers and sellers of securities or for otherwise performing with respect to securities the functions commonly performed by a stock exchange within the meaning of Rule 3b-16 under the Exchange Act; and (2) that does not (i) set rules governing the conduct of subscribers other than the conduct of such subscribers' trading on such organization, association, person, group of persons, or system, or (ii) discipline subscribers other than by exclusion from trading."

Types of Assets on the Report

The form must provide these details for activity conducted through the system, including transactions in the following:

  • Listed equity securities
  • Nasdaq National Market securities
  • Nasdaq SmallCap Market securities
  • Rule 144A equity securities
  • Penny stocks
  • Other equity securities
  • Rights and warrants
  • Listed options
  • Unlisted options
  • Government securities
  • Municipal securities
  • Corporate debt securities
  • Mortgage-related securities
  • Other debt securities

The ATS must also provide unit and dollar volume transaction figures in most of these categories for after-hours trading that takes place on the ATS.

About the ATS

An alternative trading system is a broker-dealer rather than an exchange. Its function is to match buyers with sellers, generally for large blocks of assets. For example, an institutional investor like Goldman Sachs or Chase might use an ATS to find another institutional investor who wants to buy a million shares of Microsoft (MSFT) stock.

The deal is done in private, or the "dark pool," to avoid such a large transaction having an unintended impact on the stock's price. Big transactions that appear on the order books of the big exchanges can cause a domino effect.

Alternative trading system is the terminology used in the U.S. and Canada. In Europe, they are known as multilateral trading facilities.