SEC Form ATS-R

What Is Securities and Exchange Commission (SEC) Form ATS-R?

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

Understanding Securities and Exchange Commission (SEC) Form ATS-R

SEC Regulation ATS established a regulatory framework for ATS. An ATS meets the definition of an exchange under federal securities laws but is not required to register as a national securities exchange if the ATS operates under the exemption provided under Exchange Act Rule 3a1-1(a). To operate under this exemption, an ATS must comply with the requirements in Rules 300-303 of Regulation ATS.

In order to be in compliance with SEC Regulation ATS, an alternative trading system must file an SEC Form ATS-R. SEC Form ATS-R reports the quarterly activities of an alternative trading system's quarterly activities—both the unit volume and dollar volume of trades in every type of security it handles.

Definition of an Alternative Trading System (ATS)

An ATS meets the definition of an exchange under federal securities laws but is not required to register as a national securities exchange (as long as the ATS operates under the exemption provided under Exchange Act Rule 3a1-1(a); to operate under this exemption, an ATS must comply with the requirements in Rules 300-303 of Regulation ATS.)

The function of an ATS is to match buyers with sellers, generally for large blocks of assets.

For example, an institutional investor (such as The Goldman Sachs Group, Inc. or JPMorgan Chase & Co.) might use an ATS to find another institutional investor who wants to buy a million shares of Microsoft (MSFT) stock.

An ATS is considered a dark pool. A dark pool is a privately organized financial forum or exchange for trading securities; the price and size of a user's order are not displayed to other users. Transactions are done in private so that the large transaction doesn't have an unintended impact on the stock's price. (Big transactions that appear on the order books of big exchanges can cause a domino effect.)

An ATS is a terminology used in the U.S. and Canada. In Europe, an alternative trading system is known as a multilateral trading facility. An ATS must file the Securities and Exchange Commission (SEC) Form ATS-R within 30 days of the end of each calendar quarter.

The SEC provides this definition of an ATS.

"Any organization, association, person, group of persons, or systems:

• that constitutes, maintains, or provides a marketplace 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;
• 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 Securities and Exchange Commission (SEC) Form ATS-R

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.