United States

SEC Proposes Rules to Enhance Transparency and Oversight of Alternative Trading Systems

Dec 07, 2015
From the Financial Reporting Network

The SEC recently proposed rules to enhance operational transparency and regulatory oversight of alternative trading systems (ATSs) that trade stocks that are listed on a national securities exchange (NMS stocks), including dark pools.

The proposed rules would require an ATS that trades NMS stocks to file detailed disclosures about its operations and the activities of its broker-dealer operator and its affiliates. These disclosures would be included on the proposed Form ATS-N and would include information about trading by its broker-dealer operator and its affiliates on the ATS, the types of orders and market data used on the ATS, and the execution and priority procedures of the ATS.

Form ATS-N disclosures would be available on the SEC Web site, which could allow market participants to better evaluate whether to do business with an ATS, and to be better informed when evaluating order handling decisions made by their broker.

Additionally, the proposed rules would create a process under which the SEC would qualify NMS stock ATSs for the exemption from registering as a national securities exchange and, instead, operating as an ATS. It also would allow the SEC to review disclosures made on Form ATS-N. Under this process, the SEC would enhance its oversight of NMS stock ATSs and would be able to declare Form ATS-N filings effective or ineffective, and to review amendments.

The comment period ends 60 days after the proposal is published in the Federal Register.

Read SEC Press Release

Read Proposed SEC Rule