Clear DefinitionsAlternative Trading System (ATS)
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Pronunciation
[awl-tər-nə-tiv trey-ding sis-təm]
Analogy
An ATS is like a private stock club where members trade shares among themselves without going through the main stock market.
Definition
A regulated trading venue that matches buy and sell orders outside traditional public exchanges; in crypto, often refers to institutional OTC or dark‑pool platforms.
Key Points Intro
ATS platforms offer bespoke matching services with distinct transparency and regulatory profiles.
Key Points
Regulatory registration: Must register with SEC or relevant authority.
Pre‑trade transparency: Varies by jurisdiction; may allow dark trading.
Custom order types: Support block trades, negotiated prices, and iceberg orders.
Settlement: Often integrates on‑chain clearing or custodial settlement.
Example
A crypto ATS provides institutional clients with an OTC matching engine for large BTC/EUR trades, settling via on‑chain escrow.
Technical Deep Dive
An ATS comprises a high-performance matching engine (C++/Rust), FIX/REST APIs for order entry, KYC/AML modules, and a settlement layer that interacts with blockchain wallets or custodian APIs. Trade reports feed into audit logs and regulatory reporting systems via encrypted channels.
Security Warning
Counterparty and custodian risk are higher in ATS venues; ensure robust legal agreements and on‑chain auditability.
Caveat
Lower transparency can lead to information asymmetry; liquidity may be limited compared to public exchanges.
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