Regulation of alternative trading systems: evolving regulatory models and prospects for increased regulatory coordination and convergence

摘要

In recent years, the emergence and growth of electronic trading platforms for securities and other financial instruments has spurred significant debate among financial market regulators. Rapid advances in technology have permitted innovative participants in the financial markets to offer traditional services in new and more efficient ways, including by permitting electronic order-matching and trade execution outside the confines of the physical trading floor of a stock exchange. These new trading platforms, commonly referred to as alternative trading systems (or ATSs), provide a wide variety and combination of services, including dissemination of bid and offer quotations, order routing, trade execution, and clearance and settlement services. The electronic nature of alternative trading systems permits easy cross-border operation and access, particularly given advances in communications technology. Through online connections, proprietary software or terminals, subscribers may access and execute orders through ATSs, both domestically and in multiple foreign jurisdictions. Securities regulators have generally recognized that alternative trading systems can bring substantial benefits to markets and investors. The advanced technology utilized by alternative trading systems can serve to reduce transaction costs, both directly for system participants (by increasing the speed and ease of execution or by creating new liquidity pools for certain securities) and indirectly for the wider market (by exerting competitive pressures on existing exchanges and brokers). By providing additional liquidity pools and enhanced order routing and execution opportunities, alternative trading systems also may reduce the cost and increase the likelihood of achieving best execution. In addition, ATSs also often provide trading and execution mechanisms not available from traditional exchanges, such as anonymous or after-hours trading.3 Accordingly, they expand investors' options in choosing a trading forum that best suits their needs for particular transactions.