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Alternative Trading Systems (ATS), Explained

Here is what changes when the same stock can trade in more than one market at once.

What is an alternative trading system?

For a long time, shares listed on an exchange could only be traded on that exchange itself. Many countries have since introduced rules allowing an alternative trading system (ATS) β€” sometimes called a multilateral trading facility, or in some markets operating alongside dark pools β€” to match buy and sell orders for the same listed shares outside the primary exchange.

Which stocks are available

Not every listed stock is available on an alternative venue from day one β€” venues commonly phase in eligible stocks gradually, based on criteria like trading volume or market capitalization, rather than covering the entire market at launch.

Extended trading hours

One common feature of alternative trading systems is offering trading sessions before and after the primary exchange's core hours, extending the window in which investors can place trades. The exact opening and closing times, and which order-matching method applies during each session, vary by venue and can be adjusted after launch, so checking your broker's current schedule is worthwhile.

Brokers' best-execution duty

With the same stock now tradable on more than one venue, brokers are typically required to compare available prices and execution likelihood across venues and route an order to whichever offers the better outcome for the investor β€” a responsibility often called 'best execution.'

The liquidity fragmentation concern

When buy and sell interest in a stock is split across the primary exchange and an alternative venue, looking at only one venue's order book can make trading volume or available quotes look thinner than the true combined total across all venues.

What to check before trading

A good first step is confirming whether your broker supports order routing to alternative trading venues, and if so, what interface or screen it uses to show that. Because eligible stocks, trading hours, and fee structures for these newer venues tend to keep expanding and being adjusted in the early going, it's safer to check the exchange's and your broker's current notices regularly rather than planning around today's rules staying fixed.

How this differs from trading on a single exchange

Historically, an investor buying or selling a listed stock had exactly one venue and one order book to consider. With an alternative trading system running alongside the primary exchange, the same stock can now have two (or more) separate pools of buy and sell orders operating at once β€” many brokers address this by showing a consolidated view of quotes from all venues, rather than just the primary exchange's order book, so it's worth checking whether the screen you're looking at is combined or single-venue.

Regulatory oversight and investor protections

Alternative trading systems generally operate under the same securities regulator's oversight as the primary exchange, and rules such as the best-execution duty are specifically designed to keep prices from diverging too much between venues for the same stock. This page introduces the general structure of alternative trading systems as educational content, not investment advice about any specific stock β€” since eligible stocks, hours, and rules keep evolving, confirm the latest details with your broker before trading.

Frequently Asked Questions

Could the price for the same stock differ between the primary exchange and an alternative venue?

In theory, yes β€” momentary differences in buy and sell interest at each venue can create small differences in quoted or executed prices for the same stock. In practice, though, the best-execution duty and other mechanisms are designed to keep prices from diverging much between venues.

Do I have to choose which venue to send my order to?

In most cases, no β€” even without the investor specifying a venue, a broker's system will typically route the order under its best-execution obligation to whichever venue offers better terms. That said, how this is presented can vary by broker, so check your broker's specific interface and disclosures.