Automated Execution Systems and Alternative Trading Systems
Chapters in this video
- 0:00 The whale order problem and why traditional exchanges fail
- 0:54 Electronic communications networks and anonymous matching
- 1:29 Dark pools: zero pre-trade transparency
- 2:56 Regulation ATS: broker-dealer registration, not exchange
- 4:16 Regulation NMS, NBBO, and the trade-through prohibition
- 5:50 NYSE automatic execution systems
- 6:00 Rapid-fire exam recap
What this video covers
- What an electronic communications network (ECN) is and why anonymity matters for institutional block trades
- Why dark pools provide post-trade transparency only, with zero pre-trade quote display, and how that protects against market impact
- The consolidated tape reporting requirement for dark pool trades after execution, not before
- Why alternative trading systems (ATS) must register as broker-dealers under Regulation ATS, not as national securities exchanges
- The three compliance pillars for ATS operators: broker-dealer registration, FINRA surveillance reporting, and fair access at volume thresholds
- How Regulation NMS enforces the order protection rule to prevent trade-throughs and guarantee the National Best Bid and Offer (NBBO)
- The access requirement under Regulation NMS that caps fees trading centers can charge for quote access
- How even traditional exchanges like the New York Stock Exchange (NYSE) now use automatic execution systems for eligible orders
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