Alternative Trading Systems (ATS) are private electronic trading venues that operate outside of traditional stock exchanges. They offer a more flexible and innovative way to trade securities compared to traditional exchanges. Unlike traditional exchanges, ATS have less stringent listing requirements and fewer regulations, allowing for faster and more efficient trading of securities. ATS also have the ability to customize trading processes and technology solutions to meet the specific needs of their participants. However, ATS lack the same level of transparency and regulatory oversight as traditional exchanges, which can lead to increased risk for investors. Despite this, ATS have gained popularity among institutional investors and are increasingly being used as a complementary solution to traditional exchanges.

Alternative Trading Systems (ATSs) and traditional stock exchanges are two different types of financial marketplaces for trading securities. Although both types of venues provide opportunities for buyers and sellers to trade securities, there are several key differences between them.

Regulation: Traditional stock exchanges are heavily regulated by government agencies, such as the Securities and Exchange Commission (SEC) in the U.S. ATSs, on the other hand, are generally subject to less regulation, although they still must follow certain rules and regulations.

Transparency: Traditional stock exchanges are required to publicly disclose information about trading activity, including prices, volumes, and order details. ATSs, on the other hand, often operate with less transparency, making it more difficult for investors to get a full picture of the market.

Order Types: Traditional stock exchanges generally offer a limited number of order types, such as market orders, limit orders, and stop orders. ATSs, however, often offer a wider range of order types, including advanced algorithms and direct market access, that cater to the needs of professional traders.

Cost: Traditional stock exchanges generally have higher fees for accessing their trading platforms and for executing trades, compared to ATSs. This is because traditional exchanges have more overhead costs, such as regulatory compliance and market surveillance.

Market Structure: Traditional stock exchanges operate as central, open marketplaces, where all orders are matched against each other. ATSs, on the other hand, may operate as dark pools, which are private venues where trading occurs outside of the public eye, or as hybrid platforms, which combine features of both traditional exchanges and dark pools.

Both ATSs and traditional stock exchanges have their own unique features and advantages, and the choice between them often depends on the specific needs and goals of the trader or investor.