US firms agree SEC form for ATS transparency lacks clarity

Consistency, lack of clear definitions, and ease of use listed by firms as major concerns ahead of SEC’s Form ATS-N.

A TABB Group study into the Securities and Exchange Commission’s (SEC) proposed rules on alternative trading systems (ATS) transparency reveals US firms agree it lacks clarity and consistency. 

The rules proposed by the SEC include a form known as Form ATS-N, which records the intricate details of each platform’s broker-dealer operations.

However, firms recently submitted comment letters which highlighted several areas of concern for implementing the use of the forms.

TABB Group said in the report that ease of use of the Form ATS-N is the first priority for most companies.

The report said: “the main concern among industry commenters is implementing a format that is easily readable and comparable.

“A core criticism of the current Form ATS’s layout is its lack of consistency across different ATSs.”

The “sheer quantity of data” is also an issue for many firms, who recommended the SEC limit the amount needed to “increase its digestibility for market participants.”

Consistency was labelled as a major burden, and some suggested the SEC “create precise terminology… to ensure consistency across ATSs.”

The information gathered from the Form ATS-N will be made public, which is another worry for firms as confidentiality of customer information could be breached.

TABB Group concluded: “Over the past year, many ATSs have worked on augmenting their public disclosures. Of the 38 active equity ATSs, 19 post their current Form ATS on their websites.

“These changes, rather than marking an end to the conversation, will usher new analytics and further discussion on the role of an exchange versus ATS in today’s equity markets.”