Regulation ATS-N, an amendment to Regulation ATS under the U.S. Securities Exchange Act, mandates specific disclosure and operational requirements for Alternative Trading Systems (ATSs) that trade NMS stocks. While directly applicable to traditional securities, its principles of market transparency, fairness, and systematic disclosure of operational mechanics offer a conceptual framework for discussions on regulatory design and system architecture in evolving crypto markets, particularly for institutional-grade platforms.
Mechanism
This regulation requires ATSs to file a public disclosure document detailing their operational characteristics, order handling practices, and matching logic. It also imposes fair access requirements and mandates specific functionalities to ensure equitable treatment of participants and proper market functioning. These rules aim to level the playing field and provide visibility into non-exchange trading venues.
Methodology
In the context of crypto, while no direct equivalent regulation exists, the strategic approach to building institutional trading systems often considers the spirit of ATS-N. Methodologies involve voluntarily providing comprehensive transparency into RFQ crypto platforms, order matching algorithms, and fee structures. Designing systems with clear rulebooks, fair access principles, and auditability helps to build trust and potentially preempt future regulatory requirements, aiming to attract institutional flow by demonstrating operational integrity akin to established financial market standards.
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