Characteristics of ATPs

THE range of operational models, services and order types provided by ATPs is broad and continues to evolve. While they were historically characterised by either call or auction markets, ATPs also include matching or market making systems, crossing networks, dark pools or some combination of these, with overlapping services and various enhancements and distinguishing features.

The main operational characteristics of ATPs include, among others: Auction markets: These allow buyers and sellers to enter competitive bids and offers respectively at the same time. Securities are generally traded at the highest price a buyer is willing to pay and the lowest price at which a seller is willing to sell the same number of shares. Typically, matching bids and offers are paired and orders are executed. Call markets: These are markets where bid and ask orders are aggregated and all transactions take place together, usually at predetermined time intervals. The marketplace generally determines the market clearing price based on the number of bid and ask orders. Crossing systems or crossing networks facilitate electronic trades between buyers and sellers who quote their prices on other trading systems. Crossing systems do not discover prices and may allow large orders to be entered and executed at predetermined time intervals throughout the day. Dark pools are trading systems that accept buy or sell orders without pretrade transparency. Market maker systems - which are quote-driven trading systems on which providers of liquidity continuously quote binding bid and ask prices. Trades are generally executed as soon as the bid and ask are matched. Generally ATPs rely heavily on innovative technologies to provide alternative services and new or unique investment strategies and trading options.

The innovative technology assists in a number of ways which include competitive pricing, real-time execution, increasing access, exposure and execution opportunities across diverse marketplaces.