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TABB Examines Alternative Trading System Matching Logic, Sees First Net Decline in 2014 since SEC’s Reg ATS Approval in 1999

In new research examining the rise in active Alternative Trading Systems (ATSs) in NMS securities since 2005, TABB Group says ATS registrations have reached a near-term peak and estimates a net decrease of three ATSs in 2014, the industry’s first net decline since the SEC’s approval of Reg ATS.

The new research report, “US Equity Market Structure: ATS Matching Logic,” written by Sayena Mostowfi, a New York-based TABB senior research analyst, examines the major types of matching logics, including nuances within each and how market participants use them to achieve their goals. It uncovers the latest trends in matching logics and details technology characteristics of each ATS, including: order routing protocols; source of NBBO; average turnaround time; matching engine location; and cross-connects.

According to Mostowfi, staying up to speed with the matching logics being employed is no easy feat as the velocity of change is increasing and innovation is very much a matter of “the devil in the details.” “While keeping up with the changes would be easier if ATS operational filings were made public, our goal in this report is to create a level playing field of understanding among industry participants. As such, TABB is a strong advocate for further ATS transparency.”

The research draws directly from lengthy conversations with firms holding 35 ATS registrations, 30 of which have allowed TABB to publish attributed information about the following data: matching logics; counterparty blocking; price improvement; locked markets; minimum fills; conditional orders; cancel/replace; segregated pools/private sessions; Indications of Interest (IOIs); odd lots, and pre- and post-open.

On Tuesday, May 20, Mostowfi will moderate a panel on ATS matching logic at Equity Trading 2014: Efficiency and Disorder, a TabbFORUM annual equities conference in New York City.

The 17-page report with 16 exhibits is available for download by TABB Group Research Alliance Equity clients and qualified media. For a copy of its Executive Summary or more information, visit To purchase the report, write to [email protected].

About TABB Group

Based in New York and London, TABB Group is the research and consulting firm focused exclusively on capital markets, based on the interview-based, “first-person knowledge” research methodology developed by Larry Tabb.

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