SEC Proposes Enhanced Disclosure and Oversight Rules for Alternative Trading Systems

3 December 2015
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Key takeaways

  • On November 18, 2015, the Securities and Exchange Commission ( the “SEC” ) announced proposed rules (the “Proposed Rules”) to enhance operational transparency and regulatory oversight of alternative trading systems that trade stocks listed on a national securities exchange (“NMS ATSs”).
  • The Proposed Rules would (i) require enhanced disclosures for NMS ATSs on new Form ATS-N; (ii) provide the process for broker-dealer operators to make Form ATS-N filings; (iii) provide for the SEC to declare such filings "effective" or "ineffective," and to limit, suspend or revoke the ATS's permission to operate; and (iv) require NMS ATSs to develop written safeguards and procedures with respect to confidential information.
  • If the Proposed Rules are adopted, NMS ATSs can expect increased scrutiny from not only the SEC and FINRA, but also market participants that will have greater information about their activities.