Equity traders looking to stay ahead of the curve—and the competition—are turning to alternative trading systems (ATSs) that are experimenting with new innovative features to improve trading outcomes.

About 16% of U.S. equity volumes overall are currently executed via ATS and could be accounting for at least half of the liquidity needs for institutional traders. Traders are attracted to these systems for their potential ability to deliver high-quality execution and enhanced liquidity with less information leakage and impact.

Three innovative ATSs, IntelligentCross, OneChronos and PureStream, are winning over the hearts of market-savvy buy- and sell-side firms. One of the main benefits of these providers is their ability to innovate.

“ATSs are incubators in a market structure laboratory, with less stringent rule sets than exchanges,” says Jesse Forster, Senior Analyst at Coalition Greenwich Market Structure & Technology and author of The Innovators: How and Why Alternative Trading Systems Succeed.

Unlike traditional trading venues, ATSs introduce an element of unpredictability in their outcomes, making them less attractive to ultra-low-latency strategies and reducing market impact. This is a feature, not a bug. As both the buy side and sell side seek out the benefits these new platforms can deliver, forward-thinking brokers are embracing these ATSs, recognizing the advantage of having multiple venues to experiment with.

“The ATSs gaining traction today have sparked a hunger for further innovation, paving the way for the next generation of groundbreaking trading venues to emerge,” says Jesse Forster.

The Innovators: How and Why Alternative Trading Systems Succeed examines current usage rates and trader interest in ATS, analyzes buy- and sell-side perspectives of current ATS offerings and looks at what might come next in ATS innovation.

Source: Coalition Greenwich