ATS (Alternative Trading Systems) Integrations

This section explores the role Alternative Trading Systems play on Plume Network, and how they enable compliant trading of tokenized securities.

Alternative Trading Systems (ATS)

ATSs are regulatory-compliant and FINRA registered trading venues for tokenized securities. They match buyers in both primary offerings and secondary market trading. In the US, they are a required partner for institutional asset issuers. Unlike traditional exchanges, ATSs do not have the same regulatory burdens, making them more flexible and accessible for various types of securities trading.

Two Types of Settlement Process

FINRA registered broker-dealers can apply for an ATS license. Those who elect to use the non-custodial approach (meaning they don't take possession customer assets) are allowed to let qualified customers use their APIs for trading. They typically use one of these settlement types.

Four-Step Process:

  1. Order Submission: The buyer and seller send their orders to the ATS.

  2. Order Matching: The ATS matches these orders.

  3. Trade Notification: The ATS notifies both parties of the match.

  4. Settlement: Parties settle the transaction directly or through their custodians.

Three-Step Process:

  1. Order and Settlement Preparation: Buyers and sellers submit orders to the ATS and simultaneously instruct their custodians to be ready to settle matched trades.

  2. Order Matching: The ATS matches the orders.

  3. Notification and Settlement Execution: The ATS informs all parties and their custodians of the match, triggering custodians to execute the trade based on prior instructions.

Both of these settlement schemes benefit from using the blockchain.

ATS Providers on Plume

Several registered Alternative Trading Systems have signed agreements and are aiming to support institutional asset issuers and investors on Plume Network.

  • Texture Capital: A non-custodial broker dealer with an API-first Alternative Trading System. Supports primary offerings and secondary market trading in the US.

  • tZERO: A leader in blockchain innovation for capital markets, tZERO offers an ATS for private companies and other issuers to trade their digital securities.

  • Openfinance: Provides trading and settlement services for tokenized securities. Offers a compliant platform for secondary market trading, increasing liquidity and accessibility for alternative assets.

  • Archax: EU regulated trading venue designed for institutional investors. Provides a regulated, secure, and efficient environment for digital securities.

Integrating with ATS Providers

  1. Selecting an ATS Provider: Choose a provider based on your specific needs, considering factors like asset types, trading volume, and regulatory compliance.

  2. Integration Process: Work with the ATS provider to integrate their trading system into your Plume Network operations. This often involves API integration for seamless trading experience.

  3. Compliance and Legal Considerations: Ensure that the ATS provider adheres to all relevant securities regulations and legal requirements.

  4. Educate Your Users: Provide resources and information to help users understand the workings of secondary trading and the role of ATS in the ecosystem.

By understanding and utilizing ATS for secondary trading, participants on the Plume Network can engage in a broader range of trading activities, benefiting from increased liquidity and market accessibility.

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