This episode is also available as a blog post: https://10leaves.ae/publications/blockchain-crypto/setting-up-alternate-trading-system-ats-in-the-difc

What is an Alternative Trading System?

An ATS is a platform that is more loosely regulated than an exchange. It is used to match large orders mainly from institutional clients, and hence work as broker-dealers rather than exchange houses. They are also referred to as Multilateral Trading Facilities in Europe.

The DFSA recognizes two types of ATS platforms – Multilateral Trading Facilities that operate on non-discretionary rules, and Organised Trading Facilities that operate on discretionary rules.

MTF operators allow for trading of a wide variety of equity and non-equity securities, including shares, warrants, options, derivatives, futures, CFDs, fund units and crypto assets. Contracts between buyers and sellers are formed according to a set of transparent rules that do not discriminate between members or their clients (non-discretionary basis).

Can an ATS operator conduct a Security Token Offering (STO)?

Security Tokens can be listed and traded on DFSA-regulated exchanges or Alternate Trading Systems, with both facilities being able to host initial token offerings and secondary trading.

The current admission criteria will also be applied to such Security Tokens, in a way that tokens trading elsewhere will also be tradable in such facilities.

In cases where the ATS is exclusively dedicated to trading only in Security Tokens, it would be labeled a Security Token Market (or Derivative Token Market).