Alternative Trading System

The Alternative Trading Systems (ATS) and the Dark Pools are more and more in competition with the Nyse, Nasdaq and all other traditional ECns. The Dark Pools are liquidity pools set up by financial institutions that match trades anonymously.

Alternative Trading Systems (ATS), Electronic Communication Networks (ECN) and Executing Brokers (EB) play a major role in support of drawing out Dark Pool liquidity and enabling larger, more efficient trading blocks for institutional and other large scale investors. Firms are divising algorythms that poll ATS. This type of 'polling for liquidity' is often referred to as a 'liquidity ping', while an IOI (Indication of Interest) is understood to be sent by brokers or Dark Pools to buy side institutional clients. (source westwatercorp.com)

'Dark pools' are the nickname on the Street for electronic trading systems that do not display their orders.

There has been considerable growth in the number of firms offering an ATS solution. The leaders in this industry are: BATS, Pipeline, POSIT, NYFIX, Liquidnet, Nasdaq Fix, LeveL, OES.

In late 2007 these ATS accounted for approximatively 20 to 25% of total equity market trading across the US.

CrossFinder

Credit Suisse registered CrossFinder, its internal crossing network, as an alternative trading system (ATS) in early 2006 with the Securities and Exchange Commission (SEC). According to the advanced execution services (AES) at Credit Suisse, CrossFinder lines up all the little pieces, the 300- and 400-share size orders resulting from AES' different algorithmic trading tactics, and then crosses them between the spread. AES flows are kept separate from the bank's other flows. The brokerage firm does not have plans to open up the ATS to outside institutions. It seems not to be a precursor to turning it into an ECN. An ATS is a trading system that is under SEC oversight, whereas an ECN displays quotes.

List of the liquidity pools that CrossFinder will access:
ISE - ISE Midpoint - FLOW - ARCA - NASDAQ - BATS - EDGA - EDGX
BIDS - Instinet CBX - Instinet IDX - Lehman LCX - LeveL - Knight - knight Match - Knight Link
Lava DarkBook - Citadel - ATD - BNY Cross - BNY Vert X
CrossFinder - CrossFinder Retail Network - Fidelity CrossStream - NYFIX Millennium
Pulse Blockcross - Liquidnet H20

Goldman Sachs liquidity pool

The dark liquidity book of Goldman Sachs is a combination of GSAT, SIGMA and SIGMA X. With the introduction of resting orders, Goldman Sachs completes the third pillar of its liquidity strategy called Seek, Route, Cross.

Seek: GSAT liquidity-seeking algorithms, such as Sonar, which search within SIGMA X and other non-displayed pools.
Route: The SIGMA smart order router is used for direct market access and interaction with SIGMA X prior to accessing every public market.
Cross: The SIGMA X crossing network is comprised of a customer book and a host of external liquidity providers to create a pool of non-displayed liquidity. SIGMA X allows customers to take liquidity from non-displayed sources and benefit from the largest aggregated source of liquidity that flows through the firm's infrastructure.

More details about the Goldman Sachs liquidity pool.