What Is an Alternative Trading System (ATS)?

What Is an Alternative Trading System?

An Alternative Trading System (ATS) is a trading venue that is registered with the Securities and Exchange Commission (SEC) to match buyers and sellers of securities. Unlike a national securities exchange such as the New York Stock Exchange or Nasdaq, an ATS operates under a different regulatory framework, specifically SEC Regulation ATS, which provides flexibility while still maintaining significant Investor protections.

The GigaStar Secondary Market is an ATS operated by GigaStar Securities, a FINRA-member broker-dealer. It is the venue where Channel Revenue Tokens (CRTs) can be bought and sold between Investors starting March 16, 2026.

Understanding what an ATS is and how it works helps Investors set informed expectations about the Secondary Market's operations, protections, and limitations.

How an ATS Differs from a Stock Exchange

While both an ATS and a stock exchange serve the fundamental purpose of connecting buyers and sellers, there are meaningful structural and regulatory differences.

Registration and Oversight

A national securities exchange must register with the SEC under Section 6 of the Securities Exchange Act of 1934. This process involves meeting extensive requirements around governance, self-regulatory functions, and market surveillance. An ATS, by contrast, registers under Regulation ATS by filing Form ATS with the SEC. The ATS itself is not a self-regulatory organization; instead, it must be operated by a registered broker-dealer, which provides the regulatory umbrella.

Types of Securities Traded

Stock exchanges primarily list and trade equity securities (stocks) and related instruments from publicly traded companies. An ATS has more flexibility in the types of securities it can handle. This makes the ATS model well-suited for newer asset classes like Channel Revenue Tokens, which would not meet the listing requirements of a national exchange.

Market Participants

Stock exchanges are typically open to a broad range of participants, from individual retail Investors to large institutional traders. An ATS may serve a more focused participant base. In the case of GigaStar Securities, the ATS serves Investors who have opened and verified accounts specifically for CRT trading.

Transparency Requirements

National exchanges are subject to the National Market System (NMS) rules, which mandate specific transparency around quoting and trade reporting. ATS transparency requirements exist but differ in scope. The GigaStar Securities ATS will provide Investors with visibility into order book activity and recent transaction prices as required by regulation.

Self-Regulatory Functions

A stock exchange serves as a self-regulatory organization (SRO) responsible for writing and enforcing rules for its members. An ATS does not have SRO responsibilities. Instead, the broker-dealer operating the ATS is subject to oversight by FINRA, which acts as the SRO.

The Regulatory Framework

The ATS regulatory framework is built on several layers of rules and oversight designed to protect Investors and maintain market integrity.

SEC Regulation ATS

Adopted in 1998, Regulation ATS established the rules under which alternative trading systems operate. Key requirements include:

Form ATS filing: The operator must file Form ATS with the SEC, disclosing the system's operations, participants, and procedures. Any material changes must be reported via amendment.
Fair access: An ATS that reaches certain volume thresholds must provide fair access to its services, meaning it cannot unreasonably deny access to qualified participants.
System capacity and integrity: The ATS must have adequate systems and procedures to ensure operational capacity and security.
Record-keeping and reporting: Detailed records of orders, transactions, and system operations must be maintained and made available to regulators.

Broker-Dealer Registration

The entity operating an ATS must be a registered broker-dealer. GigaStar Securities is registered with the SEC as a broker-dealer and is a member of FINRA. This registration brings with it a comprehensive set of obligations:

Net capital requirements: The broker-dealer must maintain minimum levels of capital to ensure financial stability.
Customer protection rules: Client funds and securities must be handled according to SEC Rule 15c3-3, the Customer Protection Rule.
Books and records: Detailed records of transactions, communications, and account activity must be maintained.
Compliance infrastructure: A designated compliance officer and written supervisory procedures are required.

FINRA Oversight

As a FINRA member, GigaStar Securities is subject to:

Periodic examinations: FINRA conducts routine and cause-based examinations of broker-dealer operations.
Conduct rules: Rules governing fair dealing, communications with the public, and suitability apply.
Continuing education: Registered representatives must meet ongoing education requirements.
Dispute resolution: Investors have access to FINRA arbitration and mediation services.

Why GigaStar Uses the ATS Model

The ATS model is a deliberate choice that reflects both the nature of CRTs as securities and the practical requirements of building a secondary market for Creator Economy investments.

Regulatory Fit

CRTs are securities offered under Regulation Crowdfunding. The ATS framework provides a regulated venue for secondary trading of these securities without requiring the extensive listing standards of a national exchange, which CRTs are not designed to meet.

Operational Flexibility

An ATS can be tailored to the specific needs of the CRT market. This includes customized eligibility requirements (such as the 12-month holding period), trading hours that suit the participant base, and order types appropriate for the expected trading activity.

Investor Protection

While an ATS has different requirements than an exchange, the combination of SEC registration, broker-dealer operation, and FINRA oversight provides a strong protective framework. Investors benefit from regulated infrastructure without the overhead of a national exchange.

Scalability

The ATS model allows GigaStar Securities to start with the current CRT market and scale as the Creator Economy investment market grows. Additional features, securities, and participants can be added over time within the existing regulatory framework.

How Order Matching Works on an ATS

The GigaStar Securities ATS uses a price-time priority matching system, which is the standard approach used by most regulated trading venues.

Price Priority

Orders are ranked first by price. For buy orders, higher-priced orders have priority over lower-priced orders (a buyer willing to pay more goes first). For sell orders, lower-priced orders have priority (a seller willing to accept less goes first).

Time Priority

When multiple orders are at the same price, the order that was placed first has priority. This ensures fairness among participants offering the same price.

Matching Example

Consider a simplified scenario for a specific Creator's CRT:

Seller A places a sell order at $12.00 at 10:00 AM
Seller B places a sell order at $11.50 at 10:05 AM
Buyer C places a buy order at $11.50 at 10:10 AM

Buyer C's order matches with Seller B's order because Seller B has the lowest asking price ($11.50), which matches Buyer C's bid of $11.50. Seller A's order at $12.00 remains unfilled until a buyer meets that price.

Order Types

The specific order types available on the GigaStar Securities ATS (such as limit orders, market orders, or other variations) will be detailed in the trading documentation provided before launch.

Investor Protections Within an ATS

While an ATS differs from a stock exchange, the regulatory framework provides meaningful protections for Investors.

Confidentiality

The ATS must safeguard confidential trading information. Your order details, account information, and trading history are protected from unauthorized disclosure.

Fair Access

The ATS must provide access to qualified participants on fair and non-discriminatory terms. Eligibility rules must be clearly defined and consistently applied.

System Integrity

The ATS must maintain systems that are adequate for the expected volume of activity, with safeguards against system failures. Business continuity and disaster recovery procedures are required.

Regulatory Accountability

Both the SEC and FINRA have authority to examine the ATS's operations, investigate complaints, and take enforcement action if rules are violated. This creates accountability that exists throughout the life of the market.

Transparency

Investors have access to information about available orders and recent transaction prices, enabling informed decision-making. The specific level of transparency will comply with applicable regulatory requirements.

Key Takeaways

An Alternative Trading System (ATS) is an SEC-registered trading venue that matches buyers and sellers of securities outside of traditional stock exchanges.
The ATS is operated by a registered broker-dealer (GigaStar Securities) under FINRA oversight, providing multiple layers of regulatory protection.
Regulation ATS requires fair access, system integrity, confidentiality protections, and record-keeping, creating a structured framework for Investor protection.
The ATS model is well-suited for CRT trading because it provides regulatory compliance and operational flexibility without requiring national exchange listing standards.
Price-time priority order matching ensures transparent, rules-based trade execution.
While an ATS differs from a stock exchange, the combined oversight of the SEC and FINRA provides significant protections for Investors.

Frequently Asked Questions

Is an ATS the same as a stock exchange?

No. An ATS is a trading venue that matches buyers and sellers but is not registered as a national securities exchange. It operates under Regulation ATS rather than the exchange registration framework. This means different regulatory requirements and typically more flexibility in the types of securities traded and the participant base served.

Is the GigaStar ATS regulated by the SEC?

Yes. The GigaStar Securities ATS is registered with the SEC under Regulation ATS and is operated by a FINRA-member broker-dealer. This provides regulatory oversight and Investor protections including fair access requirements, confidentiality safeguards, and system integrity standards.

Can anyone trade on an ATS?

Access requirements vary by ATS. For the GigaStar Securities ATS, you need a verified broker-dealer account with GigaStar Securities. Selling also requires that CRTs have been held for a minimum of 12 months from the original purchase date. Buying is available to all verified account holders.

How does an ATS protect Investors?

An ATS must comply with SEC regulations including fair access requirements, confidentiality protections for trading information, record-keeping obligations, and reporting requirements. FINRA oversight of the broker-dealer adds an additional layer of regulatory protection, including periodic examinations and access to dispute resolution services.

This content is for educational purposes only and does not constitute investment advice. All investments involve risk, including the potential loss of your entire investment.