The Next Generation of Alternative Trading Systems

The Next Generation of Alternative Trading Systems

By: Prime Trust
Published On: July 8th, 2021

Prime Trust’s financial infrastructure for ATS’ provides compliant custody and counterparty settlement at lower cost and quicker market launch as they create new liquidity services for private securities

Alternative trading systems (ATS) have long provided liquidity to capital markets. But now, a new generation of ATS platforms are enabling secondary markets for buying and selling tokenized (blockchain) securities. This will mean broader access to private securities, especially since tokenized securities make cross-custodian, and even direct ownership settlement possible, which in turn makes it easier to buy and sell previously illiquid assets, thus a new era of opportunities for investors. 

If you’re looking to launch or expand an ATS, this is what you need to know: 

The benefits of an ATS

What is an ATS? An alternative trading system is a broker-dealer that has filed under Reg ATS to provide an electronic marketplace to create an order book and match sellers with buyers. For example, institutional buyers may use an ATS to place a large block sell order, or retail investors may buy private real estate securities. ATS support transactions of private securities and can provide increased investor access to private investment opportunities. Unlike securities exchanges, ATS transactions, including order size and price, are not listed publicly on order books. 

While ATS may be less regulated than national exchanges like the Nasdaq, they are regulated by the SEC and FINRA and must be compliant with Bank Secrecy Act (BSA) obligations. 

Better infrastructure leads to a new generation of ATS

The next generation of ATS’ are “poised to fundamentally disrupt and transform capital markets as we know them,” said Prime Trust Founder and Chief Trust Officer, Scott Purcell

What makes this new generation of ATS so different? They are supported by sophisticated and efficient asset transfer infrastructure. This is made possible by infrastructure providers like Prime Trust that enable seamless custody, settlement, and trading for all types of assets, including tokenized securities. Our all-in-one financial infrastructure was designed to replace legacy financial “plumbing” that is slow and asset restrictive. 

The result: new private markets, liquidity for any kind of digital asset, and a less costly, more efficient method for transferring assets between custodians. 

The properties of tokenized securities as blockchain-based assets

The tokenization of securities has excited the financial industry because once digitally represented on the blockchain, the asset is now ready for easy and efficient transferring, tracking, and fractionalization. 

In cases where the asset is unique, like with real estate, the tokenized security can also be categorized as a non-fungible token (NFT). As a type of blockchain-based token, NFTs can be supported by this new generation of ATS. 

Launch or expand an ATS  

Whether you’re a blockchain platform seeking to launch an ATS, or an ATS seeking to add support for cryptocurrencies, Prime Trust’s APIs work for you. Our payment rails, settlement, trading, compliance, and custody APIs make it easy for you to expand your business.

Payment Rails 

Strong payment rails underpin an ATS, allowing customers to easily move their funds and assets onto and off of the platform. Our funds processing rails include ACH, credit/debit cards, and wires.

Settlement

Our instant T+0 settlement provides a fast and secure method of transfer between our large network of Prime Trust accounts including crypto exchanges, OTC desks, and asset managers. Fiat currency, private securities (stocks and bonds), Bitcoin, Ethereum, and Ethereum-based ERC20 and ERC721 tokens, and more, are sent in real time, any time. Funds from each trade, deposit, and withdrawal are available immediately. 

Trading and Liquidity

Prime Trust’s Trading API provides liquidity for crypto/fiat pairs, tokenized securities, and other alternative assets. We allow our custodial customers to trade digital assets and settle transactions without ever taking assets out of custody and work with multiple liquidity sources to provide 24x7 coverage.

Compliance

Prime Trust’s Compliance API uses cutting-edge technology and a broad set of data sources, including watchlists, fraud databases, and transaction monitoring systems to deliver effective fraud protection and financial crime detection at scale. Our automated and frictionless verification and review process onboards users in compliance with BSA (CIP/KYC/AML) requirements. 

Prime Trust is your one-stop shop for financial infrastructure. Get in touch to find out how we can support your trading platform.


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