Equity market structure in the US


Equity market structure in the United States
Stock trading in the United States is fragmented into a number of different venues that
fall into three main categories: 1) 12 national securities exchanges; 2) 44 ATSs,3 including
off-exchange visible trading venues (ECNs) and dark pools; and 3) various OTC systems,
including internal trading systems of firms. It is worth noting that trading in off-exchange
venues is not a new phenomenon. Already in 1990, 17% of the volume traded in shares that
were listed on the New York Stock Exchange (NYSE) took place in venues other than NYSE
itself.4 This share remained stable until 2005 when it started to successively increase. 

Figure 4.3, shows that in 2015 only 33% of the trade in NYSE-listed shares actually took
place on the three NYSE Group exchanges. The remaining two thirds of all trades were
carried out in other venues. Similarly, the three NASDAQ exchanges’ share of the total
trading in NASDAQ Stock Market listed firms was just 31% in 2015.
Out of the 18 national securities exchanges registered with the US SEC at the end of
2015, 12 exchanges traded equity securities in the United States. However, 10 of these
12 exchanges belong to one of three exchange groups (Intercontinental Exchange/New York
Stock Exchange [ICE/NYSE], NASDAQ and Bats Global Markets [BATS]).5 Figure 4.3 shows
how the trading volume in companies that are listed on NYSE and NASDAQ is distributed
among these three exchange groups and the only independent securities exchange, the
Chicago Stock Exchange (CHX). 

CHX share of trading volume was less than 1% in both NYSE
and NASDAQ-listed shares.
Figure 4.3 also shows the off-exchange trading in shares listed on NYSE and NASDAQ.
In 2015, 31% of all trading in NYSE-listed and 35% of all trading in NASDAQ-listed shares
took place in off-exchange venues.
In January 2014, the US SEC approved a rule that requires all broker-dealers that operate an
ATS to report the aggregate weekly trading information for each security to the Financial Industry
Regulatory Authority (FINRA). FINRA has made this information available since July 2014.
Figure 4.3. Market shares in the trading of NYSE and NASDAQ-listed shares
among trading venues in the United States, 2015
Note: Off-exchange volume includes ATS, internal trading systems of firms and other OTC trading that are reported to the FINRA. This is
primarily done through the two Trade Reporting Facilities (TRFs) operated by the two exchanges or through the Alternative Display
Facility (ADF) directly operated by FINRA.
Source: BATS Global Markets.
1 2 http://dx.doi.org/10.1787/888933362472
NYSE Listed NASDAQ Listed
As of 1 December 2015, there were 85 trading venues operating as ATSs.6 Of these,

 44 venues traded NMS stocks.7 Figure 4.4 displays the distribution of traded volume among
the different ATS venues based on data retrieved from FINRA. As seen in Figure 4.4, ATS
trading is quite concentrated to the five largest venues that trade NMS stocks, which
account for about half of the total ATS trading volume for both NASDAQ-listed and NYSE-listed
stocks. The two largest ATSs by trade share, Credit Suisse’s CrossFinder and UBS, account
for about 25% of the total.

5 and shows that 67% of all trading in shares listed on NYSE and NASDAQ was executed
on 11 national securities exchanges. The remaining 33% was executed on ATSs, internal
trading systems of firms and other OTC trading centres.
With respect to the second dimension of fragmentation, Figure 4.5 clearly shows that
the demarcation line for fragmentation between dark and lit trading is not necessarily
between exchange and off-exchange trading. The reason is that ATS venues can indeed be
lit, for example, in the form of an ECN venue while part of the exchange trading is actually
dark.8 However, ATSs in the form of lit ECNs play an insignificant role in terms of total
trading today. On the other hand, there is a significant portion of dark trading on regulated
exchanges, which is estimated to be 9% of total trading volume. This overlap between dark
trading volume across off-exchange trading venues and exchange trading is identified
in Figure 4.5. Adding the volume of dark trading in exchanges to the dark trading in
off-exchange trading venues (including ATS and non-ATS OTC volume) shows that about 42%
of the total trading volume in US equity markets in 2015 was in the form of dark trading

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