DBOT ATS: Electronic Platform for OTC Securities Makes a Splash

Equities Research |

The long-awaited launch of Delaware Board of Trade's DBOT ATS, an alternative trading system for OTC stocks, has finally happened. Readers may recall the formation of DBOT ATS as a centralized, automated limit order book for matching orders on over-the-counter equity securities and unlisted ADRs of companies trading on foreign stock exchanges.

After missing several targeted start dates, it appears that DBOT ATS was launched in March. The press release showed a strategic investment by S.S. Lootah Holdings, the diversified Dubai-based industrial group. Initial funding for DBOT ATS came in the form of a $3 million loan from New Castle County in Delaware.

DBOT ATS's goal is to improve liquidity and transparency for this market, and we are encouraged that the platform is live.

According to its website, DBOT ATS seeks to list:

  • Small and microcap US based companies that are not currently eligible to be listed/traded on the national exchanges. Essentially small CAP firms between $20-50 million.
  • Internationally based companies that are listed on a recognized Foreign Exchange, that meet SEC standards – to be traded via ADRs (American Depository Receipts).
  • Companies qualified by REG A+ because of the provision of the JOBS Act. These are early stage ventures seeking access to capital; DBOT ATS will seek to establish a secondary market for trading these issues as well.

The platform features:

  • Anonymous order posting and routing, execution services with price protection and the opportunity for broker-dealers to receive a rebate.
  • DBOT ATS publishes its own top-of-book orders as an aggregate quote on OTC Markets.
  • Published quotes are price protected on the primary inter-dealer quotation system, OTC Markets.
  • Orders posted on DBOT ATS and published to OTC Markets pay a rebate to the broker if executed.
  • Executed orders on DBOT ATS offer broker-dealers 100% anonymity during the settlement process.
  • Global OTC (ARCA) is an additional routable venue to post orders for price protection and a secondary inter-dealer quotation system option available to subscribers.

Click here to learn more about Delaware Board of Trade's DBOT ATS.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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