An ATS is regulated as a broker-dealer rather than as an exchange. It does not have to display quotes, does not set market-wide rules, and reports trades through a trade-reporting-facility.
Because it is lighter-touch, an ATS can pick its participants and design bespoke matching logic — minimum sizes, conditional interest, counterparty tiers. Each operator files a public Form ATS-N describing exactly how it works.
Example: a block-focused ATS may accept only orders of 10,000 shares or more and cross them at the midpoint-peg. A large institution gets size done without signalling, but no one outside sees a quote and the trade only reaches the consolidated-tape after it happens.
Related: dark-pool, crossing-network, trade-reporting-facility, exchange