Increasing penetration of distributed energy resources in the distribution network (DN) is threatening safe operation of the DN

which necessitates setup of the ancillary service market in the DN. In the ancillary service market

distribution system operator (DSO) is responsible for safety of the DN by procuring available capacities of aggregators. Unlike existing studies

this paper proposes a novel market mechanism composed of two parts: choice rule and payment rule. The proposed choice rule simultaneously considers social welfare and fairness

encouraging risk-averse aggregators to participate in the ancillary service market. It is then formulated as a linear programming problem

and a distributed solution using the multi-cut Benders decomposition is presented. Moreover

successful implementation of the choice rule depends on each aggregator's truthful adoption of private parameters. Therefore

a payment rule is also designed

which is proved to possess two properties: incentive compatibility and individual rationality. Simulation results demonstrate effectiveness of the proposed choice rule on improving fairness and verify properties of the payment rule.