1. Electronic Trading: Introduction
  2. Electronic Trading: The Exchanges
  3. Electronic Trading: The Role of a Designated Market Maker
  4. Electronic Trading: The Role of a Market Maker
  5. Electronic Trading: Super Display Book (Formerly SuperDOT)
  6. Electronic Trading: Electronic Communications Networks (ECNs)
  7. Electronic Trading: Small Order Execution System (SOES)
  8. Electronic Trading: Level I, II and III Access
  9. Electronic Trading: Conclusion

Electronic Communications Networks (ECNs) are a type of alternative trading system (ATS) that electronically connect buyers and sellers so they can trade stocks, currencies and other financial instrument directly with one another. Unlike dark pools, which are another type of ATS that keep orders private, ECNs display orders publicly in the consolidated quote stream (ECNs are known as light pool markets). As ATSs, ECNs must be registered with the Securities and Exchange Commission (SEC) as broker-dealers and must also be FINRA members.

Benefit of ECNs

The primary benefit of ECNs is that they eliminate the need for a third party to facilitate trades. ECNs help investors and traders participate in after-hours and foreign currency trading, and have made it easier for people living in different countries to trade with each other. ECN transactions are automatic and immediate: When the price of a buy order and the price of a sell order intersect on the ECN, a trade execution occurs.

Investors must be ECN subscribers to place orders directly with an ECN. In general, only broker-dealers and certain institutional traders can become ECN subscribers. As such, individual investors and traders need an account with a broker-dealer subscriber to place ECN orders. For an up-to-date list of ATSs, including ECNs, visit the SEC’s website.  

You may be able to direct your trade to a particular exchange, market maker or ECN. Some brokers allow you to direct orders in Nasdaq stocks to the market maker or ECN of your choosing by making a selection within the order entry ticket. Otherwise, contact your broker to find out how to do so. 


Electronic Trading: Small Order Execution System (SOES)
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