ECN (Electronic Communication Network):
Principle: ECN is an electronic network that automatically connects traders and provides direct access to liquidity. Trades can be executed at the best available market prices, and traders have direct access to the order book indicating the best prices.
Example: A trader places a buy/sell order, and the ECN automatically matches it with the best available prices in the network.
MTF (Multilateral Trading Facility):
Principle: MTF is a platform where traders can execute trades among themselves. It facilitates decentralized trading and creates multiple points of liquidity.
Example: A trader places an order, and MTF connects it with other participants, providing liquidity through the platform.
STP (Straight Through Processing):
Principle: STP allows trades to go from initiation to execution without human intervention. Orders are automatically routed through the system without manual involvement.
Example: A trader places an order, which goes through the STP system, automatically connecting with relevant counterparties for execution.
Other execution principles may include:
Retail Execution: Trades are executed through a broker directly with the trader.
Auction Execution: Trades are formed based on an auction method, where prices are determined based on bids and asks.
