Electronic Communication Network (ECN) is an electronic trading platform that provides direct access to various market participants, such as individual traders, institutional investors, brokers, and other financial institutions. ECN creates a virtual environment where participants can place their buy or sell orders directly in the market.
Key features of ECN include:
Direct Access: ECN participants can interact with each other, executing trades directly without broker intermediation. This ensures faster execution and transaction transparency.
Liquidity: ECN aggregates liquidity from various sources, including banks, financial institutions, and other market participants, promoting deeper liquidity and reduced spreads.
Transparency: ECN provides participants with information on the best bid and ask prices, as well as trade volumes at different price levels, ensuring a high level of market transparency.
Continuous Trading: ECN typically operates 24/7, allowing participants to trade at any time when the market is open.
Minimal Spread: Thanks to price aggregation from different market participants, ECN can offer lower spreads compared to traditional brokers.
No Conflict of Interest: ECN is not a counterparty to trades, eliminating conflicts of interest between traders and the platform.
Ability to Place Limit and Stop Orders: Participants can place not only market orders but also limit and stop orders, providing more flexibility in managing trading strategies.
