Electronic Communication Network (ECN)

An Electronic Communication Network (ECN) is a type of computerized trading system that automatically matches buy and sell orders for securities in financial markets. ECNs operate without a central exchange, connecting major brokerages and individual traders directly, allowing them to trade outside traditional market hours. ECNs increase market transparency, reduce transaction costs, and provide more efficient trading by allowing investors to bypass traditional intermediaries.

Example

ECNs like Instinet and Archipelago connect traders directly, allowing them to place orders electronically without going through traditional exchanges.