We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is an Electronic Communication Network?

Malcolm Tatum
By
Updated May 17, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

An electronic communication network, or ECN, is a computer-operated system that makes it possible to conduct trades outside of a stock exchange. The Securities and Exchange Commission first authorized networks of this type for use in the United States in the late 1990’s. Today, electronic communication networks are used extensively by traders all over the world.

The Securities and Exchange Commission classifies the electronic communication network as what is known as an alternative trading system or ATS. As part of this family of trading systems, the ECN does not allow access by the internal crossing networks operated by some brokers and dealer, since these systems process orders without actually sending the orders to a public venue. The focus of an electronic communication network is to allow direct access trading, not any type of automatic matching of orders with the prices currently on an exchange, as is the case with a crossing network.

For the most part, trading on an electronic communication network is focused on buying and selling stocks and currencies. Because of the fast pace that is common with currency trades as well as with trading stocks, the ECN is capable of initiating real time transaction activity that will execute the order with the same speed it would be executed by trading directly on the exchange using more traditional methods. This effectively makes it possible for investors all over the world to trade without regard to their local time zone. As long as the exchange is open and accepting transactions, it is possible to use the ECN to make investment trades.

Not everyone can trade on an electronic communication network. The investor must either be a subscriber to the ECN, or have an established account with a dealer or broker who is registered with the network. At one point, executing orders required a customized terminal access, but today the network can be accessed using proprietary network protocols as long as a secure Internet connection is established.

As with any type of trading activity, there are fees connected with the use of an electronic communication network. Users may choose to go with what is known as a classic pay structure, which is simply a flat charge to anyone using the network. The second alternative, known as a credit pay structure, involves charging a fee to liquidity removers using the system while offering a credit or rebate to liquidity providers. Each ECN determines whether to offer one or both of these fee structures to their subscribers.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including WiseGeek, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.