ECN broker - what is it?

ECN - Electronic Communications Network (Electronic Trading Systems) is a term that came to market from the stock exchange, where such systems became an alternative to traditional trading floors (exchanges) at the end of the 20th century.

In fact, ECN is a common trading network for many market participants, client orders to which get in online mode. ECN market broker allows clients' orders to interact with orders of other brokers' clients. ECN broker provides the output of customer transactions on a global trading floor, where all market participants (banks, investment funds and traders) trade against each other through a price offer within the system.

ECN system participants interact within the system and receive the best offers for their orders currently available. All trade orders are overlapped between opposing parties in real time. Often by a broker-participant ECN a small fee is charged.

Sometimes STP (Straight Through Processing) brokers are seen as ECN brokers. ECN broker must allow clients to show the size of their orders in the system and allow other clients to see those orders. Trading with ECN brokerclients can often see all current orders and get the best possible execution for their trades.

ECN-trading has advantages over trading through brokers that are market makers, because the ECN brokers traders' transactions are not executed against the broker, but have their counterparty or in the form of another client ECN brokeror in the form of liquidity provided by a partner ECN broker. ECN brokers are not players against the client, which are market makers and brokerage companies of other types.

In the Russian market of service provision, ECN broker - is a rarity. Most companies that claim to be ESN brokersThe company does, in fact, provide such a service, but it applies to strictly defined trading accounts. Therefore, when opening an account with a company, expecting to trade with the ESN system, make sure that your trading account type falls under the ESN conditions.