Electronic Communications Network (ECN)
What is it? A computer network that electronically matches buyers and sellers of securities. There are no brokers, market makers, or trading floor specialists involved in the transaction. ECNs operate during regular exchange trading hours, but they have attracted the most attention lately as avenues for after-hours trading. There are just a handful of ECNs, which are regulated as broker-dealers, but several have applied to the Securities and Exchange Commission to become stock exchanges. The largest and best-known ECN is Instinet. Trading via the ECNs can save money because of increased efficiency and access to world order flow. But investors should be careful because the spread between bid and ask prices are often greater than on the Nasdaq. And that can make trades more expensive.Added By: Alex
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