Electronic Communication Networks (ECNs)
Electronic Communications Networks (ECNs) are a type of alternative trading system (ATS) that trade listed stocks and other exchange-traded products. Unlike dark pools, another type of ATS, ECNs display order in the consolidated quote stream. As ATSs, ECNs are required to register with the Commission as broker-dealers and are also members of FINRA.
To place orders directly with an ECN, a person must be an ECN subscribers. Typically, only broker-dealers and certain institutional traders are permitted to become ECN subscribers. Individual investors must have an account with a broker-dealer subscriber to place an order on an ECN. An execution occurs when the price of a buy order and the price of a sell order intersect on the ECN.
To learn more about the basics of trade execution - including order routing, payment-for-order-flow, and internalization - you should read Trade Execution: What Every Investor Should Know. For a current list of ATSs (including all ECNs), go here: http://www.sec.gov/foia/docs/atslist.htm.