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Electronic Communication Networks (ECNs)

Sept. 25, 2013

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:

The Office of Investor Education and Advocacy has provided this information as a service to investors.  It is neither a legal interpretation nor a statement of SEC policy.  If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.

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