What is an electronic communication network?
Electronic communication network, or ECN, is a computer -operated system that allows you to carry out shops outside the stock exchange. The Securities and Exchange Commission first authorized networks of this type for use in the United States at the end of the 90's. Today, traders around the world are widely used by electronic communication networks.
The Securities and Exchange Commission classifies an electronic communication network as what is called an alternative trading system or ATS. Within this ECN business system, the ECN does not allow internal cross -networks to operate by some brokers and sellers, as these systems process orders without sending orders to a public place. The focus of the electronic communication network is to allow direct access trading, not any type of automatic order customization with prices that are currently on the stock exchange, as is the case with the cross network.
For the most part, trading with electronic communication networkfocused on purchasing and sales and currency. Given the rapid pace, which is common in monetary trades and with business shares, ECN is able to initiate transaction activities in real time, which will order the same speed as it would be made directly on the stock exchange using traditional methods. This allows investors around the world to trade regardless of their local time zone. If the stock exchange is open and transactions, ECN can be used to produce investment trades.
Not everyone can trade on the electronic communication network. The investor must be an ECN subscriber, or have an account with a seller or broker registered in the network. At one place of order execution, the Access Terminal required, but today it is possible to access the network using proprietary network protocols if a secure internet connection is bound.
As with any type of business activity there are fees associated with the use of electronicKé communication network. Users can choose to go with what is known as the classic remuneration structure, which is simply a flat fee to anyone using the network. The second alternative, known as the structure of credit remuneration, includes accounting for liquidity remover fees by means of a system while offering a credit or discount to liquidity providers. Each ECN determines whether to offer one or both of these fees to their subscribers.