What Are Electronic Communication Networks (ECN)?
Today everyone who's involved in operations on the US stock market knows about ECNs. But there are not many people who really understand the basic principles of ECNs. This article explains the most important things about ECN systems. ECN is an automated computer trading system. The first ECN was INSTINET - a trading network established in 1969, long before the term ECN appeared in dictionaries. Most of the other ECNs (ISLAND, REDI, ARCHIPELAGO, BLOOMBERG, BRUT) have been built on the principles of the first ECN - INSTINET. New rules of order execution became a catalyst for the intensive ECN's development. New rules were approved after a long discussion in the investors' community, as well as in brokerage houses. The main goal of the new rules was the modification of the existing order execution algorithms so that every investor could get the best possible price by an order submission, whether he buys or sells shares. New rules were to terminate all market-makers' o