Definition of ECN / Electronic Communication Network
Electronic Communication Networks, or ECNs, operate independently of FINRA. ECNs display and execute third party orders and are allowed access to the NASDAQ Market Center Execution System. ECNs are widely used by broker dealers, market makers and institutional investors to display and execute orders. ECNs
Applying "ECN / Electronic Communication Network" to Securities Exams:
ECNs are registered as broker dealers with the SEC and have their quotes included in the NASDAQ quote system. ECNs are not required to maintain a two-sided market like a market maker and ECNs do not take positions securities. ECN’s will typically charge access fess to its subscribers and for incoming orders that execute against its displayed quotations. Many ECNs will offer rebates to subscribers who provide liquidity by entering non-marketable limit orders that are displayed by the ECN. There are two ways that the ECN may participate in the market. The ECN may be a full participation ECN or it may be an order delivery ECN.