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How does an Electronic Communication Network work?

ECNs are making internet trading faster, cheaper, and more efficient. In this post, we will discuss ECNs, ECN brokers, order matching systems, routing protocols, and their benefits.
We’ll examine the ECN’s order-to-execution process.
This post will explain how ECNs make trading more efficient and cost-effective.

We will explore the characteristics of an ECN

  • The advantages of using an ECN broker,
  • The different components of an ECN
  • The order-matching system
  • Routing protocols
  • ECN brokers.

What is an ECN?

ECNs allow financial market participants to exchange securities electronically.
It is a decentralized network of banks, brokers, and other market participants that connects securities buyers and sellers on a secure online platform.
It makes trading stocks, bonds, ETFs, commodities, and derivatives easy and affordable.

ECN brokers connect security and financial instrument buyers and sellers.
The ECN broker rapidly searches various market makers and liquidity providers for the best price on a security order.
The ECN broker will execute the transaction and provide the security at the best price.

ECNs let buyers and sellers trade without being impacted by other market players. Buyers and sellers get comprehensive market data in real time. It also encourages liquidity suppliers to compete, improving buyer prices and seller liquidity.

ECNs offer a secure, efficient, and cost-effective environment for securities trading, making them increasingly popular. ECNs are great for traders and investors seeking high returns because to their cheap transaction costs.

What are the Advantages of ECNs?

ECNs offer speed, privacy, and transparency.

Brokers use ECNs to discreetly match securities buyers and sellers. Investors choose ECNs over other order-routing systems because to their many benefits.

ECNs execute orders quickly, which is their main benefit. ECNs promptly execute orders and locate the optimal security price. Compared to other order-routing systems, this is faster.

Investors profit from ECNs’ confidentiality. ECNs let investors place orders anonymously. Investors can operate more discreetly, decreasing the chance of their order affecting the market.

ECNs are fast, private, and transparent. ECN order books show all orders. Investors can see real-time securities pricing and make better judgments.

ECNs’ speed, anonymity, and transparency are attracting investors.

How Does an ECN Work?

ECN brokers electronically match securities purchase and sell orders using a computer system. ECN brokers let investors trade directly without an intermediary. This reduces trading expenses and improves efficiency.

ECNs aggregate orders from institutional investors and retail traders. The ECN broker’s order-matching engine receives the orders. This technology matches orders and makes trading securities efficient and transparent.

ECN brokers execute transactions faster. ECN brokers match orders, so traders don’t have to wait. In volatile markets with fluctuating pricing, this is beneficial.

ECN brokers carry risks. Market liquidity may be low. ECN market pricing may be more volatile.

Since the ECN broker system is new, the market may lack experience and accurate information.

Recommended ECN Brokers

Choosing the correct broker for trading is critical to your trading journey, there are many factors you should take into consideration specifically for ECN trading before settling with the broker you may be trading with or when switching to a new choice broker which is best suited to your needs and factors which are important to you personally.

Get access to deep liquidity and the latest trading technology with an ECN broker.
Benefit from competitive spreads, fast execution and advanced order types with ECN. Find the right ECN broker for you today!

Broker

Regulators

Max. Leverage

Spreads

Trading Acc.

Instruments

Connect

FP Markets 

ASIC, CySEC

Up to 1:500*

From 0.0 pips

Broker Type:
STP | ECN | DMA 2 Accounts

Forex, Indices,
Commodities, 
Metals, Energies,
Shares, ETFs Crypto, Bonds

Eightcap

ASIC, VFSC

 Up to 1:500 

From 0.0 pips

Broker Type:
STP | ECN
 2 Accounts

Forex, Indices,
Commodities, 
Shares, Crypto

IC Markets

AFSL, ASIC, CySEC, FSA

Up to 1:500

From 0 pips

Broker Type:
ECN
6 Accounts

Forex, Indices,
Commodities, 
Metals, Energies,
Shares, Crypto

Axi 


ASIC, FCA, DFSA, FSC

Up to 1:500

From 0 - 0.4 pips

Broker Type:
STP | ECN
 3 Accounts

Forex, Indices,
Commodities, 
Metals, Energies,
Shares, Crypto

InstaForex

BVI FSC

Up to 1:1000

From 0 pips

Broker Type:
MM | Binary
 6 Accounts

Forex, Indices,
Commodities,
Metals, Energies, Shares, Crypto

NordFX

VFSC

Up to 1:1000

Floating spread from 0.9 pips

Broker Type:
STP | ECN
4 Accounts

Forex, Indices,
Commodities, 
Shares, Crypto

FXOpen 

ASIC, FCA

Up to 1:500*

Floating spread from 0 pips

Broker Type:
STP | ECN
 6 Accounts

Forex, Indices,
Commodities, 

Metals, Energies,

Shares, Crypto

Vantagemarkets

CIMA, ASIC, FCA

Up to 1:500*

From 0.4 pips

Broker Type:
STP | ECN
4 Accounts

Forex, Indices,
Commodities, 

Metals, Energies,

Shares, Crypto

RoboForex

FSC

Up to 1:2000

From 0.0 pips

Broker Type:
MM | STP | ECN
5 Accounts

Forex, Indices,
Commodities, 
Metals, Energies,
ETFs, Shares, Crypto

Fxview

CySEC, FSCA  and FSC

Up to 1:500

From 0.0 pips

Broker Type:
Raw | Zero | Premium
3 Accounts

Forex, Indices,
Commodities, 
Metals, Energies,
Shares, Crypto

FBS

CySEC, FSC, FSCA, ASIC

Up to 1:3000 

From 1 pip

Broker Type:
STP | ECN
 6 Accounts

Forex, Indices,
Commodities, 
Metals, Energies,
Shares, Crypto

Blackbull
Markets

FMA, FSA

Up to 1:500

From 0.0 pips

Broker Type:
STP | ECN

6 Accounts

Forex, Indices,
Commodities, 
Metals, Energies,
Shares, Crypto

  Review  


Blueberry Markets

ASIC, SCB

Up to 1:500

From 0.0 pips

Broker Type:
ECN | MM
2 Accounts 

Forex, Indices,
Commodities,
Shares, Crypto

  Review  


VALUTRADES

FCA, VFSC
CIMA, ASIC

Up to 1:500

From 0.0 pips

Broker Type:
ECN | MM
4 Accounts 

Forex, Indices,
Commodities,
Shares, Crypto

  Review  


FXGT

SFSA, FSCA, CySec*

Up to 1:500

From 0.0 pips

Broker Type:
STP | ECN

6 Accounts

Forex, Indices,
Commodities,
Shares, Crypto

  Review  


SVGFSA, FSC, FSA

Up to 1:500

From 0.0 pips

Broker Type:

STP | ECN 

3 Accounts

Forex, Indices,
Commodities,
Shares, Crypto

Exness

FCA, CySEC, FSA, CBCS, FSC, FSCA

Up to 1:3000

From 0.4 pip

Broker Type:
STP | ECN
 6 Accounts

Forex, Indices,
Commodities, 
Metals, Energies,
Shares, Crypto

  Review  


FINMA 

Up to 1:100

From 0.1 pip

Broker Type:
STP | ECN
 7 Accounts

Forex, Indices,
Commodities, 
Metals, Energies,
Shares, Crypto

Order Matching System

ECNs match financial instrument buy and sell orders automatically. ECNs connect buyers and sellers directly. Large financial institutions, brokers, and trading organizations use ECN.

The order matching mechanism, the most common ECN, matches buy and sell orders. Sell orders match buy orders and vice versa.

The ECN matches orders after checking the best price. The ECN ensures that the transaction meets financial institution restrictions (e.g., minimum price amount).

After matching orders, the ECN sends each side the trade’s amount, price, and securities. Parties can settle accounts using this information.

The ECN also provides market liquidity. The ECN connects buyers and sellers, ensuring market liquidity. This stabilizes pricing and reduces volatility.

Routing and Execution Protocols

ECNs match buy and sell orders to give clients the optimum execution. ECNs manage market access and order handling via routing and execution protocols to route and execute orders efficiently and cost-effectively.

ECN brokers create order routing and execution protocols. ECNs can link to exchanges and other liquidity sources and execute orders automatically using these protocols.
ECNs may route orders to exchanges, other ECNs, or brokers’ proprietary trading desks.

ECN routing protocols automate order routing. Different ECN protocols route orders differently. One protocol routes orders to the best pricing, while another routes them to the lowest price on the best venue.

ECN protocols fill orders as well as route them. Execution protocols determine how, when, and under what conditions an order is filled. An execution protocol may require an order to be filled within a specified timeframe or price.

Finally, ECN protocols allow order cancellation or modification. Traders can rapidly amend or cancel unwanted orders. In busy markets, where prices can change fast and unexpectedly, canceling or changing orders is crucial.

ECN Brokers

ECN brokers have access to the ECN, a network of banks and financial institutions that allows direct trading. ECNs give traders direct market access and competitive bids and offers.

ECN brokers enable traders to access the latest market prices and execute orders quickly by providing network access.

Direct ECN access reduces slippage, improving trading performance.

ECN brokers also utilize modern technology to acquire market prices from many sources, including dark pools, which major traders use to bypass the main market.

This technology gives traders access to real-time market data for trend analysis. ECN brokers are suitable for traders who desire the latest market pricing and fast, reliable trading.

Now you can Start Trading with an ECN Trading Brokers

Choosing the right broker for ECN trading is crucial to your trading journey. There are many factors to consider before settling with your current broker or switching to a broker that better suits your needs and priorities.

These are the brokers we have reviewed:

ECN Execution Recommended Brokers

FP Markets

Since 2005

Offices:

Australia, Cyprus, South Africa

FP Markets

Minimum Deposit:50 USD 
Account currency: USD, EUR, GBP
Leverage:1:500*
Accounts:Raw, Standard, Pro, IRESS account
Instruments Offered: Forex, Indices, Commodities, Metals, Energies, Shares, ETFs Crypto, Bonds
Trading Platform:MT4, MT5, cTrader, WebTrader, Mobile App,  Superior VPS solutions
Regulation:ASIC, CySEC, FSCA
Spreads:Raw:  from 0.0 pips,
Standard: from 1.0 pip   
Visit BrokerBroker Review

FXOpen

Since: 2005

Offices:

UK, Australia, Cyprus, Nevis 

  FXOpen

Minimum Deposit:$15
Account currency:GBP, USD, EUR
Leverage:Up to 1:500
Accounts:Micro, STP, ECN, Crypto, Demo
Instruments Offered:Forex, Indices, Commodities, Metals, Energies, Shares, Cryptocurrencies
Trading Platform: MT4,   MT5*, TickTrader*  Free Forex VPS Hosting
Regulation:ASIC, FCA
SpreadsMicro: Floating Spread
STP: Tight Spreads
ECN: Raw Spreads
Crypto: Tight Spreads
Visit BrokerBroker Review

InstaForex

Since: 2007

Offices:

 British Virgin Isles

InstaForex

Minimum Deposit:From $1
Account currency:EUR, USD
Leverage:From 1:1 up to 1:1000
Accounts:Demo, Insta.Standard, Insta.Eurica, Cent.Standard, Cent.Eurica, PAMM
Instruments Offered:
Forex, Indices, Futures, Options, Commodities, Metals, Energies, Shares, Cryptocurrencies
Trading Platform:МТ4, МТ5, InstaTrader, WebTrader, Multiterminal, Mobile Trading, VPS hosting
Regulation:BVI FSC 
Spreads:0 pips: Insta.Eurica and Cent.Eurica;
3–7 pips: Insta.Standard and Cent.Standard
Visit BrokerBroker Review

EightCap

Since: 2009

Offices:

Australia, Vanuatu

EIGHTCAP

Minimum Deposit:$100
Account currency:AUD, USD, GBP, NZD, SGD, EUR
Leverage:1:30 for Australian clients
1:500 for Non-AU clients
Accounts:Standard Account, Raw Account
Instruments Offered:
Forex, Indices, Commodities, Metals, Energies, Shares, Cryptocurrencies
Trading Platform:MT4, MT5, Mobile, VPS hosting
Regulation:ASIC, VFSC
Spreads:From 0.0 pips
Visit BrokerBroker Review

IC Markets

Since: 2007

Offices:

Australia, Cyprus, Seychelles

IC MARKETS

Minimum Deposit:200 US dollars
Account currency:USD, AUD, GBP, CHF, JPY, NZD, SGD, CAD, HKD, BTC
Leverage:From 1:1 to 1:500
Accounts:Demo, Raw Spread, cTrader, Standard, Islamic, PAMM
Instruments Offered:Forex, Indices, Commodities, Metals, Energies, Shares, Bonds Cryptocurrencies
Trading Platform:cTrader, MT4, MT5, WebTrader, VPS hosting
Regulation:AFSL, ASIC, CySEC, FSA
SpreadsFrom 0
Visit BrokerBroker Review

RoboForex

Since: 2009

Offices:

Belize

RoboForex

Minimum Deposit:$10
Account currency:USD, EUR, and GOLD
Leverage:1:2000 
Accounts:ECN, Pro, Prime, ProCent, R Stocks Trader
Instruments Offered:Forex, Indices, Commodities, Metals, Energies, Shares, Cryptocurrencies, Futures
Trading Platform:MT4, MT5, WebTrader, Free VPS-Server, R StocksTrader
Regulation:FSC 
Spreads:From 0.0 pips
Visit BrokerBroker Review

Conclusion

ECNs give traders many benefits, including lower transaction costs and faster execution times.

Direct access to ECN markets requires specialist knowledge, but the benefits outweigh the cons.
ECN brokers let traders access profitable marketplaces and trade more confidently and effectively. New and seasoned traders can benefit from ECN trading.

 

 

+ posts

Cory has been a professional trader since 2005, and holds a Chartered Market Technician (CMT) designation. He has been widely published, writing for Technical Analysis of Stock & Commodities magazine, Investopedia, Forbes, Benzinga, and others.