ECNs - A Revolutionary Advancement

The most powerful advancements to the NASDAQ system are the establishment and active participation of Electronic Communication Networks (ECNs) in the market. ECNs enable institutions, investors (small and big), and traders a means to electronically transmit their current best buying and selling prices. Very often, these prices are very competitive with market maker quotes. Recently, ECN quotes and not market makers' quotes, often establish the best prices.

The recent establishment of the ECNs has added a great milestone, if not a total revolution to the NASDAQ System. Although the NASDAQ may be a dealer-oriented market, the presence of ECNs as a means for ALL investors and traders to trade among each other without the help of market makers has created a NASDAQ that is more of a free market – with prices that reflect the true sentiment of the general public. Through the various ECNs and through the army of new stock traders, more fair market pricing is established.

ECN Facts:

  • ECN quotes are not "hidden". They can be seen on the Level II Screen.
  • Only the best ECN Bid or Ask is displayed on regular Level II screens.
  • Most DAT brokerages have direct subscriptions for several ECNs. Some DAT brokerages have all of them available. This allows for a much faster quote and execution.
  • When using a DAT platform, you may submit/post direct bids and offers through the direct ECN system only.
  • When using direct ECN access, you may specify a price and share size; these are limit orders. However, improvements in the ECN routing do allow market orders, reserve orders and even hidden orders. Check with your DAT brokerage to be sure of all possibilities.
  • Partial fills on the ECN system are common, especially in heavily traded stocks.

ECN List

ARCA Archipelago Trading Services Sponsors access for trading small-cap equity securities typically quoted on the Over-The-Counter-Bulletin-Board (OTCBB).
NSDQ NASDAQ Single Book The combination of what was once the NASDAQ’s Brut and INET.
BLTR Bloomberg Tradebook Global electronic agency brokerage for institutional investors, brokers and dealers.
DATA Track ECN Does not charge an access fee to those who take away liquidity through the NASDAQ. Displays Bids and Offers in the first tier with Market Makers.
FLOW Lavaflow A National Market System (NMS) market center coupled with Lava’s popular and well respected ColorBook smart router.
TRAC Track ECN Original pricing model from Track ECN known as the Rebate Model. Owned by Track Data Corporation, which has been providing fast, reliable and critical market data to the top traders in the world for over 20 years.

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