ECN (Electronic Communication Network)
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Definition
A market structure in which orders from multiple participants are matched without a central dealer. Characterized by tighter spreads and access to depth-of-book information.
ECN (Electronic Communication Network) in plain English
An ECN is a kind of electronic matchmaker that pairs up buy and sell orders from many traders directly, instead of routing everyone through a single middleman dealer who sets the price. Because buyers and sellers meet each other head-on, the gap between the best buy price and best sell price (the 'spread') is usually tighter, meaning you pay less to trade. It also lets you peek at the 'depth of book' — the stacked-up orders waiting above and below the current price — a bit like seeing the whole line at a ticket booth instead of just the person at the front. That extra visibility and lower cost is why many active traders prefer ECN-style access.
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