NASDAQ ECNs
Electronic Communication Network:
The NASDAQ ECNs or the electronic communications network is a financial term used for a computer system that helps in the trading of products related to the financial markets. The ECNs are used to operate in stocks from outside the stock exchanges. The main products that are traded on the ECNs are the currencies and the stocks. The ECNs were formed in the year 1998 by the authorization of the securities and exchange commission of the United States of America, for the facilitation of the forecasting process. The investors did not have to go to the portfolio mangers for the forecasting process due to the ECNs. The transaction costs are lowered considerably because of the electronic communication networks. This increases the competition levels among the traders. It gives the clients access to their order books and also, helps in offering orders that match outside the exchange hours.
Functioning of the ECNs:
The person interested in trading with the help of an ECN has to be a subscriber in the first place. The subscribers of the ECN can enter their orders by a computer terminal or the networking protocols. The electronic communication network then matches the sell order with a similar count buy order and executes the deal. The ECNs have features such as unmatched orders that are posted on the system for the convenience of the subscribers, negotiations, pegging, and reserve size. The clients also have access to the entire book of the ECN. This book contains the data concerning the functioning of the markets which facilitates the forecasting process. |
