ECN (Electronic Communication Network)

An ECN is an electronic system that matches buy and sell orders directly against each other, with no dealer in the middle. Orders rest in a visible book, and when a buy price crosses a sell price the ECN pairs them automatically — the model that Island and Archipelago pioneered in the late 1990s and that modern venues like NYSE Arca and Nasdaq inherited.

ECNs run on a maker-taker fee model. Post a limit order that adds liquidity and you may collect a rebate, commonly around $0.002 per share; hit an order that is already resting and you pay a take fee, capped by the SEC at $0.003 per share. Active traders route to specific ECNs partly to farm those rebates.

The practical draw is speed and transparency: your order is on the book for everyone to see and can execute in microseconds, including in premarket and after-hours sessions where ECNs handle most of the volume.