Electronic Communication Network - ECN

(Electronic Communications Network) A computerized, private financial trading system. Terra Nova Trading www.terranovatrading.com) and Instinet www.instinet.com) are examples.

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An electronic system that attempts to eliminate the role of a third party in the execution of orders entered by an exchange market maker or an over-the-counter market maker, and permits such orders to be entirely or partly executed.

Investopedia Says:
An ECN connects major brokerages and individual traders so that they can trade directly between themselves without having to go through a middleman.

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Any one of a number of electronic systems that displays and matches orders placed on exchanges and over-the-counter by market makers and traders. A prominent example is Inet, a business of Instinet Group Incorporated. Inet represents the consolidation of the order flow of the former Instinet ECN and former Island ECN, which was purchased mid-2002, giving it some 26% of trading in NASDAQ stocks. In 2005, Nasdaq announced it was buying Instinet Group, and will incorporate Inet into its operations. See also National Market System; Super Montage.