Electronic Communication Network, a type of computerized trading system that automatically matches buy and sell orders for securities. It operates outside traditional stock exchanges to provide direct trading between investors.
Modern acronym formed in the 1990s from Electronic Communication Network, reflecting the digitization of financial markets. The term emerged as technology enabled direct electronic trading without traditional intermediaries like market makers.
ECNs revolutionized trading by operating 24/7 and often offering better prices than traditional exchanges, leading to the phenomenon of 'after-hours trading' that extends market activity beyond normal business hours. They've democratized trading by giving individual investors access to the same electronic systems previously available only to institutions.
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