How you guys distinguish ECNs is Electronic Crossing networks or Electronic communications networks?
I find to distinguish it is pretty challenging.,…
Electronic Crossing networks
These are markets in which buy and sell orders are batched and crossed at a specific point in time. Crossing networks mainly serve institutional investors.
- Both buyers and sellers avoid the costs of dealer services.
- Traders avoid the effects a large order can have on execution prices (market impact).
- It prevents information leakage.
- Anonymity of traders is preserved.
- Commissions are paid but are typically low.
- Participants cannot be guaranteed that their trades will find an opposing match (execution uncertainty).
- Crossing networks provide no price discovery (the adjustment of prices to equilibrate supply and demand).
_ Electronic communications networks _
These are computer-based auctions that operate continuously within the day using a specified set of rules to execute orders. Electronic communications networks, such as Paris Bourse in France, are an example of automated auctions for equities.
In contrast to crossing networks, ECNs:
- Operate continuously.
- Provide price discovery.
Like crossing networks, ECNs:
- Provide anonymity.
- Are computer-based.