what is an ecn broker 
an ecn broker is a financial intermediary that uses electronic communications networks ecns to give clients direct access to other participants in equity and currency markets because an ecn broker consolidates price quotations from several market participants it can generally offer its clients tighter bid ask spreads than would be otherwise available to them an ecn broker only matches trades between other market participants it cannot trade against the client ecn spreads are often narrower than those used by conventional brokers but ecn brokers still charge clients a fixed commission per transaction understanding ecn brokersthe use of an ecn allows investors a way to trade outside traditional trading hours providing a mechanism for those who either can t be actively involved during normal market times or who prefer the flexibility offered by wider availability it also avoids the wider spreads that are common when using a traditional broker and provides overall lower commissions and fees for those concerned about privacy the ecn can provide a level of anonymity to those who desire it this can be particularly attractive to investors interested in making larger transactions ecn brokers are non dealing desk brokers meaning that they do not pass on order flow to market makers instead they match participants in a trade electronically and pass the orders to liquidity providers an ecn broker facilitates trades for interested investors across the ecn working with brokers of this nature often results in lower fees as well as additional trading time availability because of how the ecn functions understanding the electronic communications networkthe ecn provides an electronic system for buyers and sellers to come together for the purpose of executing trades it does this by providing access to information regarding orders being entered and by facilitating the execution of these orders the network is designed to match buy and sell orders currently present in the exchange when specific order information is not available it provides prices reflecting the highest bid and lowest ask listed on the open market benefits of electronic communications networksprice feed transparency is also a byproduct that many consider a benefit because of how the information is transmitted all ecn brokers have access to the exact same feed and trade at the precise price that is provided a certain amount of price history is also readily available allowing for easier analysis of particular trends within the marketplace this helps limit price manipulation as current and past information are readily available to all making it more difficult to act unscrupulously additionally no trader has a particular built in advantage over the other as they all have equal access to the information disadvantages of electronic communications networksone of the biggest drawbacks to using an ecn is the price to pay for using it typically the fees and commissions for using an ecn are higher as compared to non ecn systems per trade based commissions can be costly and can affect a trader s bottom line and profitability investopedia does not provide tax investment or financial services and advice the information is presented without consideration of the investment objectives risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors investing involves risk including the possible loss of principal 