ECN broker

An Electronic Communications Network (ECN) broker acts as a bridge, matching buy and sell orders among market participants. These participants include banks, hedge funds, and other traders. The ECN aggregates price quotes from various liquidity providers, displaying the best available bid and ask prices to its clients. This system bypasses a dealing desk, ensuring direct market access and greater price transparency.

For a retail trader, an ECN broker typically offers tighter spreads, often as low as 0.1 pip on major pairs like EUR/USD, but charges a commission per trade. This structure contrasts with market makers who profit from wider spreads. ECN execution minimizes requotes and can reduce slippage compared to dealing desk models, providing more accurate order fills at market prices.