Today's Market Players: A User's Guide
Alternative Trading Systems
These trading venues may be unknown to many but they have become powerful players in the marketplace. Electronic Communication Networks, ECNs, are the most similar to exchanges but are prohibited from listing stocks. The first opened in 1998. (BATS and DirectEdge started as ECNs.)
An ECN is essentially a computer system designed to trade stocks (and currencies) outside of an exchange. They are popular among trading firms because they are cheap and fast. Matching networks are a version of ECNs.
Dark pools, or dark liquidity, are used by traders who want to trade large blocks of stocks without it being noticed by others in the marketplace. Neither the price nor the identity is displayed during the transaction.
The voice-brokered, third-party matching system involves old fashioned, block traders matching buy and cell orders directly.