Different Types of Trading Platforms
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finance
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published 30/08/2007
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SummaryThere are several different types of financial exchanges in which the trading of securities takes place. On one end of the spectrum, there is the National Association of Securities Dealers Automated Quotations system, known as the NASDAQ, which is the largest screen based security trading system in the united systems. At the complete opposite end of the spectrum are Electronic Communication Networks. ECN’s are small often independent trading screen based platforms that allow for exchange. These two different exchange types are completely different; there are many benefits and also drawbacks to each individual system.
Table of Contents
- Electronic Communication Networks are trading platforms that allow for screen based trading of assets.
- In a brief history, the ECN was born due to an anti-trust suit against the market makers of the NASDAQ
- An ECN could be useful to a person for many different reasons, for example it allows for anonymity between traders
- ECN's don't provide all benefits; there are many downsides as well
- In order to better understand the ECN, the whole process can be simulated over the internet without actually putting any money at risk
- As with ECN's there are several advantages to trading on the NASDAQ
- After looking at the differences between markets with no liquidity providers, ECNs, and several liquidity providers, the NASDAQ, many similarities and differences were found
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