ECN
An ECN is an Electronic Communications Network is a private trading system maintained separately from the public markets such as NASDAQ and NYSE.
Shares are traded in the same way but liquidity may vary. In any one instance, the inside market may be different on an ECN than on the public markets (or another ECN), creating arbitrage opportunities. An important distinction should be made between buying/selling "through" an ECN andbuying/selling "to" an ECN.
The grand daddy of all ECNs, is Instinet. Instinet is an acronym for "institutional network".
It is one of theprimary markets in New York through which institutions (mutual funds, hedge funds, private asset managers) buy and sell large blocks of stock.
In addition to providing traders with substantial liquidity of shares to buyand sell, Instinet transactions can be conducted 24 hours a day.
Instinet participants tend to be the market makers themselves and institutional money managers. It is, by far, the most liquid of any ECN, but is also the most expensive, and hardest to execute against. There are at least a dozen other ECNs which are cheaper and potentially more accessible to the individual investor.