ECN Brokers: An In-Depth Look

Tablet screen and a pencil

Whether you’re a beginner or seasoned investor, part-time or full-time, it can be important to know what kinds of brokers are available and how they can assist you. One particular type that you might want to look closer into are ECN brokers. 

Most investors will find that there are quite a few benefits that come with choosing one of these kinds of brokers, which is why it’s well worth doing your research and learning more about what’s on offer. 

What exactly is an ECN broker?

While there’s a lot involved, it can be fairly easy to understand what these individuals could do for you. To put it simply, ECN brokers use electronic communications networks (ECNs) to act as an intermediary between a client and other market participants.

In some ways, this can give an investor an opportunity to trade outside of the regular hours, making it quite a good choice for those who aren’t full-time investors or pretty much anyone who prefers flexibility. ECNs can also offer clients a higher level of anonymity to their transactions too. This can be another benefit for those who would rather keep their identity a secret.

There’s no need for the middleman with direct transactions

One of the main reasons why investing with these brokers can be so beneficial is because ECN trading cuts out the middleman. 

Generally, when getting into trading, an individual will need to work with companies that offer assets for trading. These are liquidity providers and while they’re essential to the trade, it’s rare for traders and providers to interact directly. There’s typically a middleman that connects the two for a transaction, but when working with an ECN broker, you’ll be connected to a provider without interference.

As mentioned above, this offers quite a few advantages. For example, one of the most appealing factors of ECN transactions are immediate trade executions. This is something that essentially any investor can benefit from.

What can you expect from ECN fees?

While there are a number of benefits, one downside that you might not be able to look past just yet are the additional costs that these brokers charge. Often, an investor will be met with a number of fees (all of which are often lumped together under the umbrella term of ‘ECN fees’) from the network that matches traders. Because of this, you’ll probably want to know more about how much these can add to your transactions and how they’re calculated. Various lists of best ECN brokers revealed can help you learn about the fees along with the benefits and downsides of the most popular brokers.

The good news is that the price that you’ll have to pay when working through ECNs is often a small one and sometimes, you may not even have to pay extra costs at all. While it’s important to note that the price can vary from one network or brokerage to another, they tend to be a fraction of a penny. This can lead to fairly low prices, like a commission of less than £4 for an order of 1000 shares, for example.

How can you reduce ECN fees?

While you won’t usually be looking to pay out too much on the commission, you may still want to ensure that you get the most out of every trade – and if so, you should consider how you can lower your expenses. 

The amount you’re charged will usually be determined by how liquid a transaction is. The less liquidity, the more chance there is that you’ll be charged additional ECN fees. The faster an order is likely to be executed, the more liquid the transaction is. This includes market orders, or when placing a marketable limit order with a specified limit above the asking price when selling (or below the bid when selling). 

Is there anything else that you should consider?

  • ECN brokers will typically consolidate price quotes from a range of market participants, giving a client tighter spreads, higher bids and lower asking prices than they would elsewhere. So, not only can these transactions be completed sooner, but you can also get better trades, too. Especially best ECN brokers revealed that
  • Since traders and liquidity providers are directly connected in ECN transactions, it’s unlikely that these brokers will ever interfere with the trade. It’s also worth noting that brokers cannot trade against their clients, they only match trades between market participants. A number of STP brokers may trade against their clients, since this could earn them a higher payout
  • Due to the nature of ECNs, investors can make use of another trading advantage; price feed transparency. All brokers have access to the same price feed, and a recent price history is readily available. The result of this? There’s less price manipulation in trades, since all the necessary information is available to everyone
  • Price is one of the most vital things to consider, especially for an investor who wants the highest profit on their trades as possible. While you can certainly get a great deal on your investments when working with these brokers, there are some fees that you might want to learn a little more about

Overall, are ECN brokers worth it?


While ECN brokers do charge a commission for their services, you’ll often find that it’s well worth it for the number of benefits they have to offer. Better yet, since you can reduce the fees and even negate them entirely in some instances, you could make use of ECNs for little to nothing (which is something any investor can take advantage of).