Electronic communications network
Electronic Communications Networks, or ECNs, are electronic trading systems that automatically match buy and sell orders at specified prices. ECNs register in the U.S. with the SEC as broker-dealers, and their subscribers -- typically institutional investors, broker-dealers, and market makers — can trade directly with the ECN. Individual investors must have an account with a broker-dealer subscriber to have their orders routed to an ECN for execution.
ECNs differ from exchanges in that only exchanges can list stocks, but both exchanges and ECNs can orchestrate transactions, collect transaction fees, and produce and sell market data. Exchanges have their own regulatory arms and govern themselves, to a degree; ECNs are regulated both by the SEC and by a national securities association (to which any registered broker-dealer is required to belong).
Each ECN has its own set of rules for matching up buyers and sellers. Those rules are programmed into the computer system that controls the trading.