Electronic communication network

An electronic communication network (ECN) is like a telephone party line for stocks on Wall Street.

Imagine you have ten friends who work in finance, and each of them has a different stock they want to buy or sell. They could call each other on the phone and make the trades, but that would take a lot of time and it'd be tough to negotiate the best price with so many people involved.

An ECN is a platform that connects all these traders (and more!) without them having to talk to each other. Instead of calling around to find the best price, they can all see what everyone else is buying or selling and choose the best option for themselves. The ECN acts like a matchmaking service for traders and helps them get the best deals.

Just like how you can swap toys with your friends, traders on an ECN can swap stocks with each other. They pay a small fee to use the ECN, but in return, they get access to more buyers and sellers than they would if they were working alone. Think of it like playing with a bigger group of friends at recess instead of just playing alone.

ECNs are important because they help keep the stock market fair and transparent. Everyone has access to the same information and can make trades based on that information. It's a bit like everyone having the same set of rules for playing tag at recess, so no one can cheat or take unfair advantage.