What is ECN?
Electronic Communication Network — a broker model that routes orders to external liquidity providers instead of filling in-house.
ECN (Electronic Communication Network) is a broker model where the broker acts as an aggregator, connecting to multiple liquidity providers (Tier-1 banks, prime brokers, sometimes inter-bank ECNs like EBS and Reuters) and routing your trade to whichever provider shows the best price at execution time.
The broker takes no directional risk on your trade — they pass it through and earn a flat commission ($3-$7 per round-turn lot). Spreads on ECN accounts are typically 0.0-0.3 pips during liquid hours (the LPs' raw spread, no markup).
ECN is best for high-volume scalpers and algo traders where the lower spread + commission cost wins over the standard model's wider spread + no commission. Pure ECN is rare in retail; most "ECN" retail brokers actually run STP (Straight-Through Processing) with a small markup. Compare total cost (spread × pip value + commission), not the spread number alone.