In this article, We learn about "The ECN".Let's Go!
ECN (Electronic Communications Network) is a technology-based venue containing numerous banks and non-bank Liquidity Providers (LPs) who continuously transmit pricing to the ECN.
ECN will aggregate pricing in turn.
When looking at the entire depth of an ECN aggregated price feed, you will notice that it has multiple levels of liquidity.
Liquidity providers prefer to transmit smaller ticket size pricing to ECNs because then they can offer tighter spreads knowing they don't risk getting hit by large tickets due to those spreads.
LPs also realize that by pricing competitively, they have an opportunity to be “top of the board” (ToB) and win business from competitors in the space.
The end result is a very strict ToB.
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