Electronic Communications Networks:
In traditional stock exchanges, the buying and selling of stocks take place at a physical location only and the members have to conduct trading activities during a specific period of time, or trading hours. It means the stock market is open during trading hours and is closed at all other times. But with increasing technology and communication facilities, the investors want unlimited time to trade the stocks. Electronic stock markets provide the facility to trade 24 hours a day, seven days a week, 365 days a year. It is also possible to trade anywhere in the world at any time through electronic exchanges. The main reason for major shifts in investor behavior and expectations are the Internet facility. Investors want instant trading and access-to-information capabilities that only online technologies can provide. Worldwide, markets and regulators have responded quickly to meet these requirements. The electronic stock trading takes place with the help of ECNs. An ECN is an automated system of trading from a stock exchange. It was authorized in 1998, when the Congress and the Securities and Exchange Commission wanted to increase industry competition for automated trading. Without specialists or market-makers to coordinate trading activity in stock exchange, ECNs provide passive order-matching systems, where it matches buy and sell orders that have the same prices for the same number of shares. It also provides trading facility after trading-hours to book the orders. Some of the best-known ECNs operating today are Bloomberg's Tradebook, the Nasdaq-owned Instinet and BRUT, and Archipelago Exchange.