A level 2 is basically an order book of order books and market makers. These can be tracked on a level 2 screen, which provides the depth of participants with aggregate available orders and prices. These ECNs are also competing with market makers and other exchanges for the best price and availability of shares. There are many ECNs and alternate trading systems (ATS) providing numerous direct routing opportunities through a direct market access (DMA) broker.

Electronic order books are referred to as ECNs, which operate without a middleman, leaving the participants to route directly to counterparties to fill their orders. What is an Order Book?Īn order book is a list of buy and sell orders for a particular security.Īn electronic order book executes trades when buy orders are matched with sell orders at specified prices. This would be a gamechanger for the exchanges and participants as the freedom, convenience, liquidity, execution and speed of order books would transform the markets into more efficient ecosystems.

In the spirit of market efficiency, the advent of electronic communications networks (ECNs) also known as electronic order books were first introduced on the NASDAQ. Rather than giving autonomous authority to a single specialist to control and manage order transactions for a stock, NASDAQ enabled competition between multiple market makers to provide the best price in order to win the order execution. NASDAQ is the pioneer of electronic trading as it introduced the world to an alternative to the auction style open outcry style of order executions found on the New York Stock Exchange (NYSE).

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