Electronic Trading encompasses a variety of methods and aspects of trading. It has transformed the traditional methods of trading on an exchange. Instead of having to become a member of an exchange and trade from the actual exchange floor, Institutional investors, broker-dealers and market-makers can place trades directly with an Electronic Communications Network, or ECN, which automatically matches buy and sell orders at specified prices. ECNs register with the SEC as broker-dealers. Individual investors can access ECNs through an account with a broker-dealer subscriber.
Initially, electronic trading was done only "after-hours" and merely augmented trading during regular exchange hours. Exchanges promised this electronic "after-hours trading" would not supplant the trading floor.
- Electronic Trading's Past & Future. SFO Magazine.