ECN Broker

### What an ECN actually is An ECN is a matching engine, not a broker business model. The first one, Instinet, went live in 1969, and the mechanic has not changed since: a computer network takes limit orders from banks, funds and other traders, matches the ones that cross, and displays the rest as a live order book. In US equities the SEC's Regulation ATS regulates ECNs as alternative trading systems rather than exchanges. The consequence is the whole point. Nobody quotes you a price. You see the best bid and best offer other participants happen to be showing, which is why raw spreads can sit at or near zero. The broker is not on the other side, so it cannot earn a markup. It earns a **commission**. ### Do the cost maths, because almost nobody does Use a broker's own published rate card. IC Markets publishes USD 3.50 per standard lot per side on its Raw Spread account, so USD 7.00 round turn, alongside an advertised average EUR/USD spread of 0.1 pips. Its commission-free Standard account quotes spreads starting from 0.8 pips ([IC Markets trading costs](https://www.icmarkets.eu/en/trading-pricing/trading-costs)). That is a price list, not a recommendation. On a standard lot of EUR/USD, 100,000 units quoted in USD, one pip is 0.0001 x 100,000, so $10. A $7 round-turn commission is therefore 0.7 pips of cost. Add the 0.1 pip raw spread and your all-in cost is roughly 0.8 pips. Which is roughly what the commission-free account charges you in spread anyway. So ECN pricing is *not automatically cheaper*. It is cheaper only when the raw spread you actually get, plus commission, lands under the marked-up spread you would otherwise pay. ### Why it still matters to active traders Cost is not an absolute, it is a fraction of the move you are trying to capture. Eight tenths of a pip is noise against a 60 pip move. Against a 5 pip move it is 16% of the whole thing, gone before you are right about anything. Frequency decides whether the model matters, not preference. ### The catch: last look Real institutional FX liquidity often runs with *last look*, a brief window in which the liquidity provider may reject your request after seeing it. The Global Foreign Exchange Committee's FX Global Code allows it only for price and validity checks, forbids trading on the information during that window, and tells providers to disclose the basis on which trades get rejected ([GFXC last look guidance](https://www.globalfxc.org/press-releases/press-p210818/)). Translation: on a genuine raw feed, a rejection is a documented, normal outcome. It is not proof of a scam. ### The honest read Most retail accounts sold as "ECN" are technically STP, routing into a pool of providers, and execution is usually still solid. You cannot audit the label from the outside. You can audit the fee schedule. Two questions settle it: what is the commission per lot round turn, and what is the *average* spread, not the advertised minimum, on the pair you actually trade. Those two numbers are the entire product.