Different Types of Trading Platforms

Andrew C.

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Different Types of Trading Platforms

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Abstract

There are several different types of financial exchanges in which the trading of securities takes place. On one end of the spectrum, there is the National Association of Securities Dealers Automated Quotations system, known as the NASDAQ, which is the largest screen based security trading system in the united systems. At the complete opposite end of the spectrum are Electronic Communication Networks. ECN's are small often independent trading screen based platforms that allow for exchange. These two different exchange types are completely different; there are many benefits and also drawbacks to each individual system.

Introduction
Electronic Communication Networks as trading platforms
Benefits of ECN
Disadvantages of ECN
The NASDAQ
Disadvantages of the trading on the NASDAQ
Conclusion
Bibliography

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[...] Another clear advantage of trading on the NASDAQ is the abundance of available information. Prices of stocks available are listed in most major newspapers, and a wide verity of technical support is available to investors who need it. Disadvantages of the trading on the NASDAQ are clear also. Firstly, market makers make profits off the spreads that they create. This means that every trade that is made helps to pay their salary, therefore you are losing money by their involvement. [...]

[...] Each of these market makers tries to set a different price and this allows for a constant motion of exchange. The NASDAQ was first electronically screening based exchange market, starting in 1971. Its original purpose had it being used as a bulletin board of information never really creating any sales. Over time the exchange became invaluable by dramatically decreasing spreads and bringing buyers together with sellers. The exchange evolved with technology, as did the regulations needed to guard it. Today it stands appropriately and is described: “NASDAQ is the largest U.S. [...]

[...] the ECN was born due to an anti-trust suit against the market makers of the NASDAQ. In this law suit it was stated that the market makers controlled a monopoly and were working together in violation of United States anti trust laws. This sparked the creation of an market maker free exchange. “Electronic Communications Networks (ECNs) are private electronic networks for order placement. These fully automated systems match orders and set prices for trades without the intervention of market makers or other middlemen. [...]

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