Electronic communications networks (ecns) provide an alternative trading medium, which has increased competition with the stock exchanges.

Question

Business

Sierra Fitzpatrick

2 May, 18:15

Electronic communications networks (ecns) provide an alternative trading medium, which has increased competition with the stock exchanges.

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Answers (1)

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Bryant Fleming · Answer 1

True

Explanation:

When competition increases, companies are forced to innovate and embrace new technologies, that is why the NYSE had to merge with the Archipelago Exchange (an ECN started in 1997) to form the NYSE Group in order to compete with other ECNs, specially Nasdaq.

Currently, around 50% of all stock trades are done through ECNs, and that percentage may increase if the price volatility is too high, since ECNs have the advantage of being quicker.