How Crossing Networks Differ from Regulated ECNs
Summary
This explanation distinguishes a crossing network from an electronic communications network by separating a venue’s function from its regulatory status. A crossing network is described as a general pool where a broker matches client orders. An ECN, by contrast, is a formal regulatory category in the United States; the answer also mentions European venue categories as analogies in the regulatory context discussed.
A broker may operate a crossing pool with or without applying for a regulated status, and regulation can affect transparency and clearing arrangements. The answer recommends reviewing a venue’s rulebook and considering who clears trades when assessing how a crossing engine works. It also clarifies that “dark pool” is a broad label that does not itself determine regulatory status. The discussion reflects the regulatory framework described in the source and should not be treated as current legal guidance.
Key ideas
- A crossing network describes a broker-operated order-matching pool.
- An ECN refers to a regulatory status in the United States.
- Crossing networks may or may not have regulated status.
- Venue rules and clearing arrangements matter when evaluating a crossing pool.
- The term dark pool does not, by itself, specify a venue’s regulatory status.
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Full text
# Is there a difference between crossing network and ECN # Is there a difference between crossing network and ECN Is there a difference between a crossing network and an ECN? The wikipedia page for Crossing Network says that ECN is a type of crossing network. But crossing network has the smell of a semi-legal practice while ECN is perfectly legal. So what is the difference ## Answer by lehalle (score 2, accepted) https://quant.stackexchange.com/a/9967 ECN is a regulatory status in the US, like MTF (Multilateral Trading Facility), and soon OTF (Organized Trading Facility) are in Europe. "Crossing network" is a generic term used to describe a pool where brokers cross orders of their clients. The broker can choose to apply or not for the ECN (or MTF) status. On the one hand it is more "transparent" for users, on the other hand once it is regulated it is often easier for the broker to cross orders without asking for too explicitly. It it thus not that obvious. Moreover you can ask the rulebook of its crossing engine to your broker and choose another one if you are not happy with it. Regulated pools nevertheless often offer guarantees for clearing (do your broker is his own clearer in its crossing network? oops). In Europe with the just issued new version of MiFID, all pools will have to be regulated (but that's why OTF are created, they are not that constraining, but they will not be allowed on equities). By the way "Dark pool" is a generic term too. You have similarly regulated or not dark pools, etc. Update:
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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.