When I submit a trade order through online brokerage, I see that the order goes to NYSE ARCA. Now NYSE ARCA is an ECN that will carry out the trade on NYSE, but I was of the impression that NYSE operated on the concept of market makers which is different from ECN.

So is this difference not valid any more after the advent of electronic trading?

2 Answers 2


Electronic trading is many orders of magnitude cheaper and more liquid than floor trading and is rapidly displacing it.

Stil, electronic trading accounts for 79% of stock trading volume in the U.S. Polcari is losing the battle.

Floor trading is still offered, but it's only used for bulk orders, so electronic trading is servicing small trades at minimum prices while floor trading is now the concierge service.


I would say it's a bit more complicated than that. Do you understand what a market maker does?

An ECN (electronic communication network) is a virtual exchange that works with market makers. Using a rebate structure that works by paying for orders adding liquidity and charges a fee for removing liquidity. So liquidity is created by encouraging what are essentially limit orders, orders that are outside of the current market price and therefore not immediately executable. These orders stay in the book and are filled when the price of the security moves and triggers them.

So direct answer is NYSE ARCA is where market makers do their jobs. These market makers can be floor traders or algorithmic.

When you send an order through your brokerage, your broker has a number of options. Your order can be sent directly to an ECN/exchange like NYSE ARCA, sent to a market making firm like KCG Americas (formerly Knight Capital), or internalized. Internalization is when the broker uses an in house service to execute your trade.

Brokerages must disclose what they do with orders. For example etrade's. https://content.etrade.com/etrade/powerpage/pdf/OrderRouting11AC6.pdf

This is a good graphic showing what happens in general along with the names of some common liquidity providers. http://www.businessweek.com/articles/2012-12-20/how-your-buy-order-gets-filled

  • Thanks very much. The fact that market makers use ECNs was the missing piece, I always thought ECNS and market makers were mutually exclusive concepts.
    – Victor123
    Jan 30, 2014 at 21:41
  • From the diagram, the question I have is :Why a limit order cannot be filled internally unlike a market order?
    – Victor123
    Jan 30, 2014 at 22:01
  • @Kaushik An ECN is just an electronic exchange. All trades are processed electronically at the end nowadays. Also I don't think limit orders have to be sent to an exchange but they often are because limit orders earn the wholesaler a rebate. The wholesaler tries to match up market orders because if those are sent to the exchange they are charged a fee.
    – grayQuant
    Jan 31, 2014 at 18:01
  • @grayQuant, Isn't there only NASDAQ and NYSE? So NYSE ARCA and AMEX is under NYSE?
    – Pacerier
    Jan 5, 2017 at 2:35
  • Also, why would Etrade want to route those orders through so many different intermediaries instead of simply routing the orders to the main market?
    – Pacerier
    Jan 5, 2017 at 2:38

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.