What is a major characteristic of electronic communication networks (ECNs)?

Electronic communication networks (ECNs) are characterized by their ability to connect buyers and sellers directly through automated systems, which facilitates trading outside traditional exchanges. The correct choice highlights that these networks function as virtual stock exchanges, making it easier for traders to execute transactions at lower costs due to reduced overhead associated with physical trading floors.

Additionally, the anonymity provided by ECNs allows traders to buy and sell without revealing their identities, which can lead to a more efficient price discovery process and increased trading volume. This characteristic is fundamental to how ECNs operate, enabling faster and often less expensive transactions compared to traditional trading venues.

In contrast to the other characteristics mentioned, ECNs are generally designed to minimize conflicts of interest and are not heavily reliant on regulatory oversight compared to more formalized exchanges. This flexibility in trading costs and practices further demonstrates the unique role that ECNs play in modern finance.