Direct Edge in simple terms can easily be described as a United States based Electronic Communications Network (ECN). It is a network that tends to carry out its operation in equity trading platforms that are twofold i.e. EDGX and EDGA. Its ownership is under a consortium which tends to include groups such as Knight Capital Group, Inc., International Securities Exchange, J.P. Morgan and the Goldman Sachs Group among others. The best thing about its co-owner EDGA is that, it provides and liquidity free of charge. On the other hand, EDGX tends to take some charges on all the liquidity takers while at the same time rebating liquidity providers. In short, we can clearly say that, they are two separate entities that tend to target and provide their services to different consumer bases.
In the year 2010 of March, it is important to know that, there was a conversion of this network. Through SEC, this organization was converted from being an ECN to being a licensed stock exchange. However, as this was done, there were some other operations that were also being done on the other side. In July the same year, the ISE Stock Exchange was kind of decommissioned and this saw EDGA and EDGX ECN podiums start their operations in an independent way. This means that the conversion done gave the organization the chance of being called names such as NYSE Euronext, Bats Global Markets and NASDAQ OMX Group Inc in July 19th the same year, the conversion was completed making the 2 groups to be exchanges.
It is important to know that, late October in the year 2009, Directedge.com had introduced a structure that was a maker-taker free. This was done on the EDGA platform which began from 1st November. Its work was based on mirroring the pricing model that was utilized by rival venue Nasdaq OMX BX. This in turn played a big role as it made both platforms i.e. EDGX and EDGA to handle combined percentages of 10 and 13 respectively in the United States equities trading volumes. This was done consecutively for about eleven months until February 2010.
