The interbank market is the Top Tier of The Forex Market

ECNs (sometimes called Alternative Trading Systems, ATS) are regulated by the SEC essentially as brokers Dealer (BDs), which puts them in a different category from exchanges • ECN Broker Tend to handle over the counter (OTC) retail securities •  ECNs started as basically websites for traders created by young computer geeks, but increasingly functioned more as exchanges •  New SEC rules January 1997 made ECNs important by granting them access to Nasdaq National Market system • 
Archipelago founded 1996 in anticipation of new rules •  Instinet: for professionals. Until 1999, it was the biggest ECN.
•  Island: for individuals, became the biggest ECN. In 1999 it did 4.9% of all Nasdaq trading volume.
The Forex Market can be divided into 3 markets. The relationship between the parties in each market is as followed:

The interbank market:
The head of the Forex market is the interbank market. At this market, banks trade with each other by contracts amongst themselves. The main objective is for banks to hold the necessary liquidity to provide for the clients. The exchange rate in this market is considered the optimal as there are no spreads. Contrary to common knowledge, the interbank market is not a centralized exchange, meaning there is no official quote linking the parties. the quote is displayed through the Inter-bank communication links such as one provided by Reuters and EBS.

The intrabank market: consists of only two parties, the banks, and clients. The bank exchanges its own currency with its clients to provide them liquidity. For example, a business in Hong Kong will trade HKD for USD with the bank to have sufficient currency to pay for one of its associations in the USA. the banks earn revenues through transaction fees. Another source of revenue is the spread, in which banks marks up the exchange rate when they sell the currency to their clients.

the clients have no choice but to accept the quote by the bank or choose another bank altogether.

This is the third tier of the Forex market, where the retail traders participate and exchange currency with each other. In this tier, the different brokers act as the liquidity providers for the retail traders. These brokers are in turn provided liquidity by the banks in the interbank market through an agreement with a single bank. Some brokers, however, have more than one liquidity providers, allowing them to have access to a more competitive spread. However, by no mean should we expect the price to be precisely what exists in the Interbank market, as collecting spread is the main source of income for the brokers.
Read more about ECN brokers in pdextrading

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