The new Direct Edge stock Exchange processes transactions at the Direct Edge press conference at the Hyatt Regency on July 21, 2010 in Jersey City, N.J. - 

When we talk about BATS and Direct Edge, “We’re really talking about the plumbing of the U.S. equities market,” says Adam Sussman, director of research for the TABB Group.

Like plumbing, these exchanges are mostly invisible. And, still important. If you trade online, Sussman says, “Some of your orders are being executed at BATS and some of your orders are executed at Direct Edge.”    

 So, why choose one over another? 

It comes down to a couple things: stock price, the cost of making the trade, and the technology each exchange uses.  “The incumbents and the challengers like BATS and Direct Edge, have all spent a ton of money on servers, co-location facilities etc, to be very competitive on the technology front,” says Joe Gawronski, president at Rosenblatt Securities.

Gawronski says all that technology makes for a more efficient market -- higher volumes, super-fast trades. But, it does have its shortcomings, as we saw last week when the Nasdaq broke. “Because human beings aren’t the ones in between every transaction and computers are,” he says, “if there’s bad code, that will run itself through the market and there will be problems.”

And problems with this plumbing cost a whole lot of money.

Follow Adriene Hill at @adrienehill