Smart order routing: Difference between revisions

Revision as of 20:39, 17 December 2019

Revision as of 00:55, 25 March 2020

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'''Smart order routing''' (SOR)<ref>{{cite newspaper |newspaper=[[Wall Street Journal]]

'''Smart order routing''' (SOR) is an automated process of handling orders, aimed at taking the best available opportunity throughout a range of different [[trading venue]]s.

|url=https://www.wsj.com/articles/SB119785381762232795

|quote=had led banks and brokers ... to offer smart order routing.

|title=Brokers doubt forecastsof trading fragmentation

|author=Luke Jeffs |date=December 17, 2007}}</ref><ref>{{cite book

|title=Market Liquidity: Theory, Evidence, and Policy

|quote=They often use smart order-routing technologies to ...

|author1=Thierry Foucault |author2=Marco Pagano |author3=Ailsa Röell

'''Smart order routing''' (SOR)|year=2013}}</ref> is an automated process of handling orders, aimed at taking the best available opportunity throughout a range of different [[trading venue]]s.

The increasing number of various trading venues and [[Multilateral trading facility|MTFs]] leads to a surge in liquidity fragmentation, when the same [[stock]] is traded on several different venues, so the price and the amount of stock can vary between them. SOR serves to tackle liquidity fragmentation, or even benefit from it. Smart Order Routing is performed by Smart Order Routers - systems designed to analyze the state of venues and to place orders the best available way, relying on the defined rules, configurations and algorithms.