‘Smart Order Routing’ Algorithmic Trading Articles & Financial Insight
- Combining Algorithmic Trading with SOR
SUBSCRIBERS ONLYSmart Order Routing (SOR) has been the buzz phrase in European equity trading over the last 18 months. Deregulation of trading venues allowed Multilateral Trading Facilities (MTFs) to trade stocks listed on other exchanges. Consequently trading service providers started offering SOR products to allow clients to trade the same stock on MTFs as well as the original exchanges where stocks are listed (the primary exchanges). However, SORs are limited in how much trading fee reduction and price improvement they can obtain. Dr Usman Malik, partner of algorithmic trading specialists PE Lynch, outlines how combining SOR with algorithmic trading strategies offers a method to overcome the limitations of standalone SOR.