With rising technology, the stock market has become a complex algorithm. A smart order router eases the process of investing by assessing the trading liquidity. It has its own set of rules that it follows stringently to execute the trade.
Earlier equity market heavily relied on this technology, but seeing its advantages other trading platforms also adopted it. With the growing popularity of online trading, SOR has become more than a necessity. Even the banks and brokers are not far from adopting it.
The increased number of trading venues has fragmented the liquidity and the scrips are traded across different platforms and at a different price. Smart order router helps to battle against the process of fragmentation by analyzing and placing the order on the best possible option.
Advantages of Smart Order Routing
Most of the institutional investors and broker use this technology to find the best possible price for trade. Each smart order will be set up as per the requirements of the order and the conditions mentioned by the institutions and regulatory bodies. Through this technology, you will get the possible chance of discovering the price. SOR means that the trading platforms adhere to the best parameters including the cost, performance to achieve the results.
Cons of using SOR
As technology is updating itself at a rapid pace, it is believed that SOR will develop enormously, and the old technology will become redundant. Though we know SOR helps to manage the fluctuation in the market, but as the market goes more complex, the SOR needs to become faster and smarter.
In the end, it is quite easy to see that SOR is a relevant tool and it helps the investor to discover the best price to execute the order. When the investor will place the order, SOR will automatically compare the stock price across different exchange and you will get to know the price instantly.