Pros and cons of a smart order routers
Pros of smart order routers
Most major institutional investors and brokers will use a smart order router to automatically find the best possible prices for trades as quickly as possible. Each smart order router will be set up according to the different needs of the order, as well as the conditions specified by institutions and regulatory bodies.
IG Bank uses smart order routing (SOR) technology to search for liquidity across multiple venues, starting with 'dark pools' that offer mid-point matching – meaning you get the best possible chance of price improvements.
SORs mean that trading platforms adhere to the best execution requirements by considering cost, performance and the optimal way to achieve results.
Cons of smart order routers
As the number of trading venues grows, we are likely to see continued development of SORs as the technology behind them becomes outdated.
Luckily, the idea behind SORs is to help manage uncertainty and market complexity by building on what we already know about markets. This means that even as the market becomes more complex, the SOR system will become even smarter and faster.