Smart Order Routing (SOR) is a system that automatically routes and executes trades to the best available market for a given security, based on factors such as price, liquidity, and execution speed. SOR systems are typically used by professional traders and institutional investors, and are designed to help them achieve the best possible execution for their trades.The SOR system works by continuously monitoring multiple markets and exchanges for the best prices and liquidity for a given security. When a trade is placed, the SOR system will automatically route the order to the exchange or market that offers the best execution, taking into account factors such as price, liquidity, and execution speed.SOR systems can also be used to implement algorithmic trading strategies, such as those used by high-frequency traders. These strategies use complex algorithms to analyze market data and make trades based on predefined rules.SOR systems can help traders and institutional investors to achieve better trade execution, lower transaction costs and increased efficiency in the trading process. However, it is important to note that SOR systems can be complex and may require significant technical expertise to set up and maintain, also it is important to understand the rules and regulations related to SOR before using it.
