What Is Smart Order Routing?

Smart order routing: how can an order find a suitable execution venue?

Smart order routing systems evaluate available trading venues and routing rules to determine where an order should be sent.

Depending on the market and system, relevant factors may include price, available liquidity, fees, execution probability, and venue-specific restrictions.

The objective is generally to improve execution quality under the applicable constraints.

However, routing technology differs across asset classes.

For example, centralized exchange-traded futures have a different market structure from fragmented equity markets or over-the-counter foreign exchange.

That distinction matters when discussing order flow.

A technique used in one market cannot automatically be assumed to work the same way in another.