The continuing crises in financial and economic markets is generating a rough time for trading technologists and specialists. As MiFID gradually penetrates through the mainstream marketplace, the latest execution platforms are being released on a seemingly weekly basis. The western industry is seeing liquidity pieces, rather in sluggish paces as compared with the anticipations of others, between solidified main exchanges and a variety of the latest execution interfaces, such as multilateral exchanging industries, dealer funded dark pools, standalone dark pools and sometimes hybrids of the above.
Stated by trading organizations, it isn’t good enough any longer to simply look for the best venue for execution and direct market access. In today’s modern day and age, smart order routing systems have to function as an integral component of exponential trading techniques, working quite fast to compare rates throughout nearly 40 lit and unlit trading venues, guaranteeing that they will suit within any amount of various tactics that may be in play at identical time and then execute.
In simpler and more comprehensible terms, a smart order routing system has become a vital part of the bigger trading marketplace that calls for customization abilities and speed. According to experts and professionals, the trading paradigm is an ever-evolving one and this must be understood by a novice in the field.
Each component of the trading network should be very quick and synchronized. Trading formulas should be rendered quickly. Similarly located databases in the trading venues should also be reliant and extremely fast, not to mention intuitive and flexible. Surmising speed, traders are also in need of transparency. Traders want to be able to know how their merchants and brokers are utilizing the SOR systems where their precepts are sent to, which dark pools are being targeted, and the amount of data regarding their placement is getting divulged in the process.
So how are smart order-routing systems able to keep up with this changing environment? Apparently, it is getting relatively intuitive and sophisticated. SORs were once run in generic approach, perceiving each order in similar means. However, at present, SORs and alternative trading system have to process continuously increasing levels of information. The intuitive and alternative trading system hits the trading market several years in the past hugely to assist traders to stay compliant with NBBO policies and regulations. Nowadays, trading tactics and systems designed for direct market access are now commanding how the systems are operated and plays a much bigger role in its respective industry.