Smart Order Routing (SOR)
Market Microstructure glossary · Limit Order Book Mechanics & Order Routing Logic
Definition
Algorithmic logic that splits and routes a parent order across multiple venues to optimize price, depth, fill probability, fees, and information leakage.
Smart Order Routing (SOR) in plain English
These days a single stock trades on many different exchanges at once, and their prices and available quantities aren't identical from moment to moment. Smart Order Routing is the automatic 'traffic controller' software that, the instant you hit buy, looks across all those venues and decides where to send your order — and often chops one big order into pieces spread across several of them — to get the best overall price, fill it quickly, pay lower fees, and avoid tipping off other traders. Think of ordering 100 concert tickets: instead of buying all 100 from one reseller (and driving that price up), a smart assistant grabs the cheapest few from each of a dozen sellers at once.
Also called: SOR
Learn these first
Related Market Microstructure terms
Market Microstructure practice questions · Market Microstructure flashcards · Market Microstructure study guide