Fidessa, the financial services technology group, has issued a new paper on the challenges facing those seeking to implement so called ‘smart’ order routing.
The paper – What you see is not what you get – the challenge of truly ‘smart’ order routing – is authored by Will Winzor-Saile, electronic execution product specialist at Fidessa, and follows a previous paper – Shifting Sands – the harsh realities of executing in today’s markets – in a series focused on the industry challenge of creating a seamless infrastructure.
Winzor-Saile said: “In the equities space the multi-market landscape is well established. Before any order is sent to a market, the trader or algo looks at all available pools of liquidity before deciding on the optimum venue. This decision used to be simple and was based on which venue had the best price or the most volume. But as markets have evolved, firms can no longer rely solely on visible information to make these decisions.”
“A new approach to SOR is needed that understands the reliability of the data and analyses market and microstructure trends. Firms that do this can add real value through their SOR and provide their clients with price improvements as well as more efficient alpha capture.”
Exploring developments in areas such as quantum physics, this latest paper looks both at issues such as latency and speed affecting brokers, but also at how smart order routing interacts with so called dark pools and hidden liquidity.