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How Does “Smart Order Routing” Contribute to Achieving Price Improvement?

SOR automatically scans multiple venues to route an order to the best price, maximizing the chance of price improvement and minimizing realized slippage.
Greeks.live04.12.25

How Does “Smart Order Routing” Contribute to Achieving Price Improvement?

Smart Order Routing (SOR) is an automated system that scans multiple trading venues (exchanges, dark pools, internalizers) to find the best possible price for an order. By dynamically routing the order to the venue offering the best bid or ask, or the highest probability of price improvement, SOR maximizes the chances of execution at a better price than the quoted BBO.

This effectively reduces the realized slippage for the trader.

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Why Is Price Improvement a Key Factor in Best Execution?
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Glossar

Order Routing

Procedure ⎊ Order Routing is the process by which a trading instruction is directed from the originating system to the most appropriate execution venue, whether a centralized exchange, a decentralized AMM, or an off-chain matching system for derivatives.

Multiple Trading Venues

Ecosystem ⎊ Multiple Trading Venues describes the fragmented landscape where a single cryptocurrency or derivative contract is traded across numerous independent exchanges, including centralized exchanges (CEXs), decentralized exchanges (DEXs), and various over-the-counter (OTC) desks or dark pools.

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