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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.Live10.11.25

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.

What Market Structure Element Allows for the Effective Spread to Be Narrower than the Quoted Spread?
How Do Exchanges Attempt to Mitigate Slippage for Large Market Orders?
How Does the Aggregation of Order Books across Multiple Exchanges Affect Perceived Depth?
What Is the Significance of ‘Best Execution’ Standards in the Agency Model?

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