Smart Order Routing (SOR)

Smart Order Routing (SOR) is a technology that automatically breaks down a large order and distributes it across multiple trading venues to secure the best execution price. It functions as an intelligent intermediary, constantly scanning the market for the best bid and ask prices.

When an order is placed, the SOR calculates the optimal split based on available liquidity and then executes the trades across different exchanges simultaneously or sequentially. This is essential for large institutional orders in the fragmented crypto market.

By using an SOR, a trader can access a larger pool of liquidity than any single exchange could provide. It also helps to hide the full size of the order from the market, reducing the risk of being front-run.

The efficiency of an SOR is determined by the speed and intelligence of its routing logic. It is a critical tool for ensuring compliance with best execution mandates and minimizing the total cost of trading in complex environments.