Market participants interact within today's high-frequency, fragmented marketplace with the use of algorithms such as liquidity aggregation and smart order routing.
These algorithms differ across participants and types of trading strategies. At a high level, they dynamically optimize where, how often, and at what price to trade. These algorithms seek to optimize their own best execution objectives while taking into account short term differences or opportunities across the various venues.
The definition of smart order routing is choosing the best prices and order distribution on multiple markets to capture liquidity.
Market fragmentation creates the potential for price and liquidity disparities across venues. Algorithms can adapt to market fragmentation by incorporating liquidity aggregation and intelligent smart order routing capabilities.
A. the pricing analytics and fundamentals are moving slowly.
Smart order routing (SOR) is an automated process of handling orders, aimed at taking the best available opportunity throughout a range of different venues.