To help a client receive the best execution on their order and efficiently access liquidity, financial institutions sometimes make use of what is known as 'smart order routing'. A Smart Order Router (SOR) is an automatic system of order routing that monitors all the trading venues to which it is connected where the product which you would like to trade is available. It will scan all these venues for the best available opposite order to your buy or sell order.
Because of the many different trading venues on which the same product can be traded, the bid and ask prices (and corresponding volumes) of that product tend to vary across venues. The SOR helps to make sure that your order is being screened against the activity on all these venues, so that you might get the best execution on your order.
The Smart Order Router always uses a reference venue to compare all the orders on the alternative venues. A reference venue is the main venue where the product is being traded. This is often a well-known exchange such as Euronext Amsterdam, The London Stock Exchange (main segment), or the New York Stock Exchange.
For more information, visit What is a trading venue? and refer to our Best Execution reports and ISI - Order Execution Policy. On this page, you can find an overview of the markets for which the SOR is available.