June 23, 2016
The evolution of smart order routers
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What we’ll cover

We’ll discuss how smart order routers have evolved over three generations since their first appearance in 2007, and why we can expect to see the birth of the fourth generation in 2016.

MiFID II will lead to yet another leap in requirements, both in terms of performance and functionality. The next generation SORs will have to cope with a major shift in market complexity.

The Double Volume Caps introduced with MiFID II are likely to shift liquidity to venues with alternative trading models such as continuous/periodic auctions (such as BATS) and Large in Scale (LIS) venues (such as Turquoise Block Discovery). Some of these new models are already in operation, if yet on a limited scale. As always, new market models rely on networks effects, meaning that they must get a critical mass of users in order to be successful. It is likely that MiFID II will be the catalyst that makes them take flight.

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