Smart Order Routing (SOR)

Adaptive Smart Order Router

The role of the Adaptive SOR is to successfully execute a chosen strategy, using real-time data-driven intelligence to achieve the best possible outcome in one or multiple markets. In a highly fragmented and fast/dynamic marketplace, the Adaptive Smart Order Router is a crucial component of each execution.

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Smart Order Routing (SOR) - Key points for Traders and Heads of Trading

Quod Financial’s Adaptive Smart Order Router (ASOR) executes routing strategies across fragmented markets by combining real-time market data, configurable routing logic, and integrated execution analytics.

  • The ASOR supports low-touch and high-touch workflows through predefined and easily configurable routing rules (e.g., routing by instrument, client, specific algorithm, DMA, or high-touch workflows).
  • The router can be configured via a real-time web interface and supports highly customized strategies using 450+ parameters.
  • Best execution and TCA capabilities allow teams to review execution outcomes and improve routing behavior over time using historical performance against benchmarks.

Your complete Multi-Asset SOR solution

With over 14 years of experience, Quod Financial offers the most powerful and customizable Smart Order Routing solution available in the market in the Americas, Europe, the Middle East, and Asia. Quod's Lit/Dark Smart Order Router uses real-time data including AI/ML analysis of markets to make microsecond-based execution decisions. Our SOR can be configured using a real-time web interface that allows for highly customized strategies using 450+ parameters.

Contact us to understand how our clients have gained control of their trading and immediate execution performance improvements.

What is Smart Order Routing (SOR)?

Smart Order Routing (SOR) is an automated execution capability that applies configurable routing rules and real-time market intelligence to determine where and how to place an order (or order slices) across one or multiple venues—supporting consistent execution outcomes in fragmented markets.

Markets Covered by Quod SOR

Quod’s SOR is designed for multi-asset workflows and is described on this page for Equities, Derivatives, and FX, with asset-class specific routing behavior and controls.

Who Quod SOR is for

  • Buy-side trading teams executing across multiple venues and liquidity pools
  • Sell-side brokers and agency desks managing client flow and execution outcomes
  • Trading firms and market participants that require configurable routing logic, supervision controls, and execution evidence in fast-moving markets

Features and Benefits

What you get with Quod SOR

Order Management System (OMS) icon for Quod

Easy Configurations

Our implementation of machine learning (ML) introduces real-time recommendations to our clients. With over 400+ configurable parameters in our SOR, our automated feedback helps clients know how to achieve the best results in real time.

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Unrivalled Order Management Rules

Our order rules functionality allows any inbound orders to be categorized and acted on automatically based on predefined and configurable criteria. Example rules include routing by instrument, client, specific algo, DMA, or high-touch process.

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Intelligent Behaviour

Smart statistics are implemented to add intelligence to the SOR decision-making process. It integrates external statistics, but more importantly, compiles the execution data over time. The data set includes the probability of execution in dark and lit, and the venue’s past performance for a given time to find passive liquidity.
Order Management System (OMS) icon for Quod

Powerful Best Execution Package

Our SOR leverages our powerful best execution and TCA package, which intuitively presents performance on an order-by-order or overview basis. Traders can show their clients the quality of execution as well as quickly learn, from up to 10 years of trading history, how to improve performance against benchmarks.

Best Execution, Compliance
and Strategic Execution

Quod provides powerful Best Execution reporting to give specific details on every step of the execution decision process. This includes market conditions at the time of the event, a decision-by-decision breakdown, and an attached benchmark to measure execution performance. This provides essential tools for regulatory compliance as well as crucial information to clients and traders.

To achieve optimal execution performance and profitability, it is crucial to have access to high-quality data and intelligence to continually evaluate your execution strategies. This involves conducting detailed analyses, such as reviewing venue performance and assessing trading costs (or spread capture). The same data is then reused by the algorithms in order to improve performance over time.

SOR Capabilities for Equities, FX, and Derivatives

 Deployment and adoption

Quod’s SOR is designed for incremental adoption: firms can start with defined order flows and routing behaviors, then expand configuration as execution requirements evolve. The goal is to introduce routing logic in a controlled way while maintaining visibility into decisions and outcomes through supervision tooling and execution reporting.

Desktop Quod Financial Smart Order Routing SOR

Multi-asset SOR: Equities, Derivatives, and FX, with asset-class specific implementation to manage liquidity, order/quoting types, and phase management (auction to continuous trading).

Orders are held away from the markets and can be placed or modified without revealing any strategies or patterns to individual venues. Different rounds of liquidity seeking (e.g. Aggressive phase followed by passive phase).

Fast decisions ensure the best possible outcomes. Combines strategies together (including Quod Algos or Broker Algos) to evolve execution during the lifecycle of an order.
Provides a supervision front-end to manage exceptions (i.e. Rejects, abnormal orders etc); a self-administration front-end to manage the SOR algorithms, and immediate availability to the SOR algorithm.
Prevents over-executions and run-away algorithms offer different levels of risk management to prevent over-fills, as well as multi-level and global Kill switch and Circuit breakers to manage run-away algorithms (as increasingly demanded by regulators).

Internalizes client order flows through internal market making and seeks out non-transparent liquidity.

How the Adaptive Smart Order Router works

The Quod Adaptive SOR is designed to execute a chosen strategy by continuously updating routing decisions as market conditions evolve

  1. Ingest real-time market data and execution signals to assess current conditions.
  2. Evaluate key routing variables (price, liquidity, latency, fees/cost, volatility, execution probability, rejection rates, market impact, and more) to select an execution path.
  3. Apply configurable routing rules to categorize inbound orders and route them by instrument, client, algorithm choice, DMA or high-touch workflows.
  4. Seek liquidity across lit and dark pools using adaptive and statistical behavior to prioritize real liquidity and reduce signaling risk.
  5. Supervise and control exceptions through operational tooling (rejects, abnormal orders, and supervision workflows).
    Review outcomes using best execution and TCA analytics to improve routing behavior over time using historical performance vs benchmarks.

Example

SOR Variables and Configurations

These variables are used to tune routing behavior and venue selection per asset class (e.g., FX venue limits, derivatives position constraints), while maintaining consistent governance and execution review.

  • Price
  • Cost
  • Broker/venue preferences (and forbidden venues)
  • Hit Ratios
  • Volatility
  • Probability of execution
  • Latencies
  • Venue limits (for FX)
  • Position (for derivatives)
  • Last Look aware
  • Liquidity hunting (for ghost liquidity)
  • Level of Market Depth
  • Rejection Rates
  • Market Impact
  • Transaction Costs
  • Internalization (executing simultaneously on internal and public)

Data Sources and Connectivity

With an estimated 80-plus trading venues in Europe and the US alone, fragments of liquidity are everywhere. This is where conventional order management and simplistic routing systems falter – and our Adaptive SOR makes the difference.

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Advanced Order Routing Logic

Our SOR consolidates transparent liquidity in different venues giving you a clear view of the markets. But it goes further, to seek out non-transparent liquidity residing in algorithms, such as Iceberg orders, or dark venues. The result is the ability to dynamically make new execution decisions as market conditions evolve during the lifecycle of an order.

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Transparency and Control

There’s no point finding liquidity if you can’t grab it. And once captured, there’s the danger of over-execution that you must manage. Our Adaptive SOR has in-built mechanisms to mitigate risk of the over-execution and algorithms to seek out only the real liquidity in the market, instead of chasing ghost liquidity.
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Use Case: SaaS Lit & Dark Smart Order Routing for European Equities

An international agency brokerage deployed Quod Financial Adaptive Smart Order Routing (ASOR) to upgrade European equities execution across fragmented markets. The objective was to run liquidity-seeking routing across lit venues and dark pools, deliver MiFID Best Execution reporting + TCA, and extend connectivity across 20+ brokers/dark pools and 10+ European exchanges/MTFs through Quod’s connectivity layer.

Multi-asset SOR: Equities, Derivatives, and FX, with asset-class specific implementation to manage liquidity, order/quoting types, and phase management (auction to continuous trading).

Orders are held away from the markets and can be placed or modified without revealing any strategies or patterns to individual venues. Different rounds of liquidity seeking (e.g. Aggressive phase followed by passive phase).

Fast decisions ensure the best possible outcomes. Combines strategies together (including Quod Algos or Broker Algos) to evolve execution during the lifecycle of an order.
Provides a supervision front-end to manage exceptions (i.e. Rejects, abnormal orders etc); a self-administration front-end to manage the SOR algorithms, and immediate availability to the SOR algorithm.
Prevents over-executions and run-away algorithms offer different levels of risk management to prevent over-fills, as well as multi-level and global Kill switch and Circuit breakers to manage run-away algorithms (as increasingly demanded by regulators).

Internalizes client order flows through internal market making and seeks out non-transparent liquidity.

Business need

  • Execute European equities efficiently across lit + dark liquidity in a fragmented venue landscape
  • Provide governance-grade best execution evidence (MiFID) with TCA for oversight and client reporting
  • Scale venue access quickly (broad broker + exchange/MTF coverage) without rebuilding the stack

What Quod delivered

  • Adaptive Smart Order Routing (ASOR) with Lit/Dark routing logic to seek and capture liquidity across venue types
  • Integrated Best Execution reporting + TCA to review decisions and outcomes against benchmarks
  • SaaS deployment with connectivity via Quod AEP / QuodNET (as described in the case study)
Read the full case study

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