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2015issue C0259

Routing orders when equivalent products trade on multiple venues

When an instrument or a close substitute is listed on more than one marketplace, choosing the destination is part of sending the order. Identify every venue that can accept it, confirm the broker can route there, and weigh speed, price, protection, and records before the fill.

  • When an equivalent listing exists, identify every venue that can accept the order before sending it, including remote electronic facilities.
  • Venue routing means instructing a chosen marketplace instead of leaving the order on a default destination.
  • Venue differentiation covers listed products, available volume, execution speed, pricing, and investor-protection features, while trade documentation makes a disputed fill easier to reconstruct.
  • A practical check is to compare several equivalent listings and confirm that the broker can send the order to the selected marketplace.
Entries in this reading1 entry
Current trackOrder routing65 readings

Identify every venue first

When an instrument or a close substitute is listed in more than one marketplace, every venue that can accept the order should be identified before the order is sent. That equivalent listing is the same instrument or a close substitute offered on more than one exchange or trading facility.

A marketplace need not be tied to a national border or a physical floor. It can operate as a remote electronic facility.

How competing venues differ

Competing venues distinguish themselves by the products they list, available volume, execution speed, pricing, and investor-protection features. Venue differentiation is that mix of listed products, available volume, speed, pricing, and protection.

Those differences feed implementation cost, the all-in cost of getting a fill, including fees, spread, and quality differences that depend on where the order is sent.

Send the order to a chosen destination

A trader can instruct that an order go to a chosen venue rather than remaining with a default destination. Venue routing is that instruction: sending an order to a chosen marketplace instead of accepting a default destination.

Records, costs, and a practical check

Venues that keep thorough trade records make it easier to reconstruct events when a fill is disputed. Trade documentation is the venue's record of order and fill events, used to reconstruct what happened if a trade is contested.

Broader venue choice has been associated with downward pressure on transaction costs and the erosion of exclusive control by a single exchange.

A practical routing check is to compare several equivalent listings and confirm that the broker can send the order to the selected marketplace.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
17 of 30 in the Order routing track
201559-59 pp.Next on Order routingForex venue checks for speed, margin, and implementation costA usable venue must support the specific currency pair or cross that will be routed, so pair-coverage is the first order-routing check.
All readings on this track · 30 readings
  1. 1988Why instant basket routing overwhelms specialist liquidity
  2. 2004Retail forex tickets as implementation-cost contracts
  3. 2005A two-gate liquidity filter for futures order routing
  4. 2006Manual after-hours routing and open-outcry fill risk
  5. 2010A futures brokerage quote is an execution specification
  6. 2011Smart order routing, maker-taker, and midpoint execution costs
  7. 2012Compare equivalent listings before routing
  8. 2012Rebate-aware routing and execution cost
  9. 2012Platform routing, fees, and server-side stops
  10. 2013Compare equivalent listings, then route the order
  11. 2013Confirm routing, margin, and fill cost before a live forex order
  12. 2013Brokerage choice as an execution-cost and routing filter
  13. 2014Order routing, pass-through rebates, and liquidity choice
  14. 2014Comparing exchange venues before routing the order
  15. 2014Selecting a futures broker as an execution-architecture problem
  16. 2014Commission shopping is the wrong first filter for a futures order
  17. 2015Routing orders when equivalent products trade on multiple venues
  18. 2015Forex venue checks for speed, margin, and implementation cost
  19. 2015Backup venues and symbol splits in futures routing
  20. 2016Route orders across competing exchange venues
  21. 2016Filter exchange venues before routing orders
  22. 2017Venue choice as an order-routing filter
  23. 2017Venue routing for equivalent listed contracts
  24. 2017Forex broker checks for fill speed, quote honor, and margin
  25. 2017Brokerage choice as an execution-speed and commission filter
  26. 2018Routing equivalent contracts across competing venues
  27. 2018Forex venue selection by fill speed, margin terms, and price honor
  28. 2019Forex execution filters for routing, cost, and liquidity
  29. 2020Routing equivalent listings across competing exchanges
  30. 2020Brokerage filters for routing, commissions, and liquidity
By fieldOrder types and routing87 readingsBy year2015181 readings
All 65 readings tagged Order routing
Also on Order routing5 readings
1986Open outcry hand signals as order routing1988Why instant basket routing overwhelms specialist liquidity1989Finishing a market order in a first index-pit session1995Canceled prints versus executable fills1999Direct access routing and the visible book