What is smart order routing meaning?

Smart order routing refers to a technology used in electronic trading to optimize the execution of orders by automatically selecting the best available market to route a trade through. The purpose of smart order routing is to improve the speed and efficiency of trade execution, as well as to obtain the best possible price for a particular security. It accomplishes this by analyzing market data such as bid-ask spreads, order book depths, and trading volumes to determine the optimal execution venue. Smart order routing can also help traders avoid fragmented liquidity by routing orders to multiple venues simultaneously, thus improving order execution efficiency. In summary, smart order routing is a vital tool for traders and brokers trading in today's complex financial markets and provides a way to achieve better pricing and faster execution of trades.