BSE introduces Smart Order Routing for brokers

BSE introduces Smart Order Routing for brokers

Mumbai: After receiving necessary approvals and guidelines from Securities & Exchange Board of India (Sebi), Bombay Stock Exchange Ltd (BSE) has introduced Smart Order Routing (SOR) for its members.

As per the Sebi circular SOR allows brokers’ trading engines to systematically choose the execution destination based on the factors like price, cost, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the order.

SOR is well-established in all developed markets with multiple exchanges. It is widely used by leading brokerage firms globally for more than a decade, BSE said in a statement.

The introduction of SOR in India by Sebi is an important step in the evolution of our market infrastructure, and should result in a significant improvement in the liquidity, integrity and overall quality of our markets. BSE is excited with this development and will be working closely with firms and their clients to facilitate its roll-out, the statement said.

Some key attributes for SOR include, best price, lowest cost, probability of execution, it said.

BSE said the members can avail SOR facility by applying to the exchange with the SOR application form along with the completed vendor certificate. This will be followed by a systems audit by a BSE empanelled CISA certified auditor. Members need to follow guidelines mentioned in the related Sebi and BSE circulars on SOR, the BSE said.

“Since the advent of electronic trading in our equity markets, Indian retail and institutional investors have been proactively pursuing smarter, faster, cheaper and more efficient trading strategies. In most instances, such strategies are automated versions of time-tested strategies from the more manual, floor-based trading era. They now have a new name - algo trading," BSE’s head product strategy, Sayee Srinivasan said.