Newedge Launches Phase 2 of Smart Order Router

The new inhouse, low latency SOR provides direct market access to major equity options and cash equity exchanges for Newedge's executing partners — including small and mid-sized broker dealers and high frequency trading firms.

Newedge has launched Phase2 of the brokerage firm’s smart order routing (SOR) platform for U.S. equity options and cash equity products.

The new in-house, low-latency routing platform is now open to executing market participants — including small and mid-sized registered broker dealers, market makers, exchanges and high frequency traders — providing independent, best execution and superior price discovery, the company said.

The global, multi-asset brokerage and clearing firm made the announcement during the Futures Industry Association (FIA) conference in Boca Raton, a gathering of derivatives industry market professionals.

Phase 1 of the platform, which was made available in Q3 of 2011 of market participants who cleared through Newedge, provides high-speed, efficient execution through direct access to major options exchanges, including: International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), NYSE Amex/NYSE Arca and the Boston Options Exchange (BOX), among others.

"This platform scans a large, diverse amount of data and then determines the optimal destination for every order,” according to Jack Boyle, Senior Director, Financial Futures & Options and Equities Execution (FFO&E) at Newedge, commenting in the release. “The SOR considers price, depth of quote, historical liquidity, fill rates, latency and price discovery, among other factors, and routes the order to the venue of least cost, providing clients with the best price." Complementing the router's technical capabilities Newedge formed a Best Execution Committee, whose role is to examine daily reports that monitor the routing logic to ensure it is being executed properly and to respond immediately to needs of market users.

During the Phase 1, the Newedge SOR averaged over two million cash equity shares and approximately 25,000 equity option contracts per day. In the same release, John Ruskin, Global Head of FFO&E at Newedge, pointed out that since Newedge, “does not operate a proprietary trading desk, the Newedge SOR will now provide clients with an alternative, independent solution in which to efficiently trade cash equity and equity option products. By opening access to more market participants with the launch of Phase 2, we believe that volume and liquidity on the platform will only increase.”

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio