Order Routing System (ORS)
An Order Routing System (ORS) is a specialized financial technology component that directs trading orders from multiple sources to appropriate execution venues while enforcing trading rules, risk limits, and regulatory requirements. It serves as a critical intermediary between traders and exchanges, optimizing order flow and ensuring compliant execution.
Core functions of an ORS
Order Routing Systems perform several essential functions in modern electronic trading:
- Order validation and risk checks
- Validates order parameters against trading rules
- Performs pre-trade risk checks
- Enforces position and exposure limits
- Venue selection
- Determines optimal execution venues
- Interfaces with Smart Order Routers (SOR)
- Manages connectivity to multiple markets
- Message transformation
- Converts internal order formats to venue-specific protocols
- Handles FIX Protocol translations
- Normalizes market data responses
Next generation time-series database
QuestDB is an open-source time-series database optimized for market and heavy industry data. Built from scratch in Java and C++, it offers high-throughput ingestion and fast SQL queries with time-series extensions.
Integration with trading infrastructure
The ORS operates as part of a larger trading technology stack:
This system interfaces with:
- Order Management Systems (OMS)
- Market Data Feed Handlers
- Exchange gateways
- Risk management systems
Next generation time-series database
QuestDB is an open-source time-series database optimized for market and heavy industry data. Built from scratch in Java and C++, it offers high-throughput ingestion and fast SQL queries with time-series extensions.
Performance considerations
Key performance metrics for an ORS include:
- Latency management
- Minimizes order processing delays
- Optimizes message paths
- Supports low latency trading networks
- Throughput capacity
- Handles peak message rates
- Manages concurrent connections
- Implements order throttling
- Reliability requirements
- Ensures order delivery guarantees
- Provides failover capabilities
- Maintains audit trails
The ORS must balance these performance requirements while maintaining strict risk controls and regulatory compliance.
Risk management features
Modern Order Routing Systems incorporate sophisticated risk management capabilities:
- Pre-trade controls
- Credit checks
- Position limits
- Order size restrictions
- Market risk controls
- Price collar checks
- Market impact cost estimation
- Volatility interruptions
- Operational risk management
- Duplicate order prevention
- Error trade detection
- Circuit breaker
Market structure considerations
The ORS must adapt to complex market structures:
- Market fragmentation
- Routes orders across multiple venues
- Handles market fragmentation
- Supports cross-market surveillance
- Order types
- Manages complex order types
- Supports algorithmic trading
- Handles multi-leg order execution
- Regulatory requirements
- Enforces best execution policies
- Maintains audit trails
- Supports regulatory reporting
Technology architecture
Modern ORS architectures typically feature:
Key components include:
- Highly available infrastructure
- Real-time monitoring systems
- Disaster recovery capabilities