Conditional Routing— What You Should Ask Your Brokers

The conditional order type is a useful and popular tool for seeking block liquidity while also helping to reduce execution costs and the associated potential for information leakage. Despite the order type’s widespread adoption, the conditional order ecosystem is often misunderstood.

In this paper, Virtu offers some simple recommendations to make the conditional order routing space more performant through transparency:
• Adopt an industry standard for conditional firm up logic.
• Furnish the buy-side with questions they should be asking their routing brokers in order to become more informed on conditional order routing practices.

Though the data and examples presented are US focused, the discussion and recommendations are global in consideration and application.

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