| Order routing systems pervade the financial | | | | Much of the current debate over Electronic Order |
| market. They are used by customers to send | | | | Routing Systems and Security is about what |
| orders to their brokers and dealers. Brokers use | | | | system should be adopted. Some of the parties |
| the same systems to forward their | | | | involved would like to see one system used by all |
| customer’s orders on to dealers and | | | | brokers, while many of the trading firms want the |
| exchanges. Dealers use order routing systems to | | | | freedom to develop their own proprietary |
| send orders amongst themselves, and exchanges | | | | systems. The main concern of the exchanges is |
| use them to send orders to other exchanges. | | | | that the system has safeguards in place and is |
| Routing systems must be accurate and quick to | | | | capable of being audited for the sake of |
| keep pace with the market and save time. The | | | | transparency. |
| advent of the electronic order routing system | | | | Most insist that the audit system should be |
| meant that lightening fast orders could be | | | | specified by the exchange, but the maintenance |
| transacted remotely, not just on the floor of the | | | | of the audit trail should be the responsibility of the |
| exchange or on the phone. The electronic | | | | brokerage firms. One way to deal with concerns |
| systems are faster and cheaper. They changed | | | | over compliance would be to levy fines for failure |
| to whole face of the market. | | | | to submit timely reports. This would provide the |
| While it is perfect for customers because it is fast | | | | necessary incentive to brokers to make sure that |
| and convenient, electronic order routing and | | | | their electronic routing systems were functioning |
| security has become a major concern for | | | | as they should and would ensure that security |
| exchanges. As is often the case, as new | | | | was maintained. |
| technology solves problems, it also creates new | | | | Another security measure being implemented is a |
| ones. It is important that careful records be kept | | | | wireless radio network with designated |
| of electronic transactions in case of a problem, | | | | frequencies used to receive on hand held trading |
| because there is no paper trail to follow. Several | | | | devices. This will allow monitoring of practices and |
| brokerage firms have adopted hand held devices | | | | also allows for security encryption to prevent the |
| used by brokers in the trading pit that receive | | | | theft on proprietary information. Electronic order |
| orders electronically from customer’s work | | | | routing is being adopted slowly but surely. Some |
| sites. Using the handheld devices, brokers can | | | | firms have switched over entirely, while others |
| receive, execute and confirm an order in twenty | | | | are implementing it side by side with existing |
| seconds. The confirmation is sent directly to the | | | | traditional practices as the perfect their systems. |
| customer. The system has eight time stamps | | | | New exchanges being built are allocating as much |
| applied during the process which creates a very | | | | space to computers and networks as they are to |
| accurate audit trail should it ever be needed. | | | | the trading floors. |