The purpose of using a smart order router (SOR) is to achieve the best possible execution for trades by intelligently routing orders to various trading venues. When executing a trade, there are multiple trading venues, such as exchanges, alternative trading systems, and dark pools, each with different liquidity pools and pricing. The SOR's role is to analyze these venues in real time and determine the most optimal destination to execute the order.

By using a smart order router, traders can access a wider range of liquidity sources and potentially obtain better prices, improved fills, and reduced trading costs. The SOR considers various factors, including liquidity, order size, price, execution speed, and trading rules, to make informed routing decisions. It can also dynamically adapt its routing strategy based on market conditions.

Furthermore, a smart order router helps traders comply with regulatory requirements, such as best execution obligations, by seeking the most favorable trading venues for their orders. Overall, the purpose of a smart order router is to enhance trade execution efficiency, increase transparency, and ultimately optimize trading outcomes for market participants.