A new report from Aite Group, based on a survey of 18 smart order routing providers and users (including including brokerage firm providers BNY ConvergEx, Goldman Sachs, Instinet, Knight Direct, BofA Merrill Lynch, SunGard Assent and UBS; CEP providers Aleri, Progress Apama and Streambase and trading technology providers (FlexTrade, Lava, Marketcetera, QUOD Financial, RealTick, smartTrade, SunGard Global Trading and ULLINKas), finds that demand for smart order routing will exceed $1 billion in 2010.

Smart order routing uses technology to figure out which execution venue will provide the best price for a trade and then routing the order to that venue.

As liquidity continues to fragment globally and firms put multi-asset and multi-geographic trading strategies back on the map with improving markets, smart order router providers must prepare to support the expansion, the Aite Group says. The analyst firm expects demand to increase over the next 12 months, in part supported by guerilla marketing through the attention on high frequency trading. The majority of the $1 billion-plus to be spent on smart order routing next year will go to brokerage providers: Aite Group expects 95% of the firms leveraging a smart order router do so through one or more brokerage providers.

"Though top broker/dealers possess the market intelligence and order flow to deliver the best fills in predominant instruments," says Adam Honor, research director with Aite Group and author of this report, "complex event processing and trading technology providers tend to offer more diversified asset classes, and are popular with firms willing to go it alone."