What is the Automated Order Entry System?

The automated order entry system is one of the modern means of facilitating a quick processing of orders within the stock market. Essentially, an automated order entry system make it possible to initiate a small order execution on the exchange floor without having to go through the usual process. Here is some information on how the automated order entry system works, and how this electronic system can be a great time saver.

In the normal process of order execution, the order has to be received, classified, and then routed to a floor broker. The broker in turn evaluates the request and routes it to an analyst who serves as the appropriate specialist for the type of transaction that is requested. While the procedure is relatively efficient, it does take some time from the initiation of the order by the investor to completion on the floor of the exchange. The automated order entry system helps to streamline the process. Instead of being logged and then evaluated for proper routing, the order goes directly from the investor to the specialist. This allows the order to circumvent the steps of going through the hands of a floor broker, and can speed up the processing of the order a great deal.

One of the obvious advantages to the automated order entry system is that time is money, when it comes to trading functions. By speeding up the reception of the order by the specialist, the investor stands a much better chance of getting what he or she wants, rather than possibly missing out because another investor got an order in first. In addition, the confirmation time is cut considerably. Since the notice of completion goes back directly to the investor and not through any intermediate channels, it is possible to have the task completed in a fraction of the time. For a person with a busy day ahead, the automated order entry system means more time to devote to other issues, and less time spent dealing with investments.

Different models of the automated order entry system are in use with various markets. The New York Stock Exchange makes use of an automated order entry system that is called DOT. Short for Designated Order Turnaround, the DOT system has proven to be very reliable and receives widespread use on a daily basis. Similar systems are in operation with other stock exchanges around the world. Among the electronic order systems that are in common usage are such models as PACE, SOES, SOREX, OSS, and Auto Ex.