Even if you’ve traded stocks your entire adult life, you may have never heard of Best Execution. That’s because it’s not something that your broker typically advertises. In the traditional stock market, offering best execution is not a differentiator, it's the law. Best Execution is guaranteed by National Best Bid and Offer (NBBO), a regulation under SEC Rule 611, that requires brokers to execute trades at the best available ask or bid price when buying securities on behalf of their clients.
In today’s market, NBBO is possible because of smart order routers. When you click 'buy' or 'sell' on E*Trade, TD Ameritrade or any other online brokerage, your trade is sent to a smart order router which uses advanced algorithms to determine the type, size and, potential market impact of the order. It then searches multiple exchanges and liquidity providers to fill your order quickly and at the best price.
Best Execution In The Crypto Market
Currently, there is no regulation requiring crypto trading platforms to honor NBBO. Because of this, the order routing architecture of most popular crypto trading platforms aren't designed to offer customers Best Execution. Most crypto 'brokers' use one single exchange to route their orders – offering customers one single price option and limited access to the market.
Due to the global and sometimes volatile nature of the crypto market, there are often significant price discrepancies across exchanges. This price variance has frequently been called the "Kimchi Premium" and it specifically calls out the gap in cryptocurrency (primarily BTC) prices on South Korean exchanges compared to other foreign exchanges. For example, in January when Bitcoin hit $19,500 on exchanges like GDAX and Binance, it was listed at $25,000 on Korean exchanges.
The Kimchi Premium has since shrunk significantly and the prices of crypto on most Korean exchanges are much closer to those of other foreign exchanges. Despite this, variations in price still exist, even amongst the most reputable exchanges. For example, at the moment of writing this, the price of Bitcoin on Bitfinex is $6,394.00, while itBit lists it at $6,412.60. That's nearly a $20 price difference.
See below for the price differences amongst other top exchanges:
|Exchange||Price of BTC|
|GDAX (Coinbase Pro)||$6,394|
Voyager's Smart Order Router
The current crypto asset market structure forces investors to search for the best price on their own – often leading customers to open multiple accounts on different exchanges and trading platforms. At Voyager, we believe that crypto investors deserve better. They deserve the service and security that the traditional market offers them. To give customers just this, we’ve built a smart order router for the crypto market. By partnering with the most trusted and secure exchanges and liquidity providers, we offer investors wider access to the market, better prices on their trades and faster, more reliable execution. Our state of the art router is constantly monitoring the crypto market and always knows where to achieve best execution, even if that means filling an order fractionally across multiple exchanges. It processes data in real-time and executes orders within milliseconds of a customer placing a trade.
Voyager’s smart order router is engineered to unify the fragmented market and allows investors to access the universe of the crypto asset market, in one app. As with everything at Voyager, our goal is to bring the maturity and reliability of the traditional equities market, all while developing new and innovative solutions for the crypto investor.
Rather than operating as a traditional centralized exchange, Voyager will serve as a routing engine for other exchanges, helping investors buy and sell 15 cryptocurrencies at the best available prices without having to open dozens of accounts.
Sign up now to get access to the first multi-exchange crypto broker.