An order room is a department or area within a brokerage firm that is charged with the actual processing of trades on behalf of the firm’s clients. Professionals working in an order room may receive orders to buy or sell securities directly from an investor via a telephone call, or receive orders via brokers who have communicated with a brokerage client. This form of brokerage department usually functions with a series of checks and balances that help to ensure orders are executed quickly and efficiently, and that confirmation of the settlement of the trade is relayed to the individual who made the initial request.
Traditionally, an order room allowed for two different ways to submit orders for processing. One approach called for a broker to physically take a documented order to the room and hand the order to an associate. The associate would then take the steps necessary to sell or buy securities as a means of filling the order. Once the order was fully settled, the document was marked as completed, the details entered into an order book, and the original order filed as backup documentation.
Over time, the use of telecommunications helped to streamline the process by allowing brokers to receive orders from clients and immediately forward them to the order room for processing. The process often involves the creation of what is known as an order ticket that provides a means of accurately relaying the terms of the order to the employees who actually execute the order. With the advent of computer technology, electronic order tickets have made it possible for clients to place orders online that are routed to an order room, processed, then confirmed with the client in a matter of minutes. Often, the confirmation is in the form of an email that contains the details of the trade, along with a transaction or confirmation number that is assigned by the brokerage’s order processing system.
As in years past, one of the benefits of the order room is that it serves as a central point for the management of all orders processed by the firm. Within this framework, it is possible to determine the current status of any order received into the system, whether it be received in process or settled. This is especially important in situations where investors are employing a strategy that depends on the orderly and timely completion of a set of orders as the means of generating the desired return.
