By Jane Baird

LONDON, Dec 18 (Reuters) – Europe’s fragmenting stock markets could cost investors profits unless brokers smarten up systems that currently fail to find the best price in 15-20 percent of trades.

Brokers use so-called smart order routing (SOR) to compare prices across the myriad platforms for a client’s order, chop the order into pieces and dribble them into trading venues to have the least possible impact on price.

Systems in Europe are often inefficient and are struggling to keep up with the pace at which markets are changing.

“All the brokers talk of their smart order routing capabilities, but in a lot of cases the use of the word ‘smart’ is actually wrong. They are incredibly clunky,” said Tony Whalley, head of dealing and derivatives at Scottish Widows Investment Partnership.

The equity market in Britain is divided between 25 exchanges, trading platforms and dark pools, Germany is split between 22 and France 23, since the European Commission’s markets in financial instruments directive (MiFID) opened up competition in 2007.