Module 3 · Chapter 5

Best Execution: Orders and the Execution Policy

A broker must get its clients the best overall result on their orders. This chapter follows an order from the app to the exchange, and shows what that duty does and does not promise.

≈ 11 min read 8-question test

In this chapter

  • How an order travels from the app to the exchange, and back
  • What best execution asks of a broker that passes every order to one bank
  • How the client’s own choices, and orders placed at night, change the result

5.1Best execution in one paragraph

When a client taps the order button, Thalvia passes the order to Holmbrecht, which carries it out on the exchange. The law gives Thalvia a duty of best execution: it must take all sufficient steps to get each client the best possible result. For a retail client, that means the best total of the price and the costs. The duty governs how Thalvia chooses and checks Holmbrecht, not the price the client last saw.

Key point

Best execution is a duty to take the right steps, not a promise of a price. Thalvia must choose a good bank, check it and follow its written policy.

Also in this chapter

  1. How an order travels from the app to the exchange
  2. The duty: the best total of price and costs
  3. Why one executing bank is allowed
  4. When the client gives a specific instruction
  5. Orders placed while the exchange is closed
  6. Warning the client before the opening
  7. Your job

Preview

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