Best Execution
Market Microstructure glossary · Market Impact & Execution Algorithms
Definition
A broker's duty to seek the most advantageous terms available for a customer's order, considering price, speed, likelihood of execution, and total cost — not solely the best displayed price.
Best Execution in plain English
When you tell a broker "buy this stock for me," they aren't allowed to just dump your order anywhere convenient — they have a legal duty to hunt for the best overall deal for YOU, not for themselves. "Best" isn't only the lowest price sticker: it also weighs how fast the order fills, how sure it is to fill at all, and every hidden fee, because a slightly better price that takes forever or costs extra in fees can leave you worse off. Think of a personal shopper who must weigh price, shipping speed, and whether the item's even in stock — grabbing the cheapest tag that's sold out helps no one. This rule exists because you're trusting the broker as your agent, so they must put your interests ahead of shortcuts.
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