DEFINITION of 'Best Execution'

The responsibility of brokers to provide the most advantageous order execution for their customers. Best execution requires brokers to get the best price for a trade in the shortest time frame. Basically, it is a precautionary measure placed on brokers by the SEC to ensure that investors' best interests are always served.

BREAKING DOWN 'Best Execution'

Best execution is not just an ethical guideline; it is also the law. To comply with this measure, broker-dealers must report to the SEC quarterly on how customers' orders are routed. Orders can be executed in a number of ways, and the method chosen will affect the investor's net profit or loss on the transaction as well as the broker's revenue.

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