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.