Best execution

Best execution is a broker's legal obligation to seek the most favorable terms reasonably available when filling a client's order. That means considering price, speed, and the likelihood the order actually gets filled, not just picking whichever venue is most convenient or profitable for the broker itself. The obligation applies whether the broker routes an order to an exchange, an electronic communication network, or a dark pool.

The requirement matters because a broker often has a choice of where to send an order, and different venues can produce different results for the client. A broker that receives payment for order flow from a particular market maker, for example, still has to be able to show that the client got a price at or better than the best available quote across the market, not just a price that was convenient for the broker's own arrangement. Regulators, particularly FINRA, review broker order routing practices to check that this duty is actually being met rather than just claimed.

For an individual investor, best execution is largely invisible in day-to-day trading, since brokers handle order routing automatically and most retail orders in liquid stocks fill close to the quoted price regardless of venue. It becomes more relevant for larger orders, less liquid stocks, or during volatile markets, where the difference between venues and routing decisions can actually show up in the price an investor pays or receives.