Best Execution Requirements

What this video covers

• Why best execution is a reasonable-diligence standard rather than an absolute price guarantee, and why the obligation reaches associated persons
• How the duty applies when a member acts as agent or principal, and why fair commissions, markups, and markdowns are a separate issue
• The five named diligence factors, including market character, size and type, markets checked, quotation accessibility, and order terms and conditions
• Why the factor list is open, why execution quality statistics are not one of the five named factors, and why the customer price standard is relative to prevailing conditions
• When interpositioning can be acceptable, where the burden of proof sits, and why understaffing or reciprocal business is never a defense
• How an unsolicited instruction to route to a specific market changes the best execution determination while preserving the duty to process the order promptly on the customer's exact terms
• How dollar and yield quotations work in debt markets, why another broker-dealer's quote hit is not order handling, and what thin-market policies and four-times-a-year reviews must cover