Best Execution – Why It’s Critical
Best execution, in the context of brokerage transactions, refers to the obligation of brokers to execute client orders in a way that maximizes the value of the trade for the client. This concept ensures that brokers prioritize the client’s interests by striving to obtain the best possible price and overall outcome when executing a trade.
Considerations include:
- Price: Ensuring that the client receives the best available price at the time of the trade.
- Speed: Executing the trade promptly to minimize any market fluctuations that could negatively impact the outcome.
- Liquidity: Ensuring the trade is executed in a market that provides sufficient liquidity, so the trade can be completed without significant price slippage.
- Costs: Minimizing the transaction costs, such as commissions or fees, which can affect the net returns for the client.
- Market Conditions: Taking into account current market conditions, such as volatility or depth, to determine the most favorable execution method.
The information in this post was compiled by S. Zachary Fineberg, CFP(r) Managing Member of Fineberg Wealth Management, LLC, a registered investment advisor. If you would like to schedule a consultation to discuss how Fineberg Wealth Management can help you reach your long-term financial goals, please make contact to discuss.
