What does the term "best execution" refer to?

The term "best execution" refers to executing client trades at the best possible terms. This concept is grounded in the obligation of investment advisers and brokerage firms to ensure that trades are executed in a manner that is most favorable to the client, considering various factors such as price, speed of execution, size of the order, and overall market conditions.

When a firm prioritizes best execution, it evaluates multiple factors to provide the most advantageous results for clients, rather than merely focusing on minimizing costs or adhering to specific trading hours. The primary goal is to safeguard the client's interests by ensuring they receive the best available outcomes when their orders are executed in the market.

This commitment typically involves using appropriate trading venues, taking into account available prices and liquidity, and continually assessing execution quality to align with the firm's fiduciary duty to its clients.