Mar. 26, 2023
• There are many Household investors who are new to trading. Best execution is important in trade execution for Household investors who may not understand the complexities involved in choosing how to execute a trade. • Brokers owe their customers a duty of Best Execution derived from common law agency principles and fiduciary obligations, but it needs to become a rule that the SEC can enforce. • Conflicted orders have no business being in a Best execution order. The word Conflict is the key word in why that should not be allowed. • Without the best execution rule many new Household investors would not realize that there are arrangements between brokers and subpar trading firms who will take advantage of them and pocket the difference in the trade. • Different trading venues may offer different prices, slower execution can lead to missed opportunities. Information leaks can inhibit a successful transaction, and less reliable settlement processes can delay receipt of proceeds. • Market Makers have paid trivial fines for not executing orders in the best possible way. • Brokers recommending mutual funds with 12b-1 fees and revenue sharing arrangements with clearing brokers have also faced best execution charges from the SEC. • Quarterly reviews of execution quality would provide transparency and accountability for the broker-dealers' practices.