Die Heuning Pot Literature Guide
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Finance Glossary

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Best Execution

Definition:

It was probably Anne Boleyn. But it might also have been Braveheart. Or maybe the last part of The Lottery. Those forms of execution are all great in the Town Square. But on Wall Street, best execution refers to giving the client the best price and service that the broker handling the trade can give. And best price alone might not always be the best deal - say the client wants a million shares. You can offer 100,000 at $23.13 but there is an offer to sell a million at the higher price of $23.18. If those million are sold to someone else and suddenly there is no supply in the market, the stock likely pops - so the client has 100,000 shares at $23.13 but now the best offer is $23.40. Was that best execution? No. A million shares at the $23.18 was the way to go.

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