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Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Best Execution

Definition:

Possibly Marie Antoinette. Or William Wallace.

Oh, we're not talking about town square executions?

On Wall Street, best execution is when a broker giving the client the best price and service possible. That might mean choosing the lowest prices on offers if the client is buying stocks. Or it might mean doing some fancy footwork (financially) to make a trade move smoothly and quickly.

Example

Let's say a client wants a million shares. You can offer 100,000 at $23.13, but there's an offer to sell a million at the higher price of $23.18. If those million are sold to someone else and suddenly there's 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.