A client sends a market order, sees 1.0850 on the screen and gets filled at 1.0851. They open a complaint citing best execution. Nine times out of ten the complaint fails, and the reason is that the rule they are invoking does not say what they think it says.
Best execution is a process obligation. Under MiFID II a firm has to take all sufficient steps to obtain the best possible result for its clients, judged across several factors, and it has to be able to demonstrate that it did. A single fill a fraction away from a screen price proves nothing on its own. A pattern of fills that consistently favour the firm proves quite a lot.
What the obligation says
The duty sits in the client order handling provisions of MiFID II and its national implementations, and equivalent rules exist in the UK and in most developed regimes. It applies when a firm executes orders on behalf of clients, and it survives the fact that a firm may be dealing on its own account rather than routing to an exchange.
Three things follow from it. The firm must establish and publish an order execution policy. It must obtain client consent to that policy before executing orders, with an explicit consent required for executing outside a regulated venue. And it must monitor the effectiveness of its arrangements and correct deficiencies it finds. The wider framing of these obligations is in MiFID II explained.
The factors, and how they are weighted
The rules name a set of execution factors and require the firm to decide their relative importance for each client type and instrument. For retail clients the regime shortcuts most of that debate: the best possible result is determined by total consideration, meaning the price of the instrument plus every cost of execution.
| Factor | What it covers | When it dominates |
|---|---|---|
| Price | The rate at which the order fills | Almost always, for retail clients |
| Costs | Commission, markup, venue and clearing fees | Combined with price as total consideration |
| Speed | Latency from instruction to execution | Fast markets and short holding periods |
| Likelihood of execution | Whether the order fills at all | Thin instruments and large size |
| Size | Volume relative to available liquidity | Orders larger than the top of the book |
| Nature of the order | Specific client instructions | A limit at a named price overrides the rest |
The last row carries a trap worth knowing. Where a client gives a specific instruction, the firm satisfies best execution by following it, for that part of the order. Setting a limit price means you have taken the price decision yourself, and the firm is not obliged to improve on it.
The execution policy, and what to read in it
A published execution policy should name the venues or counterparties the firm uses, explain how it weighs the factors, and disclose whether the firm executes against its own book. That disclosure is the one clients skip and the one that matters most, because it tells you whether your counterparty profits when you lose, which is the distinction laid out in A-book versus B-book.
Dealing on own account is permitted and common in retail CFDs. The obligation does not disappear because the firm is the counterparty: the price offered still has to meet the standard, and the firm still has to monitor whether it does. What is not permitted is presenting a dealing desk model as agency routing, or burying the arrangement in a paragraph nobody reads.
Best execution is not a promise about any individual fill. It is a promise about the process, the disclosure and the monitoring. A firm that cannot produce evidence of ongoing execution quality review has a problem even if every fill was fine.
Monitoring is where firms fail
The policy is the easy half. Regulators have repeatedly found that firms write a reasonable policy and then never test it, which is a breach in its own right. Monitoring means sampling actual executions against a reference price, measuring how often fills land better and worse than the quote, checking whether rejections and re-quotes cluster in a way that favours the firm, and documenting what was done when something looked wrong.
Symmetry is the number that gives the game away. If price improvement and negative slippage both occur, and roughly in proportion, the arrangement is behaving as a market should. If clients are only ever slipped against, someone has configured an execution tolerance in one direction. The mechanics behind those outcomes are covered in slippage and, for the older model, in requotes and execution.
The public reporting side of the regime has been scaled back in both the UK and the EU, with the standalone venue reports that firms once published annually removed or suspended. The underlying duty to monitor and to demonstrate compliance did not go anywhere. Firms that read the reporting change as a relaxation of the obligation have misread it.
What a client can actually do
Read the execution policy before funding, not after a dispute. Check whether the firm names its liquidity providers or discloses that it deals on own account. Then keep your own record: timestamped screenshots or platform statements showing quoted price and fill price on the trades that concerned you. A complaint supported by twenty documented fills across two months is an entirely different conversation from a complaint about one bad tick.
If the firm is regulated in a jurisdiction with an ombudsman or complaints scheme, that route exists once the firm's own process is exhausted. If it is not, there is no route, which is one more reason to check the register before opening the account, using the walkthrough in how to check a broker licence. Trading leveraged products carries a high risk of loss regardless of how well a firm executes.
"Show me a firm's execution monitoring file and I will tell you more about how it treats clients than any amount of marketing about tight spreads. Most firms do not have one."
— Roman Onta, Executive Director, SINGUARD
Key Takeaways
- Best execution is a duty of process and evidence, not a guarantee of the best price on each fill.
- For retail clients the deciding measure is total consideration: price plus all costs of execution.
- A specific client instruction, such as a limit price, satisfies the obligation for that part of the order.
- Asymmetric slippage across many fills is the pattern that signals a configuration problem, not a single bad tick.
Frequently Asked Questions
Does best execution mean I always get the best available price?
No. The obligation is to take sufficient steps to obtain the best possible result taking several factors into account, including price, costs, speed, likelihood of execution and settlement, and size. For a retail client the rules treat total consideration, meaning price plus all execution costs, as the dominant factor, but a single fill being a fraction worse than a quoted price is not by itself a breach.
Where do I find my broker's execution policy?
A regulated firm must publish an order execution policy and provide it before you begin trading, usually in the legal documents section of the website and inside the account opening pack. It should name the execution venues or counterparties used, explain how the firm weighs the execution factors, and state whether the firm executes against its own book.
Is a broker allowed to be the counterparty to my trade?
Yes, provided the arrangement is disclosed and the firm still meets its best execution obligation on the price it gives you. Many retail CFD firms deal on own account by design. The regulatory concern is not the model itself but whether the prices and the handling of orders can be shown to deliver the required result, and whether the client was told clearly which model applies.