Best Execution
FINRA's requirement that firms use reasonable diligence to get customers the most favorable terms reasonably available — considering price, speed, and likelihood of execution — on every customer order.
On the exam the tell is a scenario where the firm gets something — a rebate, payment for order flow, or routing to an affiliated venue — while the customer gets a worse fill; the answer is always that the firm still owed best execution and violated FINRA Rule 5310. Watch the trap that price is the only factor: the review also weighs the size and type of order and the markets actually checked, and Rule 5310 demands a “regular and rigorous” review (at least quarterly, security- and order-type-by-order-type) of where the firm routes. A firm cannot simply route everywhere it always has.
Don’t confuse best execution with the bid-ask spread — that’s the quote the customer trades against, not the firm’s diligence duty. A handy hook: best execution is about the route to the trade, not the price tag on the trade. Note that limit orders can go unfilled without breaching the duty — non-execution because the market never reached the limit isn’t a best-execution failure, since a limit order guarantees price, not a fill.
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