SIE practice questionmediumBest Execution
Under FINRA's best execution rule, a broker-dealer is required to:
- AExecute all orders within 10 seconds of receipt
- BAlways execute orders at the National Best Bid and Offer (NBBO)
- CUse reasonable diligence to determine the best market for a security and execute at the most favorable price reasonably obtainable✓ Correct answer
- DRoute all orders exclusively to the NYSE
Explanation
Why C — Use reasonable diligence to determine the best market for a security and execute at the most favorable price reasonably obtainable
FINRA Rule 5310 (best execution) requires broker-dealers to use reasonable diligence to determine the best market for a security and buy or sell at the most favorable price reasonably obtainable under prevailing market conditions. This doesn't mean the firm must always get the NBBO (A) — it must use reasonable diligence considering factors such as order size, market conditions, character of the market for the security, number of markets checked, and accessibility of quotations.
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