SIE practice questionmediumTrade Execution
Which of the following best defines 'best execution' under FINRA rules?
- AObtaining the most favorable terms and price reasonably available for a customer’s order✓ Correct answer
- BExecuting the order on the exchange with the highest trading volume
- CAlways executing as a principal
- DRouting to the exchange chosen by the customer
Explanation
Why A — Obtaining the most favorable terms and price reasonably available for a customer’s order
FINRA requires broker-dealers to seek the most favorable terms available. Routing to high-volume exchanges, acting as principal, or simply following a customer’s exchange preference do not fulfill the regulatory standard.
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