The SEC’s 2024 Regulation Best Execution requires brokers to rigorously demonstrate they’re getting clients the optimal trade prices. This formalizes what was previously implicit, with detailed documentation of how firms route orders and analyze execution quality across different trading venues.
For investors, this means better trade prices and reduced conflicts of interest. The rules cover stocks, bonds, and increasingly crypto assets. Brokers must now consider factors like speed and likelihood of execution alongside price, especially important for large institutional orders.
The regulation reflects today’s fragmented markets, where dozens of exchanges and dark pools exist. Compliance costs may pressure smaller brokers, potentially accelerating industry consolidation. Ultimately, investors gain transparency into an opaque but critical aspect of trading.
