What is Best Execution?

At it’s most basic “best execution” refers to the obligation of an investment services firm executing orders on behalf of customers to ensure that the prices those orders receive reflect the optimal mix of price improvement, speed and likelihood of execution.
(ref: http://en.wikipedia.org/wiki/best_execution)

However, despite reams of regulation, best execution remains an elusive concept. A recent survey, conducted by London-based capital markets consultancy GreySpark Partners in association with Best Execution magazine, shows it all depends on your perspective. For the buyside* contingent, price is the main factor but low latency and access to liquidity are the prime objectives in the sellside** camp. The common link is to achieve the best outcome for clients and to navigate the never-ending stream of new rules that are reshaping the trading landscape.

What is Best Execution about?

As the name suggests, our focus is the challenge of attaining ‘best execution’, and in periods of economic and market instability, when margins tighten and political pressure builds for ever greater legislative oversight, a key part of this focus is Regulation & Compliance. We look at how regulations are evolving, the events and consultation process (or lack thereof) that are shaping them and the technology that is providing the participants with solutions that meet both compliance standards and maintain competitive edge.

Best Execution magazine launched in 2008, and in 2012 with the incorporation of a digital marketing channel the reach and ambit are extending to a wider audience. Our prime focus has been on best execution in equities trading which, in a regulatory sense, is the most mature market, but as both the reach of the regulatory authorities’ widens to include other asset classes, and as the buyside looks to diversify its investment strategies we will also track developments in the key areas of the trading lifecycle - pre-trade, trade execution, post-trade and TCA (Transaction Cost Analysis) - across other asset classes.

*Buyside: Private equity funds, mutual funds, unit trusts, hedge funds, pension funds, proprietary trading desks etc. **Sellside: Firms that sell investment services to asset management firms, (the buy-side), or corporate entities. These services encompass a broad range of activities, including broking/dealing, investment banking, advisory functions, and investment research.