Define ‘Best Execution’ and How It Applies to Dark Pool Trading.
Best execution is the obligation of a broker or execution venue to take all reasonable steps to obtain the most favorable terms for a client's order, considering factors like price, cost, speed, and likelihood of execution and settlement. In dark pool trading, this means the broker must demonstrate that routing the order to the non-public venue was likely to achieve a better outcome (e.g. better price or less market impact) than executing it on a public exchange.
Glossar
Best Execution
Criteria ⎊ Best Execution is the regulatory and operational mandate requiring trading desks to obtain the most favorable terms reasonably available for client orders, considering price, speed, likelihood of execution, and overall cost.
Dark Pool
Anonymity ⎊ is the defining characteristic of these private trading venues, allowing institutional participants to execute large block orders without signaling intent to the public order book.