How Does Guaranteed Execution Differ from Best Effort Execution in Trading?
Guaranteed execution, often provided by principal OTC desks, means the price quoted at the time of the agreement is the price the investor will receive, with no slippage. Best effort execution, typical on agency exchanges, means the order will be executed at the best available price at the time of execution, but the final price may differ from the price when the order was placed, meaning slippage can occur.
Glossar
Best Effort Execution
Standard ⎊ Best Effort Execution represents a fundamental standard of care in the routing and fulfillment of client orders, particularly prevalent in Over-The-Counter (OTC) and less liquid crypto derivatives markets.
Best Available Price
Execution ⎊ Best Available Price, within cryptocurrency derivatives, represents the lowest ask price accessible to a trader given prevailing market conditions and order book depth.
Guaranteed Execution
Execution ⎊ Within cryptocurrency derivatives and options trading, guaranteed execution represents a commitment by a liquidity provider to fulfill an order regardless of prevailing market conditions, a feature increasingly relevant as decentralized exchanges (DEXs) mature.