From Orders to Markets

Among the clearest rules in U.S. securities law is the duty that brokers have to quot;seek the best execution that is reasonably available for its customers' orders.quot; The problem with the current orientation of the policy discussion on best execution is that it has focused on the narrow, yet unanswerable, question of which venue provides traders with quot;best execution.quot; For example, it makes no sense to employ the same, or even a similar, legal definition of the duty of best execution for large institutional traders and for small retail traders. In this article, we examine the alternative institutions most likely to generate optimal rules regarding best execution