Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset.
The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.
In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them.
This is a common marketing point of emphasis by brokers, whose action execution varies considerably from company to company.
When execution prices are not matching the submitted price the client is charged or credited the difference resulting from the negative or positive slippage.
Slippage is a very contentious issue among retail traders, which can lead to issues. Many traders view levels of slippage at brokers as a key determinant for their business.
Best Execution a Legal Obligation
Brokers are required by law to diver to their clients the best execution possible. Some regulators are requiring brokers to submit execution stats in order to assess the quality of their services.
Other brokers are regularly posting execution statistics in order to boost the confidence of their clients in the best execution commitment of the company.
Best execution has been a point of emphasis in recent years from both retail and institutional players in the FX industry.
Negotiating and executing transactions in order to promote a robust, fair, open, liquid and appropriately transparent FX market is identified as one of the six main principles outlined in the FX Global Code of Conduct, which came into effect in 2018.