If a UK or EU retail customer places an order to buy 100 shares of a London-listed stock, the broker who accepts the order is legally required to do something specific with it. The legal phrase is "best execution," and it appears in Article 27 of MiFID II (Directive 2014/65/EU) for the European Union and in COBS 11.2A of the FCA Handbook for the United Kingdom. The two regimes have been substantively identical since the UK retained MiFID II rules following Brexit, with minor divergences that have begun to appear in subsequent FCA consultation papers.
The phrase has a more precise meaning than the words suggest. "Best execution" does not mean the broker has to obtain the absolute best possible price on every single order, which would be impossible. It means the broker has to take "all sufficient steps to obtain, when executing orders, the best possible result for their clients taking into account price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the order." That is the exact wording, and the words after "taking into account" are doing a lot of work. This piece walks through what they mean in practice, and what a retail customer can ask of a broker who claims to be applying them.
The "execution factors" and the order they sit in
The five factors named in the regulation, in the order they appear in the rule, are price, costs, speed, likelihood of execution and settlement, and size. For a retail client, the regulation explicitly states that the best possible result "shall be determined in terms of the total consideration, representing the price of the financial instrument and the costs related to execution." (COBS 11.2A.4 in the FCA Handbook; Article 27(1) in the MiFID II directive.)
The phrase "total consideration" is the part that catches first-time readers off guard. It means that for retail orders, the regulation cares first about the all-in cost (the price of the shares plus all the fees and charges associated with that specific execution), not about any of the other factors in isolation. A broker that fills your order at a slightly worse price but charges nothing for execution is, under the rule, free to claim it has met the test, provided the all-in cost beats the alternative.
The other factors come into play only where the customer has given specific instructions, where the broker is dealing with a particularly large or unusual order, or where the customer is a professional rather than a retail client. For the typical retail order, the regulation is essentially asking: did you get the customer the best total cost across the venues you considered, and can you prove you did?
The order execution policy
Every MiFID II authorised firm is required to publish an order execution policy. The document explains, in plain enough language for a retail client to read, which execution venues the firm uses, how it selects between them, and how it treats different categories of financial instrument. The document is usually a PDF linked from the broker’s legal or regulatory disclosures section, often with a name like "Order Execution Policy" or "Best Execution Policy."
The regulation requires the policy to include "information on the different venues where the firm executes its client orders, the factors affecting the choice of execution venue and at least those venues that enable the firm to obtain on a consistent basis the best possible result for the execution of client orders." For a stock broker, this typically means a list of regulated exchanges, multilateral trading facilities (MTFs), systematic internalisers (which are a category of large investment bank running an internal order book), and possibly the broker’s own internal book.
A retail customer reading the policy is looking for two pieces of information. First, whether the broker uses external venues at all, or whether it routes orders to its own internal book (called principal or "B-book" execution in the contract-for-difference world; called systematic internalisation in equities). Second, how the broker resolves conflicts of interest where its own book is one of the candidate venues for a particular order.
The disclosures the broker is required to publish (or to make available)
MiFID II originally required two annual public disclosures: the RTS 27 report (published quarterly by execution venues, showing execution quality data for each instrument) and the RTS 28 report (published annually by investment firms, showing the top five execution venues per class of financial instrument).
The picture changed significantly in 2021 and 2024. The European Commission, in the wake of the European Securities and Markets Authority’s (ESMA’s) 2021 review report, suspended RTS 27 and made significant changes to the RTS 28 obligations. The UK Financial Conduct Authority subsequently consulted on its own approach and proposed, in CP23/32, to remove the RTS 28 requirement for UK firms. The result, as of 2026, is that the formalised quarterly venue-quality reports are no longer the default disclosure regime in either jurisdiction.
What has not changed is the underlying rule. The broker still owes the customer best execution. The broker still has to be able to demonstrate, to the regulator and (on request) to a client, that its execution arrangements meet the standard. What has changed is the format in which the demonstration is published. Most large firms now publish their own "execution quality" or "best execution" disclosures voluntarily; the contents and the level of detail vary firm by firm.
What a retail customer can ask for
A retail customer who wants to know whether their broker is delivering best execution has, in practice, four useful tools.
- Read the order execution policy. It is published. It is short. It tells you which venues the firm uses and how it routes orders. If the policy describes a routing arrangement that always results in execution against the firm’s own book, you have learned something useful.
- Ask for the firm’s best execution monitoring summary. Under COBS 11.2A.36 in the UK and the equivalent EU provisions, firms are required to monitor the effectiveness of their execution arrangements on an ongoing basis and to summarise the results. Many firms will share an internal summary on request to a retail client. A firm that refuses to provide any information at all about its monitoring is signalling something useful.
- For a specific trade where the customer suspects a poor outcome, request the venue and the timestamp of the execution. The trade confirmation should already contain this information; if it does not, the customer can request it. Comparing the execution price to the public consolidated tape for the same instrument at the same time is a practical post-trade check on whether the order was filled at a price consistent with the prevailing market.
- If the answer to any of the above is unsatisfactory, escalate. In the UK, the Financial Ombudsman Service handles individual complaints against authorised firms once the firm’s own complaints process has been exhausted. In the European Economic Area, the equivalent route is the national competent authority of the member state in which the firm is authorised. Both routes are free for the customer.
The honest summary
Best execution is a real obligation that sits on every regulated retail broker in the United Kingdom and the European Union. The obligation is precisely worded, has been the subject of multiple regulatory enforcement actions, and gives the customer concrete rights to information about how their orders are being handled. Most retail customers never exercise those rights, partly because the disclosures are dense and partly because the recent simplification of the formal reporting regime has made the published data less standardised than it briefly was.
The two-page order execution policy, downloaded once and read with a coffee, is enough to tell most customers everything they need to know about how their broker handles their orders. The customers who have read it are better equipped to evaluate the platform, to ask the right questions on a specific trade, and to choose between two brokers whose marketing material otherwise looks identical. The rule was written for them. It is worth using.