NASD expands brokerdealer's duty of best execution

• Published in: The journal of investment compliance Vol. 8; no. 1; pp. 25 - 28
• Main Authors: Yim, Soo J., Farris berg, Christie
• Format: Journal Article
• Language: English
• Published: Emerald Group Publishing Limited 20.03.2007
• Subjects: Financial institutions; Financial management
• ISSN: 1528-5812
• DOI: 10.1108/15285810710739337

Purpose This paper seeks to explain amendments to NASD Rule 2320a, commonly known as the best execution rule, approved by the Securities and Exchange Commission on August 21, 2006. Designmethodologyapproach Explains the scope of the best execution obligation, as amended outlines factors relevant to a best execution determination and suggests questions brokerdealers should consider as they review their best execution policies and procedures in light of the amendments. Findings Most significantly, the amendments make the rule applicable to any transaction for or with a customer or a customer of another brokerdealer, thus imposing the duty of best execution on a member that executes a customer order received from another brokerdealer. The NASD also has reiterated that debt transactions are subject to the rule. In addition, the rule amendments update certain language and add new Interpretive Material regarding certain aspects of the rule. Originalityvalue A useful interpretation of recent amendments to the best execution rule.