Broker execution policy: how to read the document

Risk warning: This guide to reading a broker execution policy is educational information only. This is not financial advice and not investment advice. Trading forex and CFDs carries a high risk of losing money. Leveraged forex and CFDs can cause substantial losses; protections and availability depend on your jurisdiction and contracting entity.

A broker comparison becomes more useful when every conclusion points to a document you can check. This guide shows which policy to read, how to record the evidence and where common assumptions break down. We distinguish general concepts from rules that depend on your country and account classification.

Broker execution policy: how to read the document

Start a broker execution policy review with the document itself rather than a marketing summary. It describes how the firm says it will handle your orders: where they go, which factors it weighs and how it says it will tell you about changes. Marketing pages tend to summarise execution in a single phrase. The policy is where the detail sits.

This guide walks you through the document section by section. It does not rate any firm’s execution and it does not suggest that one model is better for every trader. The aim is to help you read the policy calmly, note what it says and identify the questions worth asking in writing.

What an execution policy is

Use the execution policy as a record of what this particular firm says it will do. In the UK MiFID framework, FCA COBS 11.2A addresses execution arrangements and policies. That is a jurisdiction-specific source, not a universal rule for every forex account. Check the document’s scope before applying a requirement to your own entity or client category.

When you first open the document, note three things before reading further:

The entity name. Which legal entity does the policy apply to? Confirm that it matches the entity named in your client agreement.
The date or version. Most policies show an effective date or version number. Save the file with that date in its name.
The scope. Does the policy apply to all products and client categories, or only some? Retail and professional clients may be treated differently.

For background reading on how one regulator frames these obligations, the FCA Handbook contains a chapter on dealing and managing, including best execution. Rules differ by country, so treat it as context for the UK framework only and check your own jurisdiction’s current materials.

Execution factors and their order

Find the section headed execution factors, or ask the firm where that information appears. Build your comparison from the factors actually listed there. Look for price, costs, speed, likelihood of execution or settlement, order size and order characteristics. Leave a field marked not found if the document does not address it. Do not supply a ranking from another broker’s policy.

As you read this section, work through the following steps:

List the factors exactly as written. Copy the wording into your notes rather than paraphrasing.
Note the stated order of importance. If the policy says one factor usually takes priority, record that and the client category it applies to.
Look for “total consideration” wording. Some policies describe combining price and costs. Note how costs are defined and whether they include spreads, commissions or financing.
Find the exceptions. Policies sometimes describe circumstances, such as fast markets or very large orders, where the firm may weigh factors differently.
Check for specific instructions. Some policies explain how the firm treats a client’s specific instruction and what that may change.

A policy that explains its reasoning clearly is easier to compare. One that lists factors without explaining how they are applied leaves more questions, and those questions are worth putting to the firm in writing.

Venues and counterparties

Find the passages that identify the firm’s role and the parties involved in execution. Avoid assigning the firm a business model from an advertising label. Instead, copy the role stated in the policy, identify the clause, and ask support to explain any term you cannot reconcile with the account agreement. This creates a firm-specific record without assuming how other firms operate.

Read this section with these questions in mind:

Does the firm say it acts as principal, as agent or in a combination of roles?
Does it name the venues or liquidity providers it may use, or describe them only in general terms?
Does it describe how it manages conflicts of interest that may arise from its role?
Does it explain how prices shown on the platform are formed?

Knowing who is on the other side of your trade does not tell you whether execution will be good or poor. It does help you understand which conflicts the firm says it manages and which documents describe them. Our guide to forex order types and execution covers how different order instructions interact with these arrangements.

How order types appear in the broker execution policy

Create a separate note for every order type you intend to research. Search the policy for market, limit, stop, slippage, partial fill and price gap. For each result, record what the firm states, including exceptions. If an explanation is absent, ask for the applicable document rather than inferring an execution promise from the order’s name.

Look for plain answers to these points. Does the policy say whether slippage can occur in both directions? Next, check how stop orders are filled when a price gaps. Is there wording on whether limit orders can be filled at a better price than requested? Finally, see whether it mentions instant execution, market execution or both. Write each answer in your notes alongside the paragraph number so you can find it again.

If the document is silent on any of these, that is worth recording too. Silence is not proof of anything, but it marks a point to raise with the firm.

Changes and notifications

Check the document’s review and notification clauses. Record whether it names a channel for notices, a review process or an effective date. Treat those as the firm’s published statements for that version. If a notice arrives, compare it with the saved document before deciding what the change means for the account.

A simple routine helps here. Save each version of the policy you download, with the date in the filename. When you receive a notice of change, download the new version and compare it with your saved copy. Note which sections changed and whether the change affects the order types or products you use. If you are unsure what a change means in practice, ask the firm to explain it in writing.

Some policies also mention periodic reports or summaries about execution. If the firm publishes these, note where they are and save copies with dates.

Questions to ask a broker about its execution policy

Written questions create a record and often produce clearer answers than a phone call. Keep each question specific and ask the firm to point to the relevant clause.

Which legal entity does this execution policy apply to, and is it the same entity named in my client agreement?
For my client category, which execution factor do you treat as most important, and why?
Do you act as counterparty to my trades, and how do you manage the conflicts this may create?
How do you handle stop orders when the market gaps?
Can slippage occur in my favour as well as against me?
How and when will you notify me if this policy changes?

Store the replies in the same folder as the policy itself. Our forex broker evidence worksheet is one way to keep these records together.

Illustrative research scenario: an unanswered clause

This is a hypothetical reading exercise, not a customer story or a report of actual execution. A reader finds a paragraph about stop orders but cannot find an answer about price gaps. Their comparison note records the document title, version, page and the unanswered question. They do not fill the gap using another firm’s explanation.

The next step is a written request asking which clause applies. When a reply arrives, the reader saves it beside the policy and records whether it identifies an existing clause or a separate document. An answer that simply repeats a marketing phrase leaves the original question open. This method documents an uncertainty without claiming that a missing answer proves misconduct.

A short reading checklist

Use this checklist each time you review a broker execution policy. Confirm that the entity in the policy matches the entity in your agreement. Note the version or effective date and save a copy. List the execution factors and their stated order for your client category. Record whether the firm acts as principal, agent or both. Note what the policy says about slippage, gaps and partial fills. Record how the firm says it will notify you of changes. Finally, write down any question the document leaves unanswered and send it to the firm in writing.

Working through the same list each time makes comparisons more consistent and helps you spot when a document is vague rather than reassuring.

Risks to understand

Do not convert a policy statement into an assurance about your next order. Keep any fill, timing or price commitment together with its conditions and exceptions. If the firm’s role raises a conflict question, record the clause and ask how it is addressed. Separately check the firm through the regulator’s own service. The FCA Firm Checker is a starting point for researching UK authorisation; a policy PDF or familiar logo is not that check.

Read the execution policy together with the client agreement, risk disclosure and cost information, and keep dated copies of each. Educational information only. This is not financial advice and not investment advice. Trading forex and CFDs carries a high risk of losing money; protections and availability depend on your jurisdiction and contracting entity.

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Broker execution policy: how to read the document