FINRA Best Execution Requires Seeking Broker Quotes for Less Liquid Securities

FINRA’s new best execution rule, which takes effect May 31, requires enhanced due diligence for securities for which there are limited quotations or pricing information available. For such securities, FINRA requires firms to have written policies and procedures “to address the steps the firm will take to determine the best market for such a security” and to “document how the firm has complied with those policies and procedures.” FINRA suggests that “contacting other brokers may be necessary to satisfy a firm’s best execution obligations.” FINRA also requires heightened procedures for handling foreign securities in non-U.S. markets.