What is best execution and how can you achieve it?

Best execution is one of the most commonly used terms in foreign exchange (FX) and across other financial markets. If your firm has an FX exposure, there is a high probability that you have come across the phrase. But what does it really mean?

Achieving best execution in FX trading is about striking the perfect balance—optimising performance while keeping costs in check. In this blog, we’ll demystify the concept, explain why it matters, and share practical strategies to help you confidently navigate the complexities of FX trading. Whether you’re a seasoned trader or just getting started, mastering best execution is essential to staying ahead in the market.

 

What is best execution in FX?

Best execution is a regulatory requirement that mandates investment firms to take all necessary steps to secure the most favourable terms for their clients when executing trades.

This includes considering a range of execution factors, such as price, costs, speed, likelihood of execution and settlement, size, nature of the order, and any other relevant considerations. Ultimately, the goal is to ensure that clients receive the best possible outcome when trading in foreign exchange markets.

 

Key factors influencing FX best execution

Best execution is governed by various market principles and regulations originating from the FCA Conduct of Business Sourcebook and Principles of Business, the FX Global Code of Conduct and, most notably, MiFID II. 

These regulations collectively emphasise the obligation of investment firms to ensure that they act in the best interest of their clients when executing FX transactions. The primary guidelines outlined are as follows:

Achieving the most favourable terms for the client: Firms are obligated to take all necessary steps to obtain the most favourable terms when executing an order, considering factors such as price, costs, speed, likelihood of execution and settlement, size, nature of the order, and any other relevant considerations.

Fair treatment of clients: Investment firms must treat all clients impartially when executing FX transactions on their behalf. This includes prioritising client interests over the firm’s, avoiding conflicts of interest, and ensuring fair pricing, regardless of the transaction’s size or nature.

Following clients orders: Firms must execute client orders promptly and accurately, in accordance with the instructions received. If a firm is unable to follow a specific instruction from the client, they must inform the client as soon as possible.

Transparency in execution practices: Firms must provide clear, accessible information about execution venues, order handling, pricing, and any potential conflicts of interest. This transparency enables clients to evaluate how their orders are managed and the quality of execution provided.

Monitoring execution policies: Firms must regularly review and assess their execution policies and practices to ensure they meet best execution standards. This includes evaluating the performance of execution venues and methods and making adjustments as needed to adapt to market or regulatory changes.

 

Tools for achieving best execution in 2025

In an increasingly complex FX environment, achieving best execution requires more than just speed — it demands intelligence, integration, and precision. At MillTech, we equip corporates and fund managers with a suite of advanced tools to optimise performance and transparency across the trade lifecycle.

Counterparty diversity via tier 1 liquidity providers

With access to up to 15 Tier 1 liquidity providers, you gain exposure to a wide range of counterparties and FX rates — reducing reliance on any single provider and strengthening your ability to secure competitive FX rates in all market conditions.

Post-Trade analytics & reporting

Understand the true cost of your FX activity with independent transaction cost analysis (TCA). This third-party assessment helps verify execution quality, highlight areas for optimisation, and meet both regulatory and internal reporting obligations.

Integrated execution management

MillTech’s platform streamlines the entire FX workflow, from order initiation to execution, reducing manual tasks and operational risks. This consolidation of processes helps to improve accuracy, control, and consistency, while providing a full audit trail aligned with best execution principles.

Risk monitoring

Best execution goes beyond securing the best price — it also requires robust risk management. MillTech’s FX risk tools help you monitor currency exposures, simulate hedging strategies, and track cost and carry across different currencies, instruments, and timeframes. This level of oversight supports more informed decision-making and enhances resilience in volatile markets.

Governance and control

Strengthen oversight with institutional-grade tools such as custom hedge policy implementation, counterparty monitoring, VaR metrics and macro-market alerts. Together, these capabilities help ensure your operations stay aligned with internal risk frameworks and meet industry best practice standards.

 

Final thoughts

Best execution is more than a regulatory requirement — it’s a strategic advantage. With MillTech’s integrated tools, you can monitor execution quality, enhance transparency, and strengthen FX governance across your business.

 

Ready to benchmark your current FX setup or explore how MillTech can support your FX risk management strategy? Get in touch with our team to learn more.