FINRA Seeks Comment on Modernizing Best Execution Guidance: What Broker-Dealers Should Know

FINRA is taking a fresh look at how its longstanding best execution guidance should apply in today’s rapidly changing securities markets.

On July 24, 2026, FINRA published Regulatory Notice 26-15, requesting industry comment on potential updates to the guidance surrounding FINRA Rule 5310, the organization’s Best Execution and Interpositioning Rule.

The review is part of the FINRA Forward rule modernization initiative and comes as changes in trading technology, market structure, extended-hours trading, artificial intelligence, and other areas continue to reshape how firms handle and execute customer orders.

Importantly, FINRA is not currently proposing to abandon the principles-based framework of Rule 5310. FINRA preliminarily believes the rule itself remains appropriately calibrated. Instead, it is examining whether the extensive interpretive guidance surrounding the rule should be modernized to provide firms with clearer direction in today’s marketplace.

Comments on Regulatory Notice 26-15 are due September 25, 2026.

Why Is FINRA Reviewing Best Execution Guidance Now?

The market in which Rule 5310 operates looks substantially different from the market that existed when many of FINRA’s interpretations were developed.

One particularly important development is the SEC’s proposal to rescind Rule 611 of Regulation NMS, commonly known as the trade-through rule.

Rule 611 generally prohibits trading centers from executing an NMS stock at a price inferior to a protected quotation available elsewhere. However, compliance with Rule 611 and compliance with a broker-dealer’s best execution obligation are separate requirements.

FINRA emphasizes that Rule 5310’s reasonable diligence standard applies regardless of whether a trade-through rule exists.

If Rule 611 is ultimately rescinded, however, firms could face new questions about routing, execution venues, liquidity, pricing benchmarks and the structure of their best execution programs.

FINRA is therefore using Regulatory Notice 26-15 to explore how its guidance should operate in that potential new environment.

Key Areas FINRA Is Reviewing

Regulatory Notice 26-15 is extensive. Rather than focusing on a single change, FINRA is asking the industry to consider numerous aspects of modern order handling and execution.

Best Execution Without the Regulation NMS Trade-Through Rule

A significant portion of the notice addresses how best execution could operate if the SEC rescinds Rules 611 and 610(e) of Regulation NMS.

FINRA is asking questions about how firms would make decisions to connect to, disconnect from, or route orders to specific execution venues without the existing trade-through framework.

Among other issues, FINRA is considering:

• Venue liquidity and trading volume
• Access fees and rebates
• Connectivity and market-data costs
• Latency and speed bumps
• Displayed versus non-displayed liquidity
• Routing to affiliated venues
• Internalization decisions
• Price-improvement standards
• The continued usefulness of the National Best Bid and Offer (NBBO)

The NBBO could remain an important benchmark even without protected quotations, but FINRA is also asking whether other execution-quality benchmarks could be appropriate in certain circumstances.

Access Fees and Transaction Costs

FINRA is also examining the relationship between best execution and the costs associated with accessing particular trading venues.

Transaction costs are already among the factors firms should consider during regular and rigorous reviews of execution quality. FINRA is now asking whether additional guidance is needed concerning venue access fees and other costs.

For example, if one venue displays a superior price but imposes a higher access fee, how should a firm balance the better displayed price against the customer’s ultimate execution cost?

That is the type of practical issue FINRA is asking the industry to address.

Regular and Rigorous Best Execution Reviews

Rule 5310 currently requires firms that do not conduct order-by-order reviews to perform regular and rigorous reviews of execution quality.

At a minimum, these reviews must occur quarterly on a security-by-security and type-of-order basis. Firms must also compare their current routing arrangements with execution quality available from competing markets rather than limiting their analysis to venues they already use.

FINRA is seeking feedback on whether its guidance concerning these reviews should evolve alongside modern routing technology.

This includes questions about when order-by-order analysis remains appropriate, particularly for internalized orders, and whether technologies such as smart order routers with built-in best execution logic could satisfy aspects of that review process.

Institutional Orders Could Receive More Specific Guidance

FINRA Rule 5310 applies broadly to customer transactions, but institutional and retail investors can have very different execution priorities.

For example, a retail customer may generally prioritize prompt execution at the best available price. An institutional investor executing a large transaction may also consider market impact, information leakage, liquidity and other factors.

FINRA is therefore asking whether firms would benefit from more specific best execution guidance for institutional customers, including guidance addressing:

• Algorithmic trading strategies
• Large or block trades
• Request-for-quote platforms
• Single-dealer platforms
• Directed orders
• Customer-specific handling instructions
• Parent orders divided into multiple child orders

The review could ultimately provide firms with additional clarity on how the principles-based standard should account for different customer objectives.

Introducing and Executing Broker-Dealers

The notice also revisits how best execution responsibilities apply when multiple broker-dealers participate in an order’s routing and execution.

FINRA has long maintained that a firm cannot completely transfer its best execution obligations to another party. When one broker-dealer routes an order to another firm for handling and execution, both firms may have best execution responsibilities, although their specific obligations can differ.

FINRA is asking whether additional guidance would help firms understand their responsibilities throughout these routing relationships.

This could be particularly important for introducing firms, clearing firms and executing broker-dealers reviewing their supervisory and order-routing arrangements.

Extended and Overnight Trading

Another significant area involves trading outside traditional market hours.

Best execution obligations do not disappear when regular trading ends. Firms participating in extended-hours trading remain subject to Rule 5310 as well as applicable supervisory requirements.

Extended-hours markets can also present different conditions, including:

• Lower liquidity
• Greater volatility
• Wider spreads
• Changing prices
• More limited pricing information

FINRA notes that retail participation in extended and overnight trading has increased and that additional exchanges have announced plans involving overnight sessions. The regulator is consequently asking what additional best execution guidance firms may need for this evolving environment.

Held and Not Held Orders

Regulatory Notice 26-15 also examines the distinction between held and not held orders.

Generally, a not held order provides a broker-dealer with discretion over the time and price of execution, allowing the firm to work an order in pursuit of a better result. A held order generally requires the broker-dealer to attempt immediate execution.

FINRA specifically raises questions about the use of broad or “blanket” not held provisions for retail customers and situations in which a retail customer’s held order may subsequently be routed as not held.

It is also considering whether firms may need additional flexibility when orders are temporarily held as part of fraud-prevention measures, such as responding to suspected account takeovers.

Listed Options and Other Securities

FINRA’s best execution requirements are not limited to listed stocks.

Rule 5310 applies broadly across securities, including listed and OTC equities, fixed-income securities, security futures, security-based swaps, listed options and OTC options.

FINRA is particularly interested in whether listed options require additional guidance because their market structure differs from listed equities.

Among the issues raised are the availability of execution-quality information, the responsibilities of introducing firms and consolidators, routing across options exchanges, and opportunities for price improvement.

Emerging Technologies and Best Execution

Technology is another important component of FINRA’s review.

FINRA specifically identifies the rapid development of artificial intelligence, large language models and generative AI tools as technologies that could affect order handling, routing and execution processes.

Although these technologies may create operational and compliance efficiencies, FINRA reiterates an important underlying principle: existing FINRA rules continue to apply when firms use AI or similar technologies.

This means firms adopting new execution and routing technology should consider not only what the technology can accomplish, but also how its use fits within their existing regulatory and supervisory responsibilities.

What Should Broker-Dealers Do Now?

Regulatory Notice 26-15 is a request for comment, not a new final rule. Firms should therefore avoid treating the notice as though FINRA has already imposed new best execution requirements.

However, the notice provides useful insight into the areas FINRA is actively evaluating.

Broker-dealers may want to review their existing broker-dealer compliance programs with particular attention to:

• Best execution policies and Written Supervisory Procedures
• Order routing and execution-quality reviews
• Venue-selection processes
• Internalized order flow
• Institutional versus retail order handling
• Extended-hours trading
• Held and not held order procedures
• Use of AI and emerging technologies in execution processes
• Documentation supporting best execution decisions

The breadth of FINRA’s questions also gives firms an opportunity to identify areas where additional guidance could reduce uncertainty or better reflect current market practices.

Key Takeaways

FINRA Regulatory Notice 26-15 represents a broad review of how best execution guidance should function in a securities market that has changed significantly since many existing interpretations were developed.

The underlying principles of Rule 5310 are not currently being discarded. Instead, FINRA is examining how its guidance should address modern realities ranging from a potential post-Rule 611 environment and extended-hours trading to institutional order handling, smart routing technologies and AI.

For broker-dealers, this is an important regulatory development to follow. Firms should understand the areas FINRA is evaluating and consider whether their existing policies, supervisory processes and documentation are equipped to address the changing execution landscape.

Contact Quadrant Regulatory Group

FINRA’s review of best execution guidance highlights how quickly market structure, technology and regulatory expectations can evolve.

If your firm needs assistance evaluating its supervisory procedures, best execution practices, or broader FINRA compliance program, Contact Quadrant Regulatory Group. Our team can help your organization assess regulatory developments and translate changing expectations into practical compliance processes.