What Is a Broker's Execution Policy Document?

1. What this document typically discloses

A typical execution policy document discloses the broker's general approach to filling client orders, including whether and how it acts as a dealing desk counterparty, which liquidityLiquidity describes how easily an instrument can be bought or sold without significantly affecting its price.Click to read more → sources or providers it draws from, and its stated commitment to providing reasonably fair pricing and execution under normal market conditions.

It's worth reading this specifically for concrete, verifiable statements rather than general reassurance language. A policy that specifically names its liquidity providers or precisely describes its slippageSlippage tolerance sets the maximum acceptable price deviation before an order is rejected rather than executed at a significantly different price..Click to read more → handling process gives more genuinely useful information than one that offers only broad, generic commitments to 'fair and transparent' execution without further detail.

2. Why brokers publish this kind of document

Publishing this kind of disclosure reflects both regulatory expectations around transparency and a broader industry practice of giving clients meaningful information about exactly how their orders are actually processed, rather than leaving this important mechanical detail entirely opaque or undisclosed.

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This document is worth treating as one of the more genuinely informative pieces of a broker's legal documentation, precisely because it addresses the practical mechanics of how your actual trades get filled, a detail that matters directly to your day-to-day trading experience in a way that some other, more abstract legal disclosures don't.

3. What to specifically look for within it

Worth checking within this document: whether the broker explicitly states its execution model (market maker, ECN, or STP), any specific commitments around slippage handling, particularly during volatile conditions, and any disclosed conflicts of interest related to the broker's business model.

It's worth cross-referencing what this document states against your own actual trading experience once you've been active with the broker for a while. A policy that promises fair handling of volatile conditions is worth more once you've seen it hold up during a genuinely fast-moving session, rather than taking the written commitment alone as sufficient confirmation.

4. How this relates to the market maker versus NDD distinction

This execution policy document is often where a broker explicitly states which of the market maker or no-dealing-desk models applies to your account, giving a more authoritative source for this important detail than relying solely on general marketing claims or third-party comparison sites.

This is worth checking directly rather than relying on a broker's general marketing positioning, since 'ECN-style' or 'STP' branding in promotional material doesn't always precisely match the specific, legally binding description found in the actual execution policy document itself.

5. What this document doesn't guarantee

It's worth understanding that an execution policy document describes the broker's general approach and stated intentions, but doesn't guarantee identical, perfect execution on every single trade. Normal market conditions, including genuine liquidity and volatilityVolatility measures how much and how quickly an instrument's price fluctuates.Click to read more → factors, still apply, meaning some variation in actual execution experience remains normal even under a genuinely fair, well-disclosed policy.

This distinction is worth internalising specifically so that normal, expected execution variation during genuinely volatile conditions doesn't feel like a broken promise. A well-disclosed policy that's honest about this variability is, in a meaningful sense, more trustworthy than one implying perfect, guaranteed execution under all conditions, a standard no broker can genuinely meet.

6. Finding and reviewing your broker's specific policy

Most FSCA-regulated brokers make their execution policy document available directly on their website, often within a legal or regulatory documentation section alongside the broader terms and conditions. Reviewing this directly, rather than relying solely on summarised marketing descriptions, gives the most authoritative, complete picture of your broker's actual execution practices.

It's also worth checking whether a broker offers negative balance protection, a feature many FSCA-regulated brokers now provide as standard, which caps your maximum possible loss at your account balance even during extreme, fast-moving market conditions.

The FSCA regulatory framework provides South African retail traders with meaningful protection that extends beyond simply verifying a broker's licence number. The requirement for FSCA-regulated brokers to maintain segregated client accounts means your deposited funds are legally separated from the broker's operating funds. In the event of broker insolvency, this segregation protects client money from creditor claims against the company. FSCA-regulated brokers must also maintain adequate financial resources, submit to regulatory oversight, and adhere to disclosure requirements covering fees, risks, and conflicts of interest. For traders considering offshore brokers outside FSCA supervision, the loss of these domestic protections is a material risk consideration, particularly for larger account balances where the downside of unregulated broker failure would be financially significant.

The FSCA regulatory framework provides South African retail traders with meaningful protection that extends beyond simply verifying a broker's licence number. The requirement for FSCA-regulated brokers to maintain segregated client accounts means your deposited funds are legally separated from the broker's operating funds. In the event of broker insolvency, this segregation protects client money from creditor claims against the company. FSCA-regulated brokers must also maintain adequate financial resources, submit to regulatory oversight, and adhere to disclosure requirements covering fees, risks, and conflicts of interest. For traders considering offshore brokers outside FSCA supervision, the loss of these domestic protections is a material risk consideration, particularly for larger account balances where the downside of unregulated broker failure would be financially significant.