A Best Execution Waiver is a formal acknowledgment from a client, particularly in institutional crypto trading, permitting their broker or trading platform to execute an order without strictly adhering to standard “best execution” obligations. This usually occurs when the client explicitly directs the order to a specific venue or requests a particular execution method.
Mechanism
The mechanism involves a contractual or digital agreement where the client explicitly overrides the default best execution policy. In crypto trading platforms, this might be implemented through specific order types, direct smart contract interactions specifying execution venues, or digital consent forms within an institutional request-for-quote (RFQ) system. The system records the client’s instruction and subsequent trade details, ensuring an auditable trail for regulatory purposes.
Methodology
The underlying methodology grants clients greater control over their trade execution routing, often in exchange for other benefits such as speed, certainty of fill, or access to specific liquidity pools, particularly relevant for large block trades in digital assets. While offering flexibility, this approach shifts accountability for achieving optimal price and cost from the executing party to the instructing client, necessitating clear disclosure and informed consent within the crypto investment framework.
A defensible best execution waiver policy is a documented protocol defining when to shift from automated to high-touch trading to secure optimal outcomes.
A firm may accept a best execution waiver by precisely following a client's specific, informed, and documented instruction, thereby recalibrating its legal duty.
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