NYSE Adopts New Rule Establishing Best Execution Standards

The New York Stock Exchange ("NYSE") adopted new Rule 5310 to establish best execution obligations for member organizations and associated persons.

The purpose of the proposed rule is "to enhance customer order protection by helping customers to receive efficient executions of their transactions at the best market prices."  

The principal provisions of NYSE Rule 5310 are as follows:

• In any transaction for a customer, members must use reasonable diligence to buy or sell in the best market so the price is as favorable as possible under prevailing conditions.
• The rule outlines five specific factors for determining reasonable diligence: (i) the "character of the market," (ii) transaction size, (iii) "number of markets checked," (iv) "accessibility of quotations," and (v) the terms of the order.
• Members are prohibited from interjecting a third party between the member and the best market unless consistent with best execution obligations. If a member employs a broker's broker, the burden rests on the member to show acceptable circumstances, such as crossing orders or preventing undue price movements.
• Members are not required to make a best execution determination beyond a customer's specific unsolicited instruction to route an order to a particular market.

In addition, the rule includes supplementary material defining "market" broadly and clarifying that best execution duties for orders from other broker-dealers arise only when the order is routed for handling and execution. The text includes minor technical adjustments to align with Nasdaq PHLX rules on which it is based.

The rule change was filed for immediate effectiveness as "non-controversial" on December 22, 2025, and will become operative 30 days after the date of the filing.