The Financial Instruments and Exchange Act calls the policy and method to be set the "best execution policy, etc.". A firm publishes it and executes orders in line with it. For sales and purchases of listed share certificates and similar securities and over-the-counter-traded securities, it gives clients information before accepting their orders (in principle not applied to professional investors). When asked after execution, it explains that the order was executed in line with the policy and gives related information1. This site writes "best execution" for the concept and "best execution policy, etc." for the policy and method that the law requires.

A Cabinet Order decides which transactions need a best execution policy, etc. They are limited to sales and purchases of listed share certificates and similar securities, over-the-counter-traded securities, and handled securities, and do not include derivatives transactions2.

Notes

  1. "金融商品取引法" (Financial Instruments and Exchange Act, in Japanese), Article 40-2, paragraphs 1 to 5. The scope of paragraph 4 is in Article 16-6, paragraph 3 of the Order for Enforcement, and the exemption for professional investors in Article 45, item 2 of the Act. ↩

  2. "金融商品取引法施行令" (Order for Enforcement of the Financial Instruments and Exchange Act, in Japanese), Article 16-6, paragraph 1. ↩