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CFA Level I · CFA Level I Exam · Guidance for Standard III: Duties to Clients

A broker who gives no advice and acts only as a trade execution professional receives a client's instruction to sell 50,000 shares. Under Standard III(A), the broker is most likely required to:

She must use her skills and diligence to execute the trade on the most favorable terms achievable while operating within the client's trading instructions. Standard III(A) applies even to execution-only roles, so firm commission cannot drive the choice.

  1. Adelay execution until she has assessed the suitability of the sale for the client
  2. Buse her skills and diligence to execute on the most favorable terms achievable, within the client's instructionsCorrect
  3. Cexecute through the venue that gives the firm the greatest commission, if the instructions are met

Explanation

Execution-only professionals must still work prudently in the client's interest, obtaining the most favorable terms achievable while staying within the client's trading instructions. Choosing a venue for the firm's commission puts the firm's interest first. She has no advisory role, so a suitability assessment is not the requirement described.

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