the best of the book under the magnifying glass

For several years we have noticed that individual investors often question whether institutional traders would benefit from preferential conditions to place orders on the stock exchange, while, on the contrary, individual traders would not have access to them.

In fact, the European Financial Regulation (MiFID II), whose objective is to protect investors and ensure the proper functioning of financial markets, imposes particularly favorable conditions for individual investors, and this at various levels.

In this article we explain what the Euronext Best of Book service is – literally “the best of the book” – thanks to which retail investors can benefit from the best conditions when placing buy / sell orders on the stock exchange.

Explanation of the principle of “Best Execution” on the Stock Exchange

Let’s start with a reminder of the law

Since the adoption of the MiFID II directive by the European Commission in 2014, which aims to ensure greater transparency on the financial markets thanks to harmonized regulations at European level, financial intermediaries (e.g. brokers) are obliged to execute orders to buy and sell securities initiated by individual investors in compliance with the best execution policy.

The best execution policy requires a stockbroker to make every effort to ensure that orders are executed at the most favorable price for his retail clients.

Two factors must be taken into consideration by the broker for best execution to be recognized as valid:

  • the order execution price (purchase / sale);
  • the cost of the transaction that the broker will pay to execute the execution.

Note : So think twice before applying for professional investor status from your stockbroker (for example, to get higher leverage), as you will lose this right to guaranteed best execution.

Also read our article Free Trading: The Hidden Face of Stock Exchange Fees

How does it work in practice?

If your stock broker is regulated in Europe, they must guarantee you “best execution”. However, new players have emerged in recent years looking to compete with major stock exchanges. These are MTFs (“multilateral trading facilities”) and “dark pools”, which do not necessarily apply the execution rules that are usually found on historical exchanges.

Please understand that MTFs and / or “dark pools” do not always execute orders at the best prices and rarely distinguish between retail and professional orders.

The best way to be sure of getting “best execution” is to go to a stockbroker who agrees to execute all of his clients’ orders on a major stock exchange regulated by financial regulations.

See also our 10 tips for choosing the best stockbroker

Euronext and its Best of Book service

When your stock broker submits your order to buy or sell shares on Euronext Paris via the Best of Book service, it is executed at the best available price among all potential counterparties on the stock exchange, including some private counterparties. Your order will be identified as an order initiated by a private investor and will benefit from advantageous prices reserved for individuals in the Euronext book, guaranteeing you:

  • access to the best prices available in Europe thanks to liquidity providers dedicated to improving your execution price;
  • an effective execution price of your order with a negotiation carried out in full competition within the Euronext Central Order Book (which says competition, says multiplicity of counterparties in the order book, guaranteeing a competitive and impartial market);
  • a higher quality of execution that allows to obtain an improvement in the price. Best of Book is the trading platform that most exceeds the EBBO (European Best Bid & Offer), which is the benchmark that reflects the best possible price available among all European trading platforms.

Therefore, with these conditions, your orders may have a better final price for buying or selling securities. Additionally, as a retail investor, you will also have access to a number of additional stocks available.

According to data provided by QuantHouse, in 2021, thanks to “Best of Book”, orders from retail investors benefited on average from a price improvement of 3.07 euros by placing their orders on Euronext rather than on an alternative platform. Additionally, Best of Book enabled individual investors to obtain a better buy or sell price for 98.68% of orders processed. In total, over € 106 million of savings were made by individual investors.

Discover also our article Stock market fees: how not to be fooled

Example of execution of stock exchange orders for the investor

In this illustrated example, we will compare the execution of an order for 100 shares that would have been initiated by a retail investor with the execution of an order for 100 shares that would have been initiated at the same time by a professional investor.

Source: Euronext

In the main order book (accessible to all), we see that 50 shares are available for sale at the price of 250 euros and another 50 shares are available at the price of 300 euros.

The liquidity pocket specially reserved for retail investors shows that there are 50 additional shares available at prices of 200 EUR.

Read also our card How to invest in the stock market? Our step by step guide

The case of the professional investor

Professional investors wishing to buy 100 shares can buy 50 at the price of EUR 250 (top of book) and 50 at the price of EUR 300 (liquidity level 2). He will then have bought 100 shares at an average price of 275 euros.

The case of the retail investor

Individual investors wishing to buy up to 100 shares, but who have access to a reserve of special shares, can buy 50 for the price of 200 euros and 50 for the price of 250 euros. He will then have bought 100 shares at an average price of 225 euros.

In conclusion, remember to always ask your stock broker where and how your stock exchange orders are executed because in addition to brokerage fees, there may be indirect transaction costs that represent significant amounts over time.

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Image source: Freepik

All of our information is, by nature, generic. They do not take into account your personal situation and do not in any way constitute personalized advice for the purpose of carrying out transactions and are not assimilated to a financial consultancy service on investment matters, nor to any incentive to buy or sell financial instruments. The reader is solely responsible for the use of the information provided, without the possibility of an appeal against the publishing house of The responsibility of the editor of cannot in any way be held liable in the event of an error, omission or inappropriate investment.

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