Best Execution and Trading Policy Template for RIAs
Advisers Act Section 206 and Form ADV Part 2A Item 12
How brokers are chosen and reviewed, how orders are placed and aggregated, how research and soft dollars are handled, and what happens when a trade goes wrong.
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What the rule requires
An adviser's fiduciary duty includes seeking best execution: the most favourable terms reasonably available for client transactions, which is not simply the lowest commission. Using client commissions to pay for research is permitted within the Section 28(e) safe harbour.
Form ADV Part 2A Item 12 requires disclosure of how brokers are selected, soft dollar arrangements, directed brokerage and aggregation practices, and examiners review trade error handling and allocation of aggregated orders.
What the policy covers
The sections of Luna's model Trading and Brokerage policy. Your draft includes only the clauses that apply to your firm.
- 1Scope
- 2Best execution and broker selection
- 3Orders
- 4Aggregation and allocation of orders
- 5Research, soft dollars and directed brokerage
- 6Conflicts with brokers
- 7Trade errors
- 8Monitoring, records, disclosure and reporting
What Luna asks you
A few of the questions that shape the draft:
- Whether the firm trades actively or only incidentally
- Who reviews best execution, and how often
- Whether the firm uses soft dollars or accepts directed brokerage
- Who handles trade errors
How drafting works
- 01Answer questions about your firm
Plain questions about how you operate. Where there is a common answer, Luna suggests it; where you are not sure, say so and it is flagged rather than assumed.
- 02Luna drafts the policy
Only the clauses that apply to your firm, in your firm's name, each traced to the rule or choice it comes from.
- 03Review what is left
Anything unanswered is marked in the text and listed for you, and the policy cannot be approved until each is settled.
- 04Edit, approve and roll out
It is your policy: edit it like any other, approve it, and have employees acknowledge it in the same place.
Read the source
Other policies
A summary of what the rule requires, current as of October 2026, so you can see what the policy covers. It is not legal advice. A policy drafted in Luna is your firm's draft to review, edit and adopt.