What is Best of Book?


What is Best of Book and how does it work?

Roland Prevot, Head of Retail Cash Equity at Euronext, explains what Euronext Best of Book is, how it works and the advantages for retail investors.
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What is Best of Book?

Best of Book (BoB) is a functionality Euronext launched to improve the trading conditions for retail investors - those investors who are trading for their own account as private individuals.

With Best of Book, when a retail investor trades on the exchange, they will not only benefit from a better price, but will also have more shares available to trade, compared to those available to professionals.

Best of Book has been designed to guarantee best execution to retail investors when they trade on Euronext. 


What is best execution?

Best execution is a concept implemented by regulators that obliges retail brokers to execute their clients' orders on the trading venue which is the most favourable for the investor.

To do so, the broker needs to consider two elements:

  1. The trading price at which the order will be executed.
  2. The cost that the broker will have to pay to provide execution.

For instance, for a buy order (an order to buy a share), the best execution will be on the trading venue where the combination of price + cost is the lowest. 


How does Best of Book work?

To build Best of Book, we asked liquidity providers to agree to provide prices at the Euronext Best Bid and Offer (the EBBO) on Euronext's Central Order Book. Those prices are exclusively available for orders initiated by retail investors.

So when a retail investor places an order on Euronext. they have access to the pool of liquidity available to all professionals, plus an additional pool of liquidity reserved only for retail investors.

We have calculated that Best of Book improves the execution price for retail investors by around €1.60 on average (in 2021 the average was €3.00).


How can I benefit from Best of Book?

First. to benefit from Best of Book, you need to trade on Euronext.

Unfortunately, not all retail brokers guarantee that they will execute their clients' order on the exchange; sometimes they choose to trade on alternative trading venues.

So before opening an account with a broker it is best to make sure that the broker is able to trade on Euronext. whether directly or indirectly, and that the broker can deliver best execution via Euronext Best of Book.

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