A stockbroking firm receives buy and sell orders for the same security from different clients.

When a stockbroking firm receives buy and sell orders for the same security, they must ensure fair execution to avoid conflicts of interest.

Best Execution Principle:

Orders should be executed in the order received (time priority).

Brokers must act impartially and in the best interests of all clients.

No preferential treatment is allowed, even for higher-value orders.

Regulatory Compliance:

Under MiFID II (Markets in Financial Instruments Directive) and FCA COBS rules, brokers must ensure:

Transparency in order handling.

Fair and prompt execution of trades.

No manipulation or front-running (trading ahead of clients).

Why Not Other Options?

A (Withdraw their services) → This would disadvantage clients and is unnecessary.

C (Openly disclose all orders) → Not required unless there is a material conflict of interest.

D (Process sell orders before buy orders) → Would create an unfair trading practice.

???? Reference: FCA Handbook (COBS 11 - Best Execution), MiFID II Regulations, CISI Wealth & Investment Management.