Market Mechanics: how a broker executes your trade
Private investors will normally buy or sell shares through their broker. Traditionally their broker chooses which member firm to use to complete the transaction having received electronic quotes from a number of competing member firms who offer to execute the buy or sell. The quotes the broker receives are referenced against London Stock Exchange current prices. The broker selects the best price for the transaction and it is duly completed. For bigger transactions the retail broker has the option to broke the transaction over the phone.
With the advent of Direct Market Access private investors are able to enter their own orders directly into the market and offer to sell or buy at better prices (or lower costs) than they might otherwise achieve.
Click here to see an interactive demonstration of a trade being executed.