Asymmetric Slippage
Trading MechanicsA practice where a broker consistently passes on negative slippage to traders but keeps positive slippage for itself. Considered an unfair execution practice.
What Is Asymmetric Slippage?
Asymmetric slippage occurs when a broker treats positive and negative Slippage differently. In fair execution, if the market moves against you during order processing, you get a worse price (negative slippage), and if it moves in your favor, you get a better price (positive slippage). With asymmetric slippage, the broker passes on the worse price but keeps the better one, or fills negative slippage instantly while re-quoting on positive slippage.
How to Detect It
Comparing your intended order prices with actual fill prices over many trades can reveal asymmetric slippage. If you consistently get negative slippage but rarely or never receive positive slippage, the pattern may indicate unfair execution. Regulated brokers are required to report execution quality statistics. ESMA-regulated brokers must publish annual execution quality reports showing slippage distributions.
Regulatory Stance
Financial regulators including the FCA, ASIC, and ESMA consider asymmetric slippage a form of client mistreatment. Regulated brokers are expected to pass on price improvements to clients. When choosing a broker, look for those that publish execution statistics showing both positive and negative slippage. This transparency is a sign of fair dealing.
Related Terms
Slippage
The difference between the expected fill price and the actual fill price of an order. Slippage occurs when market conditions change during order execution.
Requote
When a broker rejects your order at the requested price and offers a new price instead. Requotes happen when the price moves during order processing.