EU banning PFOF

Hello all. I have seen on twitter that the EU is going to ban PFOF. Any idea if / how that will affect us UK users on 212?

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It’s been banned in the UK for ages.

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It won’t affect UK users and UK brokers. It will affect users of some EU brokers in countries like Germany, where the regulators still allow PFOF.

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Hey, @matth1984 :wave: it’s been a while since we’ve seen you around the block.

Further to what @Donaldo mentioned, PFOF is not a part of our practices, so this scenario will have no impact on our users, whatsoever.

Happy Community Anniversary, by the way. We hope to see more of you, this time around. :v:

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It was banned in :uk: back in 2012.

Happy cake day @matth1984

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Ah, no problems. Thank you for the update. As I am sure you can tell I am a bit clueless with all of this :slight_smile:

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Unless you’re referring to certain German markets where PFOF effectively still exists.

Any broker routing to the L-S exchange or Gettex, for example, will be facilitiating PFOF.

German rules are a European anomaly that the EU Regulatory has started to investigate.

That’s why you see a lot of (unnamed!!!) German based brokers routing to these smaller exchanges. Because it’s cheaper for them as a business.

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It seems this is finally happening:

“The agreement reached today imposes a general ban on ‘payment for order flow’ (PFOF), a practice through which brokers receive payments for forwarding client orders to certain trading platforms

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Then the next line reads

“Under the deal, member states that already allow PFOF will be exempt from the ban provided it is only offered to clients in that member state.”

So, er, Germany will still be allowed to offer PFOF so long as it’s only to Germans?

Am I missing something there? WTF?

And not until 2026.

Speedy work :upside_down_face:

But next, it says:

“However, this practice must be phased out by 30 June 2026,” the statement said.

IMHO, it means a grace period for the existing PFOF allowing countries until all the PFOF practices will be ended. (New PFOF practices would be banned and existing ones must end until 30.06.2026.)

My interpretation is, that countries that already allow PFOF can only be for their local customers and not for their foreign customers. (But I see the “risk” of platforms creating some sort of agreement for their foreigner customers to sign if they want to trade with that platforms.)

First thought, I see a known low-cost German neobroker that openly admit the use PFOF being impacted.

Besides the customer side, I also see a leveling of the playing field for the trading platforms in the matter of competition, as some brokers can legally use the PFOF, generating extra income and being able to reduce their fees to their customers.

With this, Robinhood and similar US brokers most probably won’t come to EU (or UK) due to the PFOF prohibition. (-> The EU is also creating a regulatory and legal moat against US companies in EU, e.g. GDPR, competition rules.)

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Robinhood has had plans to come to the UK despite PFOF being banned. So there is a way to be “commission-free” without PFOF. All UK commission-free brokers prove that (including Trading 212).

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