Since July, securities brokers in Germany are no longer allowed to receive payments from trading venues for routing client orders. The financial regulator BaFin had surveyed 14 institutions in the spring.
Frankfurt. Many brokers have had to forgo an important source of income since July. They are no longer allowed to be paid by trading venues for preferentially routing client orders there. This practice is called Payment for Order Flow or PFOF for short.
A BaFin survey from the spring found that 11 out of 14 institutions had received such fees. At six institutions, PFOF payments accounted for more than 40 percent of commission income.
These incentives have been banned in the EU for some time. Germany granted the industry a transition period until 2026. Many online brokers have adjusted their models, but BaFin suggests that not all new models are legally compliant.
