ESMA warns firms and investors for risks arising from payment for order flow

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, is issuing a public statement to remind firms that the receipt of payment for order flow (PFOF) raises significant investor protection concerns. It also highlights key MiFID II obligations aimed at ensuring firms act in their clients’ best interest when executing their orders.

See ESMA’s full statement.

Update 9/2/2022

Following the ESMA call to supervisory bodies to delve deeper into the practices of PFOF, the AFM looked into the execution quality of two PFOF trading venues and one non-PFOF trading venues, all three used by pan-European operating low-cost neobrokers. The research results are published in this paper.

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