Understanding the New Ban on Payment for Order Flow
As of July 1, 2026, the prohibition of Payment for Order Flow (PFOF) will extend to customers of online brokers, or “Neobrokers,” in Germany. Under EU law, these brokers will no longer receive payments for forwarding customer orders to specific trading venues or intermediaries. This change may lead to shifts in pricing models for users of these services. What do brokers such as Trade Republic and Scalable Capital think about this transformation? Consumer portal biallo.de has conducted surveys to find out.
What is Payment for Order Flow?
PFOF refers to a practice where brokers, like Trade Republic, send their clients’ buy and sell orders to specific trading venues or market makers in exchange for a fee. This setup has enabled many brokers to offer low-cost or even seemingly free trades. However, the critical concern lies in the conflict of interest this creates: brokers might prioritize routing orders to venues that pay the highest fees instead of those offering the best execution price for clients.
Importantly, this ban is not exclusively German; it is based on an EU-wide market regulation. Germany has maximized its allowed transition period until June 30, 2026, meaning the PFOF ban will apply to domestic customers thereafter. How individual brokers will restructure their fees in this new landscape is a pressing question for many investors.
Implications for Investors
The removal of the PFOF practice might lead to increased costs per trade, encouraging brokers to shift towards flat-rate or subscription models. However, there is a silver lining: order execution is expected to become more transparent and aligned with customer interests.
What Do Neobrokers Have to Say About the PFOF Ban?
Biallo.de surveyed several notable providers, including:
- Trade Republic
- Scalable Capital
- Smartbroker+
- Traders Place
- Trading212
- Just Trade
- Finanzen.net Zero
Finanzen.net Zero has not provided clear answers on how its conditions will change post-PFOF ban but emphasizes the intention to maintain attractive offers. However, a definitive commitment to ongoing free ETF savings plans or unchanged order fees has not been confirmed.
Just Trade has similarly avoided specifying its business model adjustments after July 1, 2026. However, it reassures customers that terms are unlikely to change dramatically, signaling stability without offering hard guarantees.
Scalable Capital asserts that customers can continue to set up fee-free savings plans and execute trades under familiar terms, having already adapted to the EU directives as of 2024. It aims to diversify its revenue through its own trading platform and asset management products.
Smartbroker+ plans to absorb the costs of eliminating PFOF, promising to offer the complete product range without changing terms. The CEO believes that the era of zero-fee trades will continue, emphasizing that their business model was never primarily focused on PFOF.
Trade Republic has pledged to keep its promise of free savings plans, while obtaining a BaFin license for its trading platform, potentially allowing revenue from spreads.
Traders Place expects that free trading will not be eliminated due to the ban. The CEO reports minimal dependence on PFOF revenue and anticipates strong client growth to offset any declines.
Trading212 welcomes the PFOF ban, indicating it was never part of their business strategy and vows to maintain their zero-fee trades.
Evaluating the Reliability of Broker Statements
Despite many optimistic claims, investors should closely monitor the advertised “zero-fee trades” and overall transaction costs starting July 1, 2026. Special attention should be paid to changes in spreads—especially outside regular trading hours—as well as any new or increased fees for non-traditional assets like funds or cryptocurrencies.
While some ETF savings plans may remain free, it’s essential for customers to scrutinize price lists, terms of service changes, and broker communications closely. If actual costs rise post-PFOF ban, considering a portfolio comparison or switching brokers might be prudent.
Sources: European Securities and Markets Authority, Federal Ministry of Finance, biallo.de
