BaFin bans payment for order flow for neobrokers

BaFin issued a supervisory statement prohibiting credit institutions and investment firms from accepting PFOF payments for forwarding client orders.

BaFin's supervisory statement operationalises the EU MiFIR PFOF ban, specifying dos and don'ts for neobrokers. Firms relying on PFOF revenue must restructure commercial models, execution arrangements, and best-execution frameworks, with implications for pricing and client disclosures.

PFOF prohibition materially reshapes retail broker economics, best-execution governance, and inducement compliance in Germany.

Direct supervisory clarification on PFOF affects revenue models and conduct frameworks of all German-facing brokers.

“Credit institutions and investment firms are no longer permitted to accept payments or non-monetary benefits from third parties in return for forwarding client orders. BaFin makes this clear in a new supervisory statement.”