ZBB 2022, 141

RWS Verlag Kommunikationsforum GmbH & Co. KG, Köln RWS Verlag Kommunikationsforum GmbH & Co. KG, Köln 2199-1715 Zeitschrift für Bankrecht und Bankwirtschaft ZBB 2022 AufsätzeGunnar Schuster* / Marius Raetz**

Payment for Order Flow

Payment for Order Flow (PFOF) is the practice of execution venues to make payments to a brokerage firm if the brokerage firm routes client orders to these execution venues. Following the “Gamestop” incident, PFOF has become the subject of increased scrutiny in the US and the EU. The European Commission has recently proposed legislation to ban this practice altogether. This article assesses the admissibility of PFOF under MiFID II with a focus on the German implementation and provides an overview of the proposed PFOF ban against the broader MiFIR legislative package.

Table of contents

  • I. Background
    • 1. Model and functioning
    • 2. Criticism
      • 2.1 Investor protection concerns
      • 2.2 Market infrastructure concerns
    • 3. Supervisory response
      • 3.1 US response and market structure
      • 3.2 EU response and market structure
  • II. MiFID II framework
    • 1. Best execution
      • 1.1 Basic framework
      • 1.2 Best execution policy
        • 1.2.1 Selecting a single venue?
        • 1.2.2 Selecting execution venues: which venues are relevant?
        • 1.2.3 Selecting execution venues: making a choice
        • 1.2.4 Method of comparison
        • 1.2.5 Execution price and spread in PFOF
      • 1.3 Regular review
      • 1.4 Ongoing monitoring
      • 1.5 Conclusion
    • 2. Inducement regime
      • 2.1 Quality enhancement
        • 2.1.1 Additional or higher level of service
        • 2.1.2 Inducements and profit
          • 2.1.2.1 No profits from inducements?
          • 2.1.2.2 Proportionality of inducements
      • 2.2 Best interest of the client
      • 2.3 Conclusion
    • 3. Conflicts of interest
      • 3.1 Identifying PFOF as a conflict of interest
      • 3.2 Dealing with conflicts of interest
    • 4. Cost transparency
      • 4.1 Disclosing PFOF to clients
      • 4.2 Disclosing implicit costs (the “spread”)
  • III. Proposed EU legislation
    • 1. General background of the MiFIR proposal
    • 2. Art. 39a MiFIR
  • IV. Conclusion
*
*)
Dr. iur., LL.M. (Chicago), lawyer with Freshfields Bruckhaus Deringer PartG mbB, Frankfurt/M.
**
**)
LL.M. (Columbia), lawyer with Freshfields Bruckhaus Deringer PartG mbB, Frankfurt/M.

Der Inhalt dieses Beitrags ist nicht frei verfügbar.

Für Abonnenten ist der Zugang zu Aufsätzen und Rechtsprechung frei.


Sollten Sie über kein Abonnement verfügen, können Sie den gewünschten Beitrag trotzdem kostenpflichtig erwerben:

Erwerben Sie den gewünschten Beitrag kostenpflichtig per Rechnung.


PayPal Logo

Erwerben Sie den gewünschten Beitrag kostenpflichtig mit PayPal.

Verlagsadresse

RWS Verlag Kommunikationsforum GmbH & Co. KG

Aachener Straße 222

50931 Köln

Postanschrift

RWS Verlag Kommunikationsforum GmbH & Co. KG

Postfach 27 01 25

50508 Köln

Kontakt

T (0221) 400 88-99

F (0221) 400 88-77

info@rws-verlag.de

© 2022 RWS Verlag Kommunikationsforum GmbH & Co. KG

Erweiterte Suche

Seminare

Rubriken

Veranstaltungsarten

Zeitraum

Bücher

Rechtsgebiete

Reihen



Zeitschriften

Aktuell