Better Finance, the European federation of savers and users of financial services, strongly advised the EU Council to support the proposal to ban ‘kickbacks’ that are detrimental to retail investors, in a statement issued on Friday 18 November.
“Worryingly a ‘non-paper’ from the Presidency of the Council not only shamelessly ignores a straightforward ban, but actually aims to institutionalise a detrimental practice for ‘retail’ investors (payment for order flows, or PFOF)”, the federation lamented.
The European Parliament’s Committee on Economic and Monetary Affairs (ECON) debated PFOFs on Thursday 17 November, hesitating between a conditional retention and an outright ban (see EUROPE 13065/20).
For Guillaume Prache, the Managing Director of Better Finance, “the political momentum is here, we just hope it will not be blocked by governments opposing EU integration to protect national industry players”.
The federation recommends instead: - ensuring adequate, fair, clear, not misleading and accessible reporting; - prohibiting systematic internalisers from trading and executing small-scale transactions; - imposing an adequate definition of best execution; - requiring brokers dealing with retail clients to offer at least one transparent electronic trading platform.
To view the EU Council’s ‘non-paper’: https://aeur.eu/f/459 (Original version in French by Anne Damiani)