Difference between revisions of "Payment for Order Flow"

From ACT Wiki
Jump to: navigation, search
m (Categorise the page.)
(Identify financial conduct context.)
 
(3 intermediate revisions by the same user not shown)
Line 1: Line 1:
 +
''Financial conduct''.
 +
 
(PFOF).
 
(PFOF).
  
Payment for order flow is defined by the UK [[Financial Conduct Authority]] in FG12/13 [http://www.fca.org.uk/your-fca/documents/finalised-guidance/fsa-fg1213], origibnally issued by the [[FSA]], as an arrangement whereby a [[broker]] receives payment from [[market maker]]s, in exchange for sending order flow to them.
+
Payment for order flow is defined by the UK [[Financial Conduct Authority]] (FCA) in FG12/13 [http://www.fca.org.uk/your-fca/documents/finalised-guidance/fsa-fg1213], originally issued by the former [[FSA]], as an arrangement whereby a [[broker]] receives payment from [[market maker]]s, in exchange for sending order flow to them.
  
 
The FCA sees such arrangements (whatever called) as creating potential conflict of interest and pressing against best execution of orders for clients and, accordingly, compromising observation of its best execution rule.
 
The FCA sees such arrangements (whatever called) as creating potential conflict of interest and pressing against best execution of orders for clients and, accordingly, compromising observation of its best execution rule.
  
 
More generally in the European Union, such payments may fall foul of the EU's [[MiFID]] rules on "inducements" reflected in the FCA's Handbook ([[http://fshandbook.info/FS/html/FCA/COBS/2/3]] at 2.3.1).
 
More generally in the European Union, such payments may fall foul of the EU's [[MiFID]] rules on "inducements" reflected in the FCA's Handbook ([[http://fshandbook.info/FS/html/FCA/COBS/2/3]] at 2.3.1).
 +
 +
 +
==See also==
 +
*[[Best execution]]
 +
*[[Best execution rule]]
 +
*[[Broker]]
 +
*[[Conduct]]
 +
*[[Financial Conduct Authority]]
 +
*[[Market maker]]
 +
*[[MiFID]]
  
 
[[Category:Compliance_and_audit]]
 
[[Category:Compliance_and_audit]]

Latest revision as of 13:12, 21 August 2018

Financial conduct.

(PFOF).

Payment for order flow is defined by the UK Financial Conduct Authority (FCA) in FG12/13 [1], originally issued by the former FSA, as an arrangement whereby a broker receives payment from market makers, in exchange for sending order flow to them.

The FCA sees such arrangements (whatever called) as creating potential conflict of interest and pressing against best execution of orders for clients and, accordingly, compromising observation of its best execution rule.

More generally in the European Union, such payments may fall foul of the EU's MiFID rules on "inducements" reflected in the FCA's Handbook ([[2]] at 2.3.1).


See also