Forex glossary
Payment for order flow (PFOF)
Scope: EU / US
PFOF is compensation or a benefit a broker receives for routing orders to a specified execution venue or party, creating a potential conflict. EU MiFIR Article 39a prohibits covered payments for retail and elective-professional orders; transitional domestic exemptions ended on 30 June 2026. Other jurisdictions have separate rules.
Illustrative example
How does it work in practice?
In a hypothetical arrangement, broker A receives 0.20 USD from executor B for routing a client's order. That payment differs from the trade price; its permissibility depends on the applicable jurisdiction's rules.
A case to work through
Two money flows
Analysis model: the client pays 0 USD commission; the executor pays the intermediary 0.30 USD for routing an order.
- No client commission does not mean no intermediary revenue.
- Separate routing revenue from execution-price quality and applicable law.
What follows? For EU services check MiFIR Article 39a; elsewhere check local rules.
Example boundary: This payment diagram does not establish legality of a specific service.
A useful distinction
Payment for order flow (PFOF) / Commission
Commission is a service fee; PFOF is another party’s benefit for routing orders.
Check your understanding
Identify an executor’s payment rather than the client’s fee.
Show the answer and explanation
0.30 USD from executor to intermediary
The payment is tied to routing the order.
Entity, obligations and client protection
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Read the fuller explanation
Related terms
Sources and documentation
- ESMA: MiFIR Article 39a
EU prohibition of covered routing payments and expiry of transitional exemptions on 30 June 2026.
Document read: - SEC: Rule 606 frequently asked questions
US securities orders: routing relationships and payment disclosures, not FX CFD rules.
Document read:
The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.