EU to Ban Payment for Orders in Blow to Digital Stock Brokers

The European Union plans to ban a practice that allows brokers to offer zero-commission transactions to clients by earning a fee from forwarding their orders to larger trading platforms.

The general ban on payment for order flow was included in a wider package of reforms on which EU member states struck a provisional deal with the European Parliament on Thursday. Zero-commission trading is a key selling point for digital brokerages that have sought to challenge traditional banks.

The meme stock mania of 2021 raised concerns among regulators that retail orders were being executed on terms that were more favorable to ...