Singapore CMS Broker's Payment For Order Flow, PFOF Ban April 2023
Singapore CMS Broker's Payment For Order Flow, Ministry of Finance Singapore PFOF April Ban 2023 Singapore CMS Broker's Payment For Order Flow, Singapore Online Brokers Ban PFOF April 2023, Payment For Order Flow Latest News 2023.
These Guidelines are issued by the Monetary Authority of Singapore pursuant to Section 321 of the Securities and Futures Act (Cap. 289) (“SFA”) and apply to all capital markets intermediaries as defined in Notice SFA 04-N16 on Execution of Customers’ Orders (the “Notice”).
Payment for order flow (“PFOF”) refers to commission or other form of payment which a CMS Broker receives from another broker or counterparty in return for routing customers’ orders to that broker or counterparty.
SINGAPORE agree with some of Investors- PFOF is inconsistent w/duty of best execution, may lead to poorer outcomes ... such as through wider bid-ask spreads.
These guidelines apply to cms brokers - Capital markets services (CMS) licensees; and - Banks, merchant banks and finance companies A CMS Broker should not receive PFOF in placing and/or executing customers' orders.
PFOF introduces conflicts of interests and is likely to cause harmto customers as the CMS Broker may be incentivized to pursue commission or other form of payment from another broker or counterparty in return for routing customers' orders to that broker or counterparty for its own benefit.
This is inconsistent with the CMS Broker's duty to provide Best Execution to customers. For instance, PFOF may lead to poorer outcomes for customers as additional costs may be passed to the CMS Broker's customers, such as through wider bid-ask spreads from the other broker or counterparty who agrees to pay PFOF in return for obtaining customers' order flow from the CMS Broker.