Trade Republic receives license for its own trading venue

The German Federal Financial Supervisory Authority (Bundesanstalt für FinanzdienstleistungsaufsichtBaFin) has granted the Berlin-based company Trade Republic – more precisely its subsidiary Trade Republic Business III – the "operation of a multilateral trading system". This is evident from an entry in the authority's company database, dated January 23, 2026. The company itself has not yet commented publicly on how it intends to use the permission.

With this step, Trade Republic is clearly reacting to the ban on so-called retrocessions or "Payment for Order Flow" (PFOF) by the EU, which will come into force in July 2026. In this process, the trading venue or a so-called market maker pays the broker a commission for executed orders from the difference between the buy and sell price, the "spread". Such commissions are generally common in securities trading to date.

Neobrokers in particular use off-exchange, but regulated electronic trading venues. Such trading venues often act as market makers at the same time, holding common securities for purchase and buying securities from holders willing to sell if no other buyer can be found. However, since neobrokers charge significantly lower trading fees from their customers than banks or conventional online brokers, PFOF has so far been a significant source of income for services heavily focused on smartphones. These revenues will disappear in the future.

New Rules, New Strategies

The EU Parliament, Council, and Commission had seen a conflict of interest in PFOF. In their opinion, it could tempt brokers to offer unfavorable conditions for their customers or to encourage customers through gamification of their apps to trade frequently and typically loss-making for inexperienced investors ("day trading"). Consumer advocates had also repeatedly pointed out this danger. Germany, where neobrokers relied particularly heavily on PFOF, had made use of a transitional period until June 30, 2026.

With its own trading venue, Trade Republic will have the opportunity to act as a market maker itself in the future. Currently, the company is working with the service provider Lang & Schwarz for this purpose. The prices are closely linked to the reference prices of the leading stock exchanges, for example the Xetra trading system in Germany. As early as the end of 2024, Trade Republic's competitor Scalable Capital announced that it would build its own trading platform called "European Investor Exchange" (EIX) in cooperation with the Hannover Stock Exchange. Most customers of Scalable Capital, which also acts as a market maker, are now connected to EIX.

Both neobrokers have also since acquired the permission to operate as full banks. Trade Republic, for example, has converted the settlement account into a current account, on which deposits are interest-bearing like overnight money and at a relatively high level – amounts over 5000 euros are invested by the broker (initially also due to advertising to the displeasure of consumer advocates) in money market funds. It also issues a debit card and earns from the so-called interchange fee, which merchants have to pay when making payments. Scalable Capital currently pays interest on amounts in the settlement account but does not offer classic banking services. (mon)