PFOF: Differences in Approach Reflect US-EU Regulatory Dichotomy (International Financial Law Review)

The US and EU’s respective approaches to payment for order flow (PFOF) have come to symbolise the different styles of regulation and market oversight that characterise each jurisdiction. While various reports seem to indicate that the US Securities and Exchange Commission has no intention to restrict PFOF deals, EU lawmakers have been calling for a ban and warning firms and investors of related risks. “The EU tends to take a more abrupt, draconian stance on regulatory items, while the US regime is more principles-based,” said Nicholas Losurdo, Financial Industry partner and former SEC commissioner counsel. “In the EU, a key a concept is that the rule must be designed to enhance the quality of the service to the client. If you can evidence the fact that clients are getting a better deal overall, that’s enough to justify it,” said Andrew Henderson, Private Investment Funds and Financial Industry partner, while speaking with International Financial Law Review.