Neobrokers have long operated a commission‑free zone for ETF holdings, but recent actions suggest they now want to tap the same revenue stream that has traditionally benefited only active mutual funds. According to the “FAZ”, BaFin has confirmed that certain intermediaries are seeking to negotiate standing commissions with ETF providers. Standing commissions would be a first for ETFs, which to date have not paid ongoing distribution fees to custodians or brokers.
Ali Masarwah, a fund‑analysis firm executive, described the idea as a “taboo break” in the ETF world and warned that it would be a wrong turn for the sector that has been pursuing passive investing for three decades. The move is being prompted by the expected loss of a major income source: from June 30, brokers will no longer be able to receive payments from trading venues for passing customer orders, ending the Payment‑for‑Order‑Flow model.
In response, Trade Republic said it would not comment on specific contract negotiations, adding that any compensation received would be reinvested into improving the platform. Major ETF issuers such as DWS (Xtrackers), Blackrock (iShares) and J.P. Morgan Asset Management declined to comment.
Gerd Kommer, a wealth‑management specialist who has launched an ETF with the UK-based Legal & General, noted that platforms are already pressuring ETF providers. He expects the split of commission income to become more common in the future. “For sector‑specific or actively managed ETFs with higher expense ratios, there is enough to distribute” he said. However, he does not anticipate cost increases for the major, low‑fee standard products that currently range between 0.03 % and 0.25 % annually.
Professor Andreas Hackethal of Frankfurt’s Leibniz Institute SAFE, on the other hand, considers the fears of rising costs overblown. “In intense competition, ETF providers cannot arbitrarily hike the total expense ratio” he said. He pointed out that neobrokers will likely diversify their own revenue streams-perhaps by establishing proprietary exchanges or developing new products-to offset the loss of order‑flow payments.
