European trading is once again undergoing a revolution after the European Commission declared the end of Payment for Order Flow (PFOF), the mechanism that allowed new brokers like Trade Republic to charge zero or near-zero commissions on trades.
Essentially, these new brokers were previously compensated by their market-maker partners for channeling client order flows to them.
Trade Republic's choice was therefore: increase fixed costs or reinvent the infrastructure. Fortunately, it chose the latter and launched three new features: Best Price, Direct Price, and Web Terminal.
Best Price: the default algorithm
Best Price is the new technological heart of the platform and marks the definitive end to the exclusive dependence on LS Exchange (market maker).
What's changing?
When you place an order, the proprietary algorithm instantly scans an aggregated order book that consolidates prices from all major global exchanges relevant to the selected security. TR (to simplify, Trade Republic) executes the order internally and guarantees the client a quote equal to or better than the reference markets (lowest price to buy, highest price to sell).
The commission remains the same: €1 for manual trades, €0 for savings plans.
Direct Price
For those who want complete control, Direct Price has also been created, a mode that bypasses TR's internal execution algorithm.
The user can independently choose where to send their order from among 30 global exchanges (XETRA, Euronext, Nasdaq, etc.), leveraging the security's native liquidity.
Commissions are €2 per trade, with no variable percentage fees.
Web Terminal: A Game Changer for Professional Traders
Historically, TR has been a platform designed for beginners, for everyone to use.
Now, finally, TR is making the leap to desktop, launching its professional browser platform called Web Terminal.
Here, we find advanced charts, technical analysis tools, and a comprehensive stock screener, as well as a real-time aggregated order book where you can visually compare prices and liquidity across individual global markets before placing a trade.
This feature will be completely free.
In conclusion, TR brilliantly circumvents the obstacle of the European PFOF ban while remaining one of the most affordable in the industry, improving and offering more services to expand its potential customers.
From a simple financial app for beginners to a full-fledged trading ecosystem.
Thanx for reading, don't forget to like, follow and comment :)
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