On 12 November 2025, the International Organisation of Securities Commissions (IOSCO) issued a Final Report on neo-brokers.
Background
Neo-brokers” are a sub-set of broker-dealers that provide services through a business model characterized by use of engaging client interfaces, leverage of social media, and provision of online-only investment services. They typically provide their services with limited or no human interaction, and their service offerings are frequently limited to only trade execution services.
The Final Report follows a consultation that IOSCO issued earlier this year that set out its understanding of the business model developed by neo-brokers and the potential issues that may arise because of their activities.
Final Report
The Final Report is built upon the responses from member jurisdictions to an IOSCO survey and stakeholder engagement, particularly, the responses to the earlier consultation. It delves into regulators’ experience on neo-brokers’ activities, including neo-brokers’ business models, remuneration and potential conflicts of interest, along with those stemming from payment for order flow (PFOF) practices. It also examines the potential risks and conflicts of interests from the activities of neo brokers, including regulators’ experience with PFOF practices of neo-brokers. It then presents the regulators’ experience with complaints, enforcement, international cooperation and cross-border aspects of neo-brokers.
Recommendations
To address the issues posed by emerging neo-broker business models, the Final Report proposes a set of recommendations as guidance for securities regulators. The recommendations are:
- Act honestly and fairly with retail investors – Neo-brokers should act honestly, fairly and professionally with retail investors.
- Appropriate disclosure of fees and charges to retail investors and advertising – Neo-brokers should provide retail investors with fair, clear and simple disclosure of material charges that may occur by entering the trade.
- Ancillary services – Where neo-brokers offer ancillary services to core trade execution services, neo-brokers should:
- disclose to retail investors the material sources of revenue the firm derives from each service and, where relevant, the type of conflicts of interest arising from them; and
- obtain retail investor consent before providing ancillary services.
- Non-commission related trading revenue such as PFOF – Neo-brokers should consider the impact of PFOF on the best execution of customer orders.
- IT infrastructure – Neo-brokers should ensure they have robust systems in place to promptly address disruptions that may prevent investors from using their platform effectively.
Final milestone
The Final Report is the final milestone of IOSCO’s Roadmap to Retail Investor Online Safety, concluding a year of spotlight on the new challenges to retail investor protection.