<!-- headlesslaw {"release":{"id":"a4f2a0495fe55b47323883f82977a9b34ab66171ec9623e39925d3a7045b6c81","published":"2026-11-01T16:41:30Z","pinned":false},"limits":{"coverage":{"history":"current_only","held_since":"2026-03-03","gaps":[],"covered":["ESMA Q&A 2559 — Q&A — Payment for order flow (PFOF) prohibition and OTC [Answer Published] L3"],"not_covered":["national guidance","court decisions"]},"freshness":{"release_id":"a4f2a0495fe55b47323883f82977a9b34ab66171ec9623e39925d3a7045b6c81","release_published":"2026-11-01T16:41:30Z","checked_at":"2026-10-26","checked_against":"the ESMA publication"},"truncation":null,"failures":[],"incomplete":[]},"page":{"path":"/mifir/level-3/q-and-a/esma/esma-qa-2559-payment-for-order-flow-pfof-prohibition-and-otc-execution","url":"https://www.headlesslaw.com/mifir/level-3/q-and-a/esma/esma-qa-2559-payment-for-order-flow-pfof-prohibition-and-otc-execution","title":"ESMA Q&A 2559 — Q&A — Payment for order flow (PFOF) prohibition and OTC [Answer Published]","family":"l3","work_id":"spaces/mifir/level-3/q-and-a/esma/esma-qa-2559-payment-for-order-flow-pfof-prohibition-and-otc-execution","status":"answer published","force_status":null,"date_state":"current","requested_date":null,"as_of":"2026-11-01","applies_from":null,"application":null,"version_label":"ESMA Q&A register, 3 June 2025","check":{"against":"the ESMA publication","on":"2026-10-26"},"check_result":"matched","official_url":"https://www.esma.europa.eu/publications-data/questions-answers/2559","valid_from":"0001-01-01","valid_until":null,"revision":1,"content_id":"463ca02cc57e4174","change_date":null,"nearest_versions":["2026-03-03"],"first_text_date":null,"correction_applies":false,"versions":["2026-03-03"],"version_url":"https://www.headlesslaw.com/mifir/level-3/q-and-a/esma/esma-qa-2559-payment-for-order-flow-pfof-prohibition-and-otc-execution/versions/2026-03-03","revision_url":"https://www.headlesslaw.com/mifir/level-3/q-and-a/esma/esma-qa-2559-payment-for-order-flow-pfof-prohibition-and-otc-execution/versions/2026-03-03/rev/463ca02cc57e4174","versions_url":"https://www.headlesslaw.com/mifir/level-3/q-and-a/esma/esma-qa-2559-payment-for-order-flow-pfof-prohibition-and-otc-execution/versions","relations_url":"https://www.headlesslaw.com/mifir/level-3/q-and-a/esma/esma-qa-2559-payment-for-order-flow-pfof-prohibition-and-otc-execution/relations","source_line":"Answer prepared by the European Commission, published in the ESMA Q&A tool · not legislation · published 3 Mar 2026 [Answer Published]","attribution":{"prepared_by":"European Commission","published_by":"ESMA","published_in":"ESMA Q&A tool","document_type":"qa_answer","legal_nature":"not_legislation","addressees":"not stated in the document","dates":{"published_on":"2026-03-03","question_submitted_on":"2025-06-03","locators":{"published_on":"ESMA Q&A Excel export ESMA_QA_2559, column 'Esma responses', date line","question_submitted_on":"ESMA Q&A Excel export ESMA_QA_2559, column 'Date of submission'"}},"adoption":null}}} -->
---
title: "ESMA Q&A 2559 — Q&A — Payment for order flow (PFOF) prohibition and OTC [Answer Published]"
shortTitle: "ESMA Q&A 2559 — Q&A — Payment for order flow (PFOF) prohibition and OTC [Answer Published]"
answer_id: ESMA_QA_2559
topic: "Inducements"
status: "Answer Published"
type: qa
instrument_type: qa
authority: ESMA
binding: false
binding_character: non_binding
legal_status: in_force
regulation: "MiFIR"
mifir_level3: true
mica_level2: false
legal_basis: "Article 39a"
date: 3 June 2025
source_link: https://www.esma.europa.eu/publications-data/questions-answers/2559
lifecycle: "Answer Published"
text_version: "ESMA Q&A register, 3 June 2025"
source_url: "https://www.esma.europa.eu/publications-data/questions-answers/2559"
check_status: matched
verified: true
last_checked: 2026-10-26
checked_against: "the ESMA publication"
source:
  prepared_by: "European Commission"
  published_by: "ESMA"
  published_in: "ESMA Q&A tool"
  evidence:
    prepared_by: "Answer provided by the European Commission"
    locator: "ESMA Q&A entry ESMA_QA_2559, first line of the answer field"
document_type: "qa_answer"
legal_nature: "not_legislation"
addressees: "not stated in the document"
dates:
  published_on: "2026-03-03"
  question_submitted_on: "2025-06-03"
  locators:
    published_on: "ESMA Q&A Excel export ESMA_QA_2559, column 'Esma responses', date line"
    question_submitted_on: "ESMA Q&A Excel export ESMA_QA_2559, column 'Date of submission'"
lifecycle_label: "Answer Published"
---

**Answer prepared by the European Commission, published in the ESMA Q&A tool · not legislation · published 3 Mar 2026 [Answer Published]**

*Answer Published · ESMA Q&A register, 3 June 2025 · Checked against the ESMA publication on 26 Oct 2026 · [Official source](https://www.esma.europa.eu/publications-data/questions-answers/2559)*

| | |
|---|---|
| **Full title** | ESMA Q&A 2559 — Q&A — Payment for order flow (PFOF) prohibition and OTC \[Answer Published\] |
| **Prepared by** | European Commission |
| **Published by** | ESMA, in the ESMA Q&A tool |
| **Reference** | ESMA_QA_2559 |
| **Document type** | Q&A |
| **Legal nature** | Not legislation |
| **Addressees** | Not stated in the document |
| **Dates** | Published 3 March 2026; question submitted 3 June 2025 |
| **Legal basis** | Article 39a |
| **Related instruments** | None recorded |
| **Text on this page** | Word for word — the full text of the ESMA publication |

**Payment for order flow (PFOF) prohibition and OTC execution of client orders**

### Question

Does the prohibition of receiving payment for order flow (PFOF) apply to situations where the order is not executed on a trading venue, for instance for products traded over the counter (OTC)?

***

### Answer

Answer provided by the European Commission

The scope of application of Article 39a of MiFIR should be considered taking into account the core policy objectives of MiFIR, including:

(a) investor protection;

(b) execution of orders in the best interest of clients.

Since those objectives support the broadest possible coverage of execution venues, the prohibition should be understood as applying not only to transactions executed on a trading venue, but also to transactions executed over the counter (OTC).

That interpretation would also be consistent with the definition of an “execution venue” set out in Article 64(1), second subparagraph, of Commission Delegated Regulation (EU) 2017/565.1

(1) Execution venue’ includes a regulated market, an MTF, an OTF, a systematic internaliser, or a market maker or other liquidity provider or an entity that performs a similar function in a third country to the functions performed by any of the foregoing.” (Article 64(1) Commission Delegated Regulation (EU) 2017/565).

Disclaimer:

The answers clarify provisions already contained in the applicable legislation. They do not extend in any way the rights and obligations deriving from such legislation nor do they introduce any additional requirements for the concerned operators and competent authorities. The answers are merely intended to assist natural or legal persons, including competent authorities and Union institutions and bodies in clarifying the application or implementation of the relevant legal provisions. Only the Court of Justice of the European Union is competent to authoritatively interpret Union law. The views expressed in the internal Commission Decision cannot prejudge the position that the European Commission might take before the Union and national courts.

***

**Source:** [ESMA original document](https://www.esma.europa.eu/publications-data/questions-answers/2559)