IOSCO/MR/20/2025 – Madrid, 12 November 2025
The International Organization of Securities Commissions (IOSCO) today published its Final Report (“Report”) on Neo-Brokers.
“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.
They have created new opportunities for investors and frequently operate with lower costs. However, in order to address the challenges posed by emerging neo-broker business models, the Report proposes a set of recommendations as guidance for securities regulators to help foster a more transparent and accountable environment in which neo-brokers operate in compliance with securities regulations, including investor protection measures.
The Report sets forth five recommendations for IOSCO members and neo-brokers:
- Acting 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 payment for order flow (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.
This 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.
“Neo-brokers are reshaping the retail investment landscape through digital platforms, low-cost trading models, and new forms of investor engagement. This report provides regulators with a clear view of the risks and opportunities posed by these evolving business models, and offers practical recommendations to strengthen transparency, manage conflicts of interest, and protect retail investors in an increasingly digital market environment.” shared Jean-Paul Servais, Chair of IOSCO’s Board
“In today’s changing demographic and economic environment, broadening retail investor access to financial market is critical, and neo-brokers can play a positive role. However, their business models may introduce risks when products and services don’t align with investors’ best interests. IOSCO’s recommendations provide clear guidance on how to mitigate these risks and ensure investor protection.” shared James Adronis, Chair of IOSCO’s Committee on Regulation of Market Intermediaries (C3)
See Also:
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