XTB Examines Systematic Internalizer Model to Cut Trading Costs

XTB is reviewing whether to adopt systematic internaliser (SI) arrangements for cash stock and ETF execution, with an eye on lowering the cost of supporting commission-free trading. Filip Kaczmarzyk, XTB's board member for trading, confirmed the review in an interview published Friday, saying the broker is examining 'systematic internaliser-type solutions' as equities become a bigger part of its diversification push.

XTB currently routes cash equity and ETF orders to regulated markets. An SI model would instead let the broker execute eligible client orders against its own inventory of liquid securities, reducing exchange, commission and related execution costs. Kaczmarzyk did not say whether XTB would become an SI itself, work with an external provider, or apply a different structure, and gave no implementation timetable.

Such a step would carry specific obligations. Under MiFID II, an SI is a firm that deals on its own account on an organised, frequent, systematic and substantial basis when executing client orders outside regulated venues. MiFIR requires SI quotes in shares and ETFs during normal trading hours, transparent and non-discriminatory execution rules, and compliance with best-execution requirements.

XTB currently charges no commission on real stocks and ETFs up to EUR 100,000 (about $117,000) of monthly turnover. Above that threshold, its fee schedule applies a 0.2% commission with a EUR 10 minimum, plus a 0.5% margin on relevant currency conversions. Kaczmarzyk said the broker has no plans to reintroduce standard commissions.

The review follows a PLN 20 million (about $5.5 million) fine imposed by the Polish Financial Supervision Authority (KNF) in March over client onboarding, target-market controls, risk information and conflicts related to a promoted-instrument list from 2022 to 2023. The sanction did not concern systematic internalisation or the cash equity model, but it draws attention to how XTB would document price quality and manage conflicts in any own-account execution setup. Kaczmarzyk rejected the idea that fines are simply a cost of doing business, saying even small penalties create reputational issues with clients, partners and regulators. XTB requested reconsideration of the decision on April 27 and considers the amount disproportionate; it also says onboarding changes predated the case.

The execution study fits a wider goal of reducing reliance on CFDs. CEO Omar Arnaout said in February that roughly 95% of revenue still comes from CFDs and set an ambition to cut that share to about 70% within two to three years. Internalisation could trim one element of the cost base behind that shift, but until XTB identifies the provider, instruments, jurisdictions and launch date, it remains an option under study rather than a new execution policy.