XTB is examining systematic-internalizer arrangements for stock and ETF execution, Filip Kaczmarzyk, its board member for trading, said in an interview published today (Friday). The broker is looking for lower execution costs while retaining its zero-commission offer.Executing eligible orders against a firm's own book, rather than routing every order to an exchange, could make commission-free trading cheaper to support. It would also bring pricing, best execution and conflict controls to the center of a model that European brokers are already rebuilding.How XTB Could Lower Stock Execution CostsKaczmarzyk said XTB currently sends cash equity and ETF orders to regulated markets. XTB is looking at other execution routes as those products become a larger part of its revenue diversification effort."We are looking closely at systematic internaliser-type solutions," Kaczmarzyk said in the Biznes Info interview.[#highlighted-links#]He described a broker keeping an inventory of liquid securities and selling from that stock when clients place orders. That can reduce exchange, commission and other execution costs.Under MiFID II's definition, a systematic internaliser is an investment firm that deals on its own account on an organized, frequent, systematic and substantial basis when executing client orders outside a regulated market, multilateral trading facility or organized trading facility.The regime is not a license to set any price. MiFIR requires systematic internalisers in shares and ETFs to publish quotes during normal trading hours, use transparent and non-discriminatory execution rules and comply with best-execution requirements.Kaczmarzyk did not say whether XTB would become a systematic internaliser itself, connect to an external provider or use a different structure. He gave no implementation timetable.XTB currently charges no commission on real stocks and ETFs up to EUR 100,000 (about $117,000) of monthly turnover. Kaczmarzyk said XTB has no plans to restore standard commissions.Its published fee schedule applies a 0.2% commission, with a EUR 10 minimum, above that threshold. A 0.5% margin applies to relevant currency conversions.Trade Republic Has Already Moved Execution In-HouseXTB would not be entering an empty field. Trade Republic changed its execution model in July, shortly after Germany's exemption from the European Union's payment-for-order-flow ban expired.Under the new system, Trade Republic said it aggregates prices from 30 exchanges before executing orders against its own account instead of passing them directly to a venue.Clients can instead select a specific venue, including Xetra, Euronext, NYSE or Nasdaq, for a EUR 2 fee. Scalable Capital, another German neobroker, has used a subscription tier to help fund low-cost trading.Those approaches illustrate the same economic pressure, but they are not interchangeable. PFOF pays a broker for routing orders to another party. A systematic internaliser executes qualifying client orders against its own account under a separate transparency and conduct framework.KNF Fine Keeps Conflicts and Controls in ViewThe possible execution change arrives after the Polish Financial Supervision Authority, known as the KNF, fined XTB PLN 20 million (about $5.5 million).The March decision concerned client onboarding, target-market controls, risk information and conflicts related to a promoted-instrument list between 2022 and 2023.The sanction did not concern systematic internalisation or the cash equity model now under consideration. It nevertheless makes the governance around any move toward own-account execution relevant, particularly how the broker documents price quality and manages potential conflicts.Kaczmarzyk rejected the idea that fines are simply built into XTB's cost of doing business. He said even a small penalty creates reputational problems with clients, partners and other regulators, and resurfaces when XTB seeks approvals or passes due diligence with a new broker.He also said XTB had changed the onboarding processes before the regulatory case began. XTB requested reconsideration of the decision on April 27 and considers the amount disproportionate to the violations.Equities Still Have to Close the CFD Revenue GapThe execution review sits inside a broader attempt to make stocks, ETFs and other products contribute more revenue. XTB CEO Omar Arnaout said in February that roughly 95% of revenue still came from CFDs and set an ambition to reduce that share to about 70% within two to three years.Internalisation could lower one part of the cost base behind that shift. Until XTB identifies the execution provider, instruments, jurisdictions and launch date, however, it remains an option under study rather than a new execution policy.This article was written by Damian Chmiel at www.financemagnates.com.