Bonuses at FX brokers - are they the beginning of their end?

ESMA (The European Securities Markets Authority), i.e. the European Securities and Markets Authority, issued a statement that it will aim at the complete elimination of offering all kinds of "deposit" bonuses (Forex bonuses) on the retail Forex market and binary options by FX brokers and brokerage houses. All such promotions are to be suspended, which will soon be flashy banners in tone "100% of the deposit is free!“, To which we are so used to brokers, will disappear from our eyes. At least among regulated brokers in the European Union. ESMA wants to force the national supervisory authorities to completely prohibit offering this type of promotion as soon as possible. At the same time, order the monitoring of the situation with bonus promotions among their FX brokers.

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According to ESMA, brokers set conditions that make bonus payouts often unrealistic. At the same time, this translates into their commercial decisions. Bonuses increase the leverage artificially. They lead to trading with increased risk by the trader (especially a beginner), resulting in a quick loss of capital.

ESMA this is the body European Union about profile economicallywho is the successor CESR. The main goal of ESMA is to ensure proper implementation of the regulations in the sector of capital, in a way that preserves financial stability and ensures trust in the financial system as a whole and adequate protection of consumers of financial services.

What are deposit bonuses

Deposit Bonuses is one of the most popular promotional tools of FX Brokers Market Maker model and binary options brokers where they have actually become the standard. These promotions consist in receiving additional funds from brokers, the value of which is strictly dependent on the payment made by the client. For example, in the case of a 100% bonus, if we transfer the amount of EUR 1000 to the account, the broker will credit the same amount to our account. Bonuses are divided into solvent and insolvent. The first type allows us to withdraw the paid-in capital and the bonus granted after meeting the conditions set by the broker. Most often it is working out a specific rate of return or execution of a given turnover in a given time. Usually insolvent bonuses are of much greater value. They do not have a series of excessive requirements - they are primarily used to "test" the account and artificially increase leverage. Losing bonuses usually doesn't have any negative consequences for the trader.

 source: ForexMagnates.com