No more competitions for Cypriot brokers

At the end of November 2016 informed you about new ideas presented in the information document of the Cypriot regulator who wanted, among others, end the bonus Forex broker campaigns (CySEC finishes with Forex bonuses and binary options). CySEC is taking further steps to "remind" brokers of the issued guidelines and does not rule out further, more radical actions in the near future.

New guidelines were ignored

After four months, exactly 16 March, CySEC has published a document in which it informs that a lot of evidence has been gathered that many companies operating under the CIF license have ignored these guidelines. A large number of bonus promotions are still offered, which, according to the supervisor, encourage potential clients to make unreasonable decisions and excessive risk. This, on the other hand, usually has the effect of quickly losing part or all of the deposit paid.

CySEC announced that due to this state of affairs and the mission which is the desire to thoroughly protect consumers, it will be more diligent in monitoring the situation. Additional authorized entities have to help him.

10 deadly sins - no more contests

The regulator has prepared an attachment to the said document, which lists 10 types of bonuses and related tools that Cypriot brokers should avoid. These are:

1. Welcome bonuses, deposit bonuses - usually a percentage value in relation to the deposit paid, which the trader receives in the form of a loan. In order for the loan to become the property of the client, it is necessary to generate (often a very excessive turnover). The terms of the promotion are often subject to a time limit in which the indicated turnover must be made.
2. Bonuses on trading - the value of funds paid in the form of an additional deposit, depending on the number of transactions and the volume that the trader makes
3. Invite a friend - usually a fixed amount that the trader will receive if he encourages his friend to open an account. Additional requirements are making a deposit with a certain minimum value and generating a turnover by the invited person.
4. Bonus after verification - funds that are transferred to the trader only after verification of basic contact details (name, surname, e-mail address, telephone number, scans of documents).
5. Prizes - most often electronic devices in the form of telephones or laptops, the receipt of which is associated with making a sufficiently high payment and / or making a turnover.
6. Trading competitions - tournaments in which the turnover or the rate of return decides about the winning (most often in-kind or cash prizes).
7. Accounts without risk - accounts offering the so-called "Rollback" of losing trades subject to the requirement of a minimum specified turnover.
8. cashback - partial refunds of transaction costs depending on the generated turnover.
9. Interest accounts - payment of interest on the so-called free margin (the deposit not used for trading). CySEC can exclude this point as long as the offered interest coincides with the real interest rate in the market.
10. Marketing activities similar to those described above.

To a large extent, the promotional campaigns described above, in the opinion of the regulator, are aimed at trading with too much risk. They can also cause irrational investment decisions, where the main goal is to meet the promotion conditions (e.g. generating turnover). This is expected to lead to force transactions. However, looking at it from the other hand, the described "prohibited TOP10" are largely marketing tools that the Forex industry is famous for, which we have already got used to. The most surprising is the fact that these changes are taking place in Cyprus - a country considered one of the most liberal in the currency industry and the birthplace of FX brokers.

The full content of the attachment