CySEC broadens Brokers Bonus Ban, following the initial circular that the regulator has issued in November 2016. Which bonuses has regulator included in its latest announcement?
CySEC broadens Brokers Bonus Ban
Earlier in November, CySEC has announced the ban of cash rewards that are tied to trading. That time, the regulator informed the public that:
“CIFs must avoid the practice of offering bonuses that are designed to incentivise retail clients to trade in complex speculative products such as CFDs, binary options, and rolling spot forex as it is unlikely that a firm offering such bonuses could demonstrate that it is acting honestly, fairly and professionally and in the best interests of its retail clients [article 36(1) of the Investment Services and Activities and Regulated Markets Law, ‘the Law’].”
Today, the Cypriot watchdog is widening the spread of the initial ban. According to the official circular of CySEC, the regulator is encouraging brokers that are offering similar promotions to revise their practice. Moreover the CySEC is urging brokers to implement the appropriate changes. Moreover, the regulator stresses that instead of using bonuses, brokers now can offer lower spreads to their clients.
A non-exhaustive list of bonuses
The Cypriot regulator decided to be more precise this time and has clarified some thing of its November circular. Below you can see a non-exhaustive list of bonuses offered. These bonuses are not consistent with Article 36 of the Law regarding the conduct of business obligations, according to the regulator.
As you can see above, there are some of the bonuses that have no direct connection to trading. The regulator sees these as a solicitation for trading. The regulator is not missing anything in this circular, where it mentioned every single trick in the publication. Moreover, CySEC has included similar bonus schemes in the circular.
Reportedly, some of the brokers in Cyprus have been utilizing these bonuses for the attraction of clients. However, CySEC proposes an alternative here – lower spreads.
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