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CySEC Clarifies Bonus Rules
Petar Nola
UPDATE, December 2016: CySEC regulated brokers can no longer provide binary options bonuses! CySEC, the securities regulator of Cyprus presented 2014 priorities a day ago. The main goal is to tighten the control over CIF licensed companies. One of first moves in this year, outlined by the Commission Chairwoman Demetra Kalougerou was to put some... Read more
UPDATE, December 2016: CySEC regulated brokers can no longer provide binary options bonuses! CySEC, the securities regulator of Cyprus presented 2014 priorities a day ago. The main goal is to tighten the control over CIF licensed companies. One of first moves in this year, outlined by the Commission Chairwoman Demetra Kalougerou was to put some new regulations and explanations of existing rules for Forex and binary options brokers, registered on Cyprus. The main point is concerned with bonuses most brokers offer their clients upon signing up and depositing. Bonuses, or so called "grant trading benefits" are funds given to clients. These bonuses enable more trading space first time users register, but since a lot of users would just withdraw the account after the bonus has been assigned, brokers tied bonuses to some conditions which would effectively prevent users from withdrawing funds until the conditions are met. Usually these conditions were tied to specific turnover target. The regulator was worried since the clients own funds could not be withdrawn upon request before turnover or other conditions were met. This is why CySEC issued new guidelines for broker rules in these instances. It has been decided that bonuses cannot be awarded unless the client will have the right to withdraw his/her funds whenever he/she wants. CySEC stressed that withdrawal restrictions violate the Investment Services and Regulated Markets Law since the regulator doesn't consider withdrawal restrictions conditional on turnover a fair and good practice towards forex and binary options brokers’ clients. The Chairwoman presents some legal cases when monetary benefits can be disbursed to clients. That is why, when advertised, bonus offers have to mention all the details and terms of using the bonus. Description must describe how the scheme works and user has a right to separate his/hers own money from the bonus credit. Clients have to be able to monitor their compliance with the bonus scheme without affecting their capital adequacy. Actually this is not a new rule, but it is a further clarification on regulators view of how the rule should be applied. Not all brokers are registered with CySEC so users should decide what kind of offers they prefer. It is also a signal for Cyprus registered to adopt the rule if they already did not.
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CySEC Clarifies Bonus Rules

UPDATE, December 2016: CySEC regulated brokers can no longer provide binary options bonuses!

CySEC, the securities regulator of Cyprus presented 2014 priorities a day ago. The main goal is to tighten the control over CIF licensed companies. One of first moves in this year, outlined by the Commission Chairwoman Demetra Kalougerou was to put some new regulations and explanations of existing rules for Forex and binary options brokers, registered on Cyprus. The main point is concerned with bonuses most brokers offer their clients upon signing up and depositing.

Bonuses, or so called “grant trading benefits” are funds given to clients. These bonuses enable more trading space first time users register, but since a lot of users would just withdraw the account after the bonus has been assigned, brokers tied bonuses to some conditions which would effectively prevent users from withdrawing funds until the conditions are met. Usually these conditions were tied to specific turnover target.

The regulator was worried since the clients own funds could not be withdrawn upon request before turnover or other conditions were met. This is why CySEC issued new guidelines for broker rules in these instances. It has been decided that bonuses cannot be awarded unless the client will have the right to withdraw his/her funds whenever he/she wants. CySEC stressed that withdrawal restrictions violate the Investment Services and Regulated Markets Law since the regulator doesn’t consider withdrawal restrictions conditional on turnover a fair and good practice towards forex and binary options brokers’ clients.

The Chairwoman presents some legal cases when monetary benefits can be disbursed to clients. That is why, when advertised, bonus offers have to mention all the details and terms of using the bonus. Description must describe how the scheme works and user has a right to separate his/hers own money from the bonus credit. Clients have to be able to monitor their compliance with the bonus scheme without affecting their capital adequacy.

Actually this is not a new rule, but it is a further clarification on regulators view of how the rule should be applied. Not all brokers are registered with CySEC so users should decide what kind of offers they prefer. It is also a signal for Cyprus registered to adopt the rule if they already did not.

Your capital is at risk
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