CySEC bans trading bonuses, sets max default leverage to 1:50 | Forex Factory

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CySEC bans trading bonuses, sets max default leverage to 1:50

  • #1
  • First Post: Dec 5, 2016 5:47am Dec 5, 2016 5:47am
The Cyprus Securities and Exchange Commission (CySEC) has issued a circular to the Cyprus investment firms setting some new rules regarding trading bonuses, maximum default leverage and fund withdrawal processing terms. (https://smnweekly.com/2016/11/30/cysec-bans-trading-bonuses-sets-max-default-leverage-to-150/) In essence the new rules concern all forex and binary options brokers regulated by the CySEC.

In its circular the Cyprus regulator says that the brokers “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”.

CySEC notes that the brokers offering “excessive leverage” to retail clients are most likely not doing it in the best interest of the clients, hence from now on all forex and binary options brokers should design their trading systems to set as default a lower leverage and give them the option, if they wish, to change the leverage to a higher level. Further in its letter CySEC sets the maximum default leverage as 1:50.

They also added some new rules about money withdrawals.
  • #2
  • Dec 5, 2016 6:06am Dec 5, 2016 6:06am
Quoting mlawson71
The Cyprus Securities and Exchange Commission (CySEC) has issued a circular to the Cyprus investment firms setting some new rules regarding trading bonuses, maximum default leverage and fund withdrawal processing terms. (https://smnweekly.com/2016/11/30/cysec-bans-trading-bonuses-sets-max-default-leverage-to-150/) In essence the new rules concern all forex and binary options brokers regulated by the CySEC. In its circular the Cyprus regulator says that the brokers must avoid the practice of offering bonuses that are designed to incentivise...
Hello, Mr. MLawson71.

Thank you very much for your information.

Do you konow anything about the withdrawal processing terms they are talking about?

Hoping hearing from you as soon as possible,
MrJinks.
  • #3
  • Dec 5, 2016 8:37pm Dec 5, 2016 8:37pm
Quote
In its circular the CySEC also sets a rule that in case of a positive cash balance in a client’s account brokers must process the client’s fund withdrawal request on the same day it was made, or the next working day if the client’s request is received outside of normal trading hours.
I liked this. No more excuses or delays.
  • #4
  • Dec 15, 2016 8:36am Dec 15, 2016 8:36am
When will this be set in action? Or is it yet anyway ?
  • #5
  • Dec 19, 2016 3:39pm Dec 19, 2016 3:39pm
There must be something wrong here, just look at that:

http://www.xm.com/account-types

Registered in Cyprus, up to 888% leverage , special year end trading bonus of 100% etc... and this is only one example among many others.
I used to be indecisive but now I'm not so sure...
  • #6
  • Dec 19, 2016 4:32pm Dec 19, 2016 4:32pm
Quoting Filipo1
There must be something wrong here, just look at that: http://www.xm.com/account-types Registered in Cyprus, up to 888% leverage , special year end trading bonus of 100% etc... and this is only one example among many others.
Nothing wrong. Check the calendar, mate.

From mlawson71s link:
Quote
In conclusion, the CySEC gives the forex and binary options brokers until January 30, 2017 to take the appropriate measures and actions in order to operate with the new rules.

BTW: the leverage would still be legal. It's just the default leverage which has to be set to 50, the broker can still offer a higher one but the customer will have to set that manually.
  • #7
  • Mar 23, 2017 8:17am Mar 23, 2017 8:17am
The Cyprus Securities and Exchange Commission (CySEC) has issued additional guidelines on the types of bonus incentives that Cyprus Investment Firms (CIFs) are banned from offering to retail clients. (https://smnweekly.com/2017/03/17/cyprus-cysec-defines-what-banned-bonuses-constitute/) The regulator gave specific examples of the types of bonuses banned from being offered. Among them are Welcome/Deposit/Re-deposit bonus, Volume Bonus, Refer a Friend Bonus, Tournament/Competition bonuses and quite a few others.
  • #8
  • Mar 23, 2017 10:15am Mar 23, 2017 10:15am
Quoting mlawson71
The Cyprus Securities and Exchange Commission (CySEC) has issued additional guidelines on the types of bonus incentives that Cyprus Investment Firms (CIFs) are banned from offering to retail clients. (https://smnweekly.com/2017/03/17/cyprus-cysec-defines-what-banned-bonuses-constitute/) The regulator gave specific examples of the types of bonuses banned from being offered. Among them are Welcome/Deposit/Re-deposit bonus, Volume Bonus, Refer a Friend Bonus, Tournament/Competition bonuses and quite a few others.
  • #9
  • Apr 5, 2017 1:58am Apr 5, 2017 1:58am
I read yesterday that cysec want to ban Ibs and affiliates too because of the way they operate and mislead clients.
  • #10
  • Apr 5, 2017 10:24am Apr 5, 2017 10:24am
I have red that as well here: http://financefeeds.com/live-cysec-chairman-demetra-kalogerou-goes-ballistic-gets-executives-cyprus-fx-firms-room-absolutely-lambasts/
They are also discussing ban for binary options. Interesting read. It raises some questions though.
  • #11
  • Apr 5, 2017 11:28am Apr 5, 2017 11:28am
Don't most brokers get their customers from IBs and Affiliates? I thought most traders elected to go that route instead of going to the broker directly. Is this wrong?
  • #12
  • Apr 5, 2017 2:00pm Apr 5, 2017 2:00pm
It's always nice to see these regulatory bodies doing their work...
"Don't lose your cool, and you will fare well".
  • #13
  • Apr 6, 2017 8:56am Apr 6, 2017 8:56am
Quoting ab-Forex
Don't most brokers get their customers from IBs and Affiliates? I thought most traders elected to go that route instead of going to the broker directly. Is this wrong?
I believe you are right that most clients select broker through IBs and there is nothing wrong with this type of relation in its pure form. The main problem is that most of the IBs are not regulated or monitored in any way. Which enables some of them to use some questionable tactics and very aggressive marketing strategies with promises for quick cash and instant success. That misleading information on the other hand easily attracts newbies who end up blowing their accounts in no time and that partially explains the negative statistics presented by the CySEC Chairman. So, long story short – I think IBs should stay around but their activity should be monitored/restricted in some way or form.
  • #14
  • Apr 6, 2017 2:07pm Apr 6, 2017 2:07pm
That makes sense. I am based in the United States and my IB told me they are regulated so I assume they are closely monitored by the regulator. It seems other jurisdictions could do the same and require introducing brokers to become regulated.

As a related note I have only had positive experiences dealing with my IB.
  • #15
  • Apr 8, 2017 5:50am Apr 8, 2017 5:50am
It’s interesting that CySEC of all regulators wants to ban binary options, because CySEC doesn’t have a reputation of a very strict regulator, unlike the FCA, which recently decided that not only won’t they ban binary options, but they’ll bring them under their regulatory jurisdiction (they used to be under the jurisdiction of the Gambling Commission), because people kept calling them to ask questions about binary options. (https://www.forexbrokerz.com/news/Investors-in-the-UK-most-interested-in-binary-options) The new regulation will come into effect on 3rd January 2018.
  • #16
  • Apr 10, 2017 6:27am Apr 10, 2017 6:27am
Quoting mlawson71
Its interesting that CySEC of all regulators wants to ban binary options, because CySEC doesnt have a reputation of a very strict regulator, unlike the FCA, which recently decided that not only wont they ban binary options, but theyll bring them under their regulatory jurisdiction (they used to be under the jurisdiction of the Gambling Commission), because people kept calling them to ask questions about binary options. (https://www.forexbrokerz.com/news/Investors-in-the-UK-most-interested-in-binary-options) The new regulation will come...
I guess banning everything is the easiest way to avoid extra work. Best way would of course to regulate better
  • #17
  • Apr 23, 2017 1:57pm Apr 23, 2017 1:57pm
Quoting mlawson71
The Cyprus Securities and Exchange Commission (CySEC) has issued a circular to the Cyprus investment firms setting some new rules regarding trading bonuses, maximum default leverage and fund withdrawal processing terms. (https://smnweekly.com/2016/11/30/cysec-bans-trading-bonuses-sets-max-default-leverage-to-150/) In essence the new rules concern all forex and binary options brokers regulated by the CySEC. In its circular the Cyprus regulator says that the brokers must avoid the practice of offering bonuses that are designed to incentivise...
Looks like CySec is getting serious, good to see they are going in that direction, After Brexit, we will all need a strong EU based regulatory body. VERY VERY good that customers can still decide on their own leverage....sure 1:50 is ok for newbies, but great that we can increase it to a higher rate....it would kill trading otherwise (!)
  • #18
  • Apr 24, 2017 6:13am Apr 24, 2017 6:13am
CySEC used to have a somewhat wobbly reputation but they’ve been working hard to change that. Recently they went as far as to send a notice to the companies they regulate to remind them not to advertise binary options and CFDs in France (https://smnweekly.com/2017/04/13/cysec-reminds-its-charges-about-frances-ban-on-binary-options-cfds-advertising/), which banned such advertisements.

I think it’s a good thing that they’re hard at work, because they and the FCA are the two major European broker regulators, and people need to be able to trust them.
  • #19
  • Last Post: Apr 26, 2017 1:44am Apr 26, 2017 1:44am
lets hope they do a good job
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