On November 30 Cypriot regulator of financial markets (CySEC) ,under whose license (CIF) operates a number of European brokers, referred to the October document the ESMA regarding the provision of brokerage services. The latest publication includes many important points which could have a clear impact on changing the conditions of the functioning of the retail FX industry.
Ban on offering bonuses in CFD, FX and Binary Options
Cypriot investment firms (CIF), all companies with licenses CySEC must avoid practices that could offer bonuses to encourage customers to invest in highly speculative products such as foreign exchange contracts, binary options or Forex Spot. According to the regulator in fact is not possible to offer these types of bonuses while maintaining the records of Article 36 (1) Investment Services and Activities and Regulated Market Law. The article says that the broker must act “honestly, fairly and professionally for the interests of their retail customers.”
CySEC requires that brokers from the date of publication should not begin any new bonus campaigns and to stop present campaigns (or wait until their expiry date). At the same time brokerage entities have to confirm until 14 December via e-mail about the conduct of bonus campaigns in the past and their form.
The proposed leverage at 1:50
A large part of brokers opening a trade account as base gives a high or the highest leverage possessed in its offer – according to CySEC it is against the above-cited article 36 (1). Accordingly, the controller recommended that the base leverage is under the 1:50.
As for the maximum permitted leverage CySEC gives no restrictions. It requires, however, that it is consistent with the financial possibilities of traders. Investors who personally ask about the possibility of using higher leverage, they would have to pass tests confirming that thier trading can be based on lower margin requirements.
Brokers have to introduce all the changes referred by the CySEC until January 30, 2017 year and adjust levels of leverage among its clients.
Full text of CySEC document and its annex, which brokers are to send by email to the board of the regulator regarding the offered bonus is under this link.
