Cyproit’s financial regulator CySEC has announced it’s intention to ban bonuses which are linked to trading activity, this means brokerages will only be able to offer bonuses if their clients are free to withdraw their deposited funds at any time. This move could seriously change the way that CIF (Cypriot Investment Firms) and in particular Binary Options brokerages go about marketing themselves to prospective clients.
A large number of CySEC based brokerages and Binary Option firms offer bonuses to their clients. A number of CySEC firms have attached terms and conditions to their bonuses, which prevent clients from withdrawing their funds until certain volume conditions where met. It seems that CySEC has decided to take action against a number of firms, who have been preventing clients from withdrawing bonuses until certain trading thresholds are reached. In the past couple of months their have been numerous complaints from individuals who have found themselves unable to withdraw their initial deposits due to certain bonus terms. This announcement should help stamp out firms who attach such predatory terms and conditions to their bonus offering.
The regulator has stated that regulated firms are allowed to offer bonuses to clients provided the firm allows for the customer to withdraw their funds at any time. So it appears that brokerages will still be allowed to offer bonuses which come attached with terms and conditions, provided clients are able to withdraw their original deposit at any time.
The majority of bonuses offered by Forex brokerages have allowed customers access to their money, but required clientèle to achieve certain volume thresholds before they are able to withdraw the bonus itself. It appears that brokerages will be able to continue to offer such bonuses, but CySEC additionally stated that firms offering bonuses will be required to provide accurate and clear information when advertising such bonus schemes. This could see the way that bonuses are advertised change significantly, with brokerages choosing not to lead with their deposit bonuses when trying to attract new customers.
The full statement regarding CySEC’s position on bonuses can be found in this statement on their official website. At the time of writing there is no indication whether firms who have been found to be offering bonuses which have prevented clients from withdrawing their funds until certain trading conditions are reached will face any regulatory action over such behaviour. This statement is likely to lead a number of firms to market their offerings in a different way and may seriously affect the business of a number of Binary Options brokerages who rely on impressive bonuses to induce clients to deposit funds with them.