Cyprus tells retail brokers to end bonus schemes

Global Brokerage

30/11/2016 12:00

LONDON, Nov 30 (Reuters) - Cyprus's financial regulator 
CySEC issued a warning to the mass of retail currency brokers 
registered on the island on Wednesday over their use of bonus 
schemes to encourage trading in risky products and related poor 
treatment of clients.  
    The circular, referring to an 80-page guide for regulators 
and other sector stakeholders issued by European authorities 
last month, underlined that players must avoid using bonus 
schemes to incentivise trading in contracts for difference and 
other of the highly-leveraged products small traders use to make 
bets on moves in currencies and other liquid assets.  
    CySEC chair Demetra Kalogerou said in an email to Reuters 
that "since early 2015, CySEC has monitored CFD, binary options 
and rolling spot forex providers very closely to ensure firms 
are acting in the best interests of retail clients. In many 
cases, they are not. This is not acceptable. 
    "Our aim here is to put a stop to the abuse of the honest, 
fair and professional principle which must govern firms' 
operations, and in most cases do."  
    Many retail traders have protested to the Cypriot 
authorities over their treatment by the dozens of retail brokers 
based on the island, and say the regulator has failed to act 
against firms who have unfairly retained client funds.  
    Kalogerou also said that "firms offering complex or 
speculative products must limit available leverage to 1:50 as 
default and process same-day requests for client fund 
withdrawals." 
 
 (Reporting by Huw Jones and Patrick Graham, editing by Nigel 
Stephenson) 
 ((patrick.graham@thomsonreuters.com; +44 207 542 9429; Reuters 
Messaging: patrick.graham.thomsonreuters.com@reuters.net)) 
 
Keywords: CYPRUS BROKERS/FOREX