CYSEC, or the Cyprus Securities and Exchange Commission is responsible for regulating many of the largest Forex brokerage companies in the European Union.
In 2016, CYSEC issued several guidelines to the brokers regarding aggressive marketing practices. It has subsequently issued a clarification to these rules in March of this year. CYSEC has been giving warnings to brokers in violation so far, and as of May 31, 2017 will begin issuing harsh penalties.
Specifically, the marketing of bonuses as real cash has been addressed in a circular by the Cysec:
“A bonus or trading benefit being offered and presented to the client in such a way as to give the impression that the trading benefit is real money, free trades or risk-free trades, when in reality that trading benefit equates to additional leverage on the client’s account (and therefore additional risk);”
This is a long overdue change in regulation as the retail Forex industry has had a reputation in fast decline. These changes should cause many regulated brokers to eliminate bonus incentives and focus on improving other aspects of their services to attract new customers and stay ahead of the competition. Longer term, it should allow the legitimate brokers to prosper, and in turn, put some consumer trust and faith back in the Forex industry.
There are several resources available on the web to help lead consumers to the brokers that have outstanding reputations. Informational sites, such as ConnectFX, that offer fair and objective Forex broker reviews and other educational Forex trading materials, are proving to be an invaluable asset to help new traders get started. Also, the CYSEC, FCA, and CFTC all have resourceful sites that offer information, and accept consumer complaints.