[I]The ‘trading bonus’ is a marketing tool frequently used and promoted by Retail Forex and Binary Options. It is almost always presented as a ‘deposit bonus’ – e.g. if the clients deposits $1,000, the broker will top-up the client’s account with an additional amount, sometimes even as much as the deposit itself.
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[I]However there is usually a catch – the client only gets to withdraw money after receiving a bonus (beyond the amount which the client actually deposited) after engaging in a certain amount of trading. [/I]
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The marketing materials and ads used by numerous brokers often did not disclose properly (or at all) the restrictions receiving a bonus would place on traders’ accounts.
A number of brokers used previous bonus grants as excuses for delaying or refusing altogether future withdrawals by their clients. [/I]
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CySEC has, apparently, continued to receive a large number of client complaints centered around deposit bonuses. It has also issued a number of significant fines against brokers found to have abused bonuses, most recently to XTrade. [/I]
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And, as a result, CySEC is looking to ban the use of client bonuses altogether.
I have always known that there is a catch with all those shining bonuses that are being offered by many brokers for new accounts. I wonder who ever falls for it. However, until there is a demand there will be also a supply.
Retail forex deposit bonuses are [I]very[/I] useful indeed for all the scammy, lightly-regulated, offshore, counterparty market-makers pretending to be forex brokers: they’re one of the major methods they use to identify and attract “victims”, i.e. naive, inexperienced customers who are inevitably most easily parted from their money (in other words the exact ones of which they need a continual turnover to survive, given their own business model).
To those slightly better informed, deposit bonuses (and perhaps especially no-deposit bonuses) can actually serve as a useful red flag denoting “brokers” to avoid.
Very good decision, I agree with CySec. I do not trust brokers who offer bonuses as they are usually market makers and scammers. Of course that there is always a catch with these bonuses. That way they force you to lose even more money than usual. And their target group are non experienced traders and people who still seek a fast profit. So I hope that CySec really bans these bonus schemes.
It’s a welcome start. Perhaps the mods here might even consider closing some of the existing spammy threads we have about this very topic, as these act as a free advert for these charlatans
To be honest, I’m a little conflicted since I’ve been using xm.com as one of my brokers for the past couple of years and their allround service has been nothing short of stellar.
Their bonus system is also totally transparent, no strings, no catches besides of course you can’t withdraw the bonus itself but all profits are immediately available for withdrawal. I’ve in fact tested it myself with a small amount of money and I had no problems. But of course some might counter with, yes perhaps you did not have a problem BECAUSE it was a small amount…In which case they should read the following:
And just yesterday I received the following email from them:[I]
…Today, 22 November 2016, XM Group is pleased to announce the [B]commencement of operations of its UK entity XM UK (Trading Point of Financial Instruments UK) [/B].
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[I]XM UK, situated in what is known as the world’s most known financial center, the City of London, has come as a result of the XM Group’s continuous commitment to being fair and being the broker of choice for its customers.
In celebration of the commencement of XM UK, from 22/11/2016 we are offering clients the opportunity to claim a [U]time limited[/U] [B]100% bonus up to $958[/B] (or currency equivalent).
In order to claim the offer you will need to login to the Members Area and follow the simple instructions there…
[/I]So my point is, while it’s true that a good number of these brokers who offer various bonus programs are blatantly shafting their clients one way or another, my experience with xm.com suggests that there are indeed exceptions.