From here: https://smnweekly.com/2016/11/30/cysec-bans-trading-bonuses-sets-max-default-leverage-to-150/
The Cyprus Securities and Exchange Commission (CySEC) has issued a circular to the Cyprus investment firms setting some new rules regarding trading bonuses, maximum default leverage and fund withdrawal processing terms. In essence the new rules concern all forex and binary options brokers regulated by the CySEC.
In its circular the Cyprus regulator says that the brokers “must avoid the practice of offering bonuses that are designed to incentivise retail clients to trade in complex speculative products such as CFDs, binary options and rolling spot forex as it is unlikely that a firm offering such bonuses could demonstrate that it is acting honestly, fairly and professionally and in the best interests of its retail clients”.
Furthermore, the CySEC expects that the brokers will not launch any such bonus programs to retail clients, with the current ones not being renewed. Also, all forex and binary options brokers regulated by the CySEC, must inform it whether or not they have such bonus schemes by December 14.
As for the offering of other trading benefits, the brokers must inform CySEC beforehand and to demonstrate they are not infringing on clients’ interests.
CySEC notes that the brokers offering “excessive leverage” to retail clients are most likely not doing it in the best interest of the clients, hence from now on all forex and binary options brokers should design their trading systems to set as default a lower leverage and give them the option, if they wish, to change the leverage to a higher level. Further in its letter CySEC sets the maximum default leverage as 1:50.
Also, the brokers should set limits to the leverage available to clients who have failed the appropriateness test, or the sum they can trade in any one transaction for a period of time.
The brokers should also ensure that clients cannot lose more than they have in their accounts negative balance protection) and establish a leverage policy approved by the board of directors of the company and be included in the internal procedures manual.
Withdrawal of funds
In its circular the CySEC also sets a rule that in case of a positive cash balance in a client’s account brokers must process the client’s fund withdrawal request on the same day it was made, or the next working day if the client’s request is received outside of normal trading hours.
In conclusion, the CySEC gives the forex and binary options brokers until January 30, 2017 to take the appropriate measures and actions in order to operate with the new rules. From then onwards, the regulator intends to “conduct thematic reviews” to ensure they are complying with them, as well as with the general provisions of the law. In case of infringement, the CySEC will take relevant measures.