CySEC warns against redirecting traffic to non-regulated websites

Cyprus regulator CySEC is turning up the heat somewhat on online businesses it licenses (read: Forex and Binary brokerages).

New directives issued by the Cypriot financial regulator take aim at the practice of regulated brokers holding CIF licenses redirecting new-client traffic to the websites of non-regulated entities.

This somewhat common practice in the Forex industry allows brokers to use the power of their ‘licensed’ status to market to clients, while quietly shunting them to a non-regulated subsidiary offshore where the client technically opens an account. The client isn’t necessarily mistreated, but does not enjoy the protections of the regulator, while the broker is not burdened by having to hold excess capital dependent upon the amount of client deposits it holds in is regulated entity.

cysec_nice_logoOther issues CySEC raised in its directive include the issue of the Forex broker ‘brand’ being different than the name of the regulated company. Many examples of this abound, and in some instances several online brands are held under one regulated company umbrella.

In these instances, CySEC now instructs that it must be made very clear and prominent to the visitor which is the regulated entity. CySEC provides two possibilities:

  1. The posting of a prominent statement in a prominent place with marked letters on the home page of the website, that this website is under the operation of the CIF, and/or
  2. Informing visitors of the CIF’s name through a pop-up message.

To see the compete CySEC directive on domain name notification click here.

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