What to expect from CySEC use of Affiliates circular?


There is a New CySEC use of Affiliates circular making noise among the CySEC licensed Forex brokers. So, what should brokers expect from CySEC use of third party affiliates circular?

26 June, AtoZForex – At AtoZForex we have been commenting over and over again that IBs and Affiliates have major issue in Forex Market. Especially IBs! Many of the third party affiliates have conflict of interest! And the new CySEC use of affiliates circular is a sound proof that CySEC acknowledges the affiliate issue in Forex market.

As the name says, the new CySEC use of affiliates circular is all about affiliates which CIFs heavily rely on. According to the announcement, CySEC regulated brokers are being reminded that they are obliged to supervise and control how their IBs and affiliates are targeting traders and communicating to them.

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CySEC use of Affiliates circular

Indeed the use of affiliates circular does not bring anything new to the table. CIFs are just being reminded of their responsibilities. OK, maybe with a little extra attention and focus to the detail.

Hence, CySEC has informed its authorized entities that they must keep track of their affiliates. CIFs need to follow with their third party introducers about the appropriateness of their marketing materials. Furthermore, they must have a proper due diligence of these affiliates. Affiliate due diligence must include the identity of the owner or representative of the affiliate websites. If the affiliate fails to comply they must immediately cease their partnership.

List of affiliates banned by CySEC

The use of affiliates circular also indicates that Cysec is planning to add a new list on its website. This list would include all the affiliates who have violated CySEC marketing practices. The new list of affiliates banned by CySEC would give heads up for CIFs about shaky affiliates.

Summary of the CySEC use of Affiliates circular

  • CIFs should have onboarding and cancellation due diligence with their affiliates;
  • CIFs should check if the affiliate has got the relevant authorization from the local regulatory authorities, if required;
  • Affiliates' marketing material must be clear, fair and not misleading;
  • Brokers must monitor their affiliates closely;
  • To effectively monitor, broker using Affiliates should develop / buy a marketing intelligence tool that enables them to gather all the Affiliates’ digital media data that relates to the CIF and ensure that these are in line, at all times;
  • If the affiliate is not following the guidelines, the broker must cease the cooperation. The broker must also take an appropriate measure against the Affiliate;
  • May there be an incident with an affiliate, the broker must disclose the incident to CySEC, including the address of the Affiliate’s website and details of the Affiliate’s identity ;

As a final point, CySEC will have a warning list with the website addresses of those Affiliates that are operating outside the parameters provided by the Law. CySEC affiliate warning list will also include the details of the Affiliates’ representatives (physical persons).

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