No More Binary Options Bonuses!
ESMA Bans Binary Options Bonuses
On October 11th the ESMA, European Securities Market Association, made recommendations to the European Brokers Association regarding the widespread use of bonuses for CFD, Forex and binary options traders.
Binary Options Bonuses Banned!
The ESMA recently updated their stance against bonuses, and now all European brokers have been ordered to suspend any and all bonus promotions.
The ESMA justified their actions with a number of reasons. They made it clear that binary options bonuses have a psychological impact on retail traders, which can affect their trading behavior. In short, bonuses make traders feel like they have a safety net to fall back onto in the event they lose a trade, which encourages them to take unnecessary risks and, in the end, lose money.
ESMA also argued that bonuses are essentially the same as giving traders higher leverage. This ruling is great for traders but bad business for brokers since many brokers rely on bonuses to acquire and retain new customers.
Another problem with bonuses is that traders often have to trade 20 to 30 times their bonus amount before they’re eligible to withdraw their funds, so they feel they have to make substantially larger bets in order to withdraw their money. The rollover the trader needs to meet is usually included in fine print.
According to Europe’s overarching regulator, brokers who award traders with virtual money for depositing real money is an element of trading that does not keep the traders best interest in mind.
Bonuses have long been a major complaint from the trading community. Some brokers have been accused of using the bonus rollover as justification for not processing a traders withdrawal request, even if the trader really does meet the trade rollover requirements!
It’s about time European bonuses get eradicated. This is a win for trader to broker transparency, and a major loss for shady binary options brokers.