ESMA has recently announced a new guideline that dictates terminating one of the most powerful tools used bi regulated binary brokers. The new guideline will effectively eliminate deposit bonus systems that were attracting traders all over the Europe.
From what we can witness, clients security has become a priority for all regulators across the Europe. ESMA – European Securities Markets Authority has issued this guideline because of the concern that various bonus promotions caused a high level of overtrading among clients. Besides stating the overtrading problem, ESMA has obligated all local regulators to follow new rules.We have found this in ESMA documentation:
“The ESMA consultation paper, in general, argues for more detailed remuneration regulations in relation to incentive payments for products sold, and particularly for new products sold. What perhaps sometimes is neglected is that it is not of an investment firm’s interest to construct inappropriate bonus schemes, to encourage unwanted behavior or to wrongly pay out large bonuses.“
The Future of Binary Options Without Bonuses?
Regulated brokers are aware they need to adapt to new regulations if they want to survive in the European market. The positive thing is that brokers must apply this rule only for European countries, while they can still offer bonus promotions to other countries.
Brokers that have been using bonuses for substantial profits for many years, now have to reorganize their operations and find new methods to retain their clients. Regulated brokerage companies are now adapting to new conditions and trying to find better marketing solutions that will help them attract European traders.
New Binary Options Solutions
Some binary brokers are already working on new projects that are aiming to reduce the regulatory conflicts. This refers to new exchange model that is starting to be popular in the US a few years ago. What are binary exchanges? The principle of binary exchanges means that traders are trading against each other and this could ensure fair and transparent terms for both sides.
Conclusion
From our perspective, the future of bonus promotions in binary options doesn’t look very bright. This decision will probably lead towards closing some brokerage companies, while others will have to adapt in order to practice new regulations. This brings more obligations for binary brokers that will have to follow regulatory requests.