CySec is NOT banning P&L remuneration – We speak to the regulator
FinanceFeeds spoke today to a senior CySec official who clarified that the regulator is absolutely not banning firms from remunerating on P&L or volume.
Yesterday, Cypriot regulatory authority CySec issued a circular that was widely interpreted as being the notification of a new ruling in which a ban on brokers generating remuneration based on the profit and loss of trading accounts, and that volume should not be taken into account when remunerating staff or partners.
This is absolutely not the case.
The original circular stated “When designing or reviewing the remuneration policies and practices, the CIFs must consider the conduct of business and conflicts of interest risks that may arise and take reasonable measures to avoid or manage them appropriately and efficiently.”
“The remuneration policies and practices must, inter alia, be designed in such a way so as not to create incentives that may lead persons to favour their own interests, or the CIF’s interests, to the potential detriment of clients.”
“Furthermore, the CIFs must establish, implement and maintain adequate control mechanisms for compliance with remuneration policies and practices being implemented and maintained by the CIFs” it concluded.
Today, FinanceFeeds spoke to CySec in order to clarify this matter.
A senior official at CySec explained “CySEC does not ban the remunerations based on volume.”
“CySEC identifies in its Circular that the remuneration based on volume is a type of conflict of interest whose existence may damage the interests of clients and therefore, Cyprus Investment Firms must take reasonable steps to avoid or manage this type of conflict appropriately.”
CySEC will issue an announcement to explain our Circular because it was perceived in the wrong way” concluded the senior official.
