The Cyprus Securities and Exchange Commission (CySEC) has just published a new circular focusing on the use of affiliates. The announcement highlights that regulated brokers are obligated to supervise how the affiliates they use are targeting end clients.
According to the announcement, Cyprus Investment Firms (CIFs) will have to ensure that their affiliate partners are using appropriate marketing materials. The circular is highlighting that due diligence on the part of brokers will need to include the identity of the owners or representatives of affiliate websites.
The regulator is planning to update its website with a list of affiliates which it has already identified to be violating goodwill marketing practices. The list is aimed at making it easier for Cyprus-regulated brokers to avoid cooperating with such websites.
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Outsourcing Provisions Fully Apply
CySEC continues to maintain that brokers are expected to be supervising their partners just like they already supervise outsourced activities related to customer service, for example. The content of the marketing that is used by affiliates should be fully in compliance with CySEC regulations.
Brokers are encouraged to use marketing intelligence tools to track affiliate activity. If they identify a partner that is not acting within the regulatory framework, they should immediately cease any cooperation. As the broker posts a publicly available message on its website about the action, it is also expected to disclose the incident to the CySEC along with the identity of the owner (or representative) of the affiliate website.
CySEC will in the meantime be publishing and regularly updating a list of affiliate websites which are not complying with the regulatory provisions outlined in Cypriot law.