The world of financial services marketing is full of roadblocks. There are things you can do and thing you most definitely cannot. But by staying on top of the rules, you can implement a strategy to engage while pleasing the regulatory warlords. Yes, we’re talking about you CySEC. As a leading content marketing agency based in Cyprus, we’re fully clued up on marketing for CySEC and all it entails. Here’s our content marketing for CySEC brokers guide – 2022 update.
The Cyprus Financial Landscape
The investment sector continues to grow in Cyprus. By the end of 2021, CySEC had an impressive 806 entities under its supervision, compared to 788 at the end of 2020, recording an increase of 2.28%. This includes over 250 listed investment firms. With the island’s low business application fees and picturesque office environments attracting global business, regulation is most certainly needed. This is particularly true considering Cyprus offers one of the lowest corporate tax rates in the world at just 12.5%, compared to say the UK’s rate which currently sits at 19%. So how does CySEC manage such a rapidly evolving landscape?
As an iFX EXPO tradition, the first day will kick off with a keynote presentation from George Theocharides, PhD, Chairman of CySEC.
The Cyprus Securities and Exchange Commission (CYSEC) is the independent public supervisory Authority responsible for the supervision of the investment services market, transactions in transferable securities carried out in the Republic of Cyprus and the collective investment and asset management sector. It supervises and ensures the compliance of multiple entities including Cyprus Investment Firms (CIFs).
So brokers you’re being watched. And this is no laughing matter.
As well as granting and revoking licenses, regulating the operation of the Cyprus Stock Exchange and keeping a beady eye on regulated agencies under its supervision, the regulatory body also imposes disciplinary action where necessary. Not to scare you, but CySEC has imposed over €4.53 million in fines over the past two years, €3 million of which were imposed on CIFs. And, in 2021 alone, CySEC suspended the operating license of 6 CIFs, revoked the operating license of 4 CIFs and called more than 70 supervised entities to take specific actions within a specific timeframe to remediate weaknesses and/or omissions that were identified during the supervisory checks. Wowza!!
Point to note: Many fines were issued as a result of third party bad practices. CySEC commented, “Given the extensive use of third parties in the industry, it is critical that authorised firms have robust controls in place to ensure the effective oversight of these relationships.” More advice on this later…
Strengthen Supervision – What’s New in 2022?
If you thought 2021 was tough, CySEC is turning up the heat in 2022.
Through the adoption of additional tools and the implementation of strategies that enhance its efficiency and effectiveness, CySEC aims to strengthen its ability to identify bad practices in a timely fashion, working proactively to prevent their implementation. This will affect you and your marketing practices. So let’s delve into this more deeply.
One of the most important details from CySEC’s enhanced supervisory approach includes:
The use of new technology to monitor and supervise the marketing and social media activities of regulated entities.
Read that again. Slowly. CySEC has acquired a specialised system for monitoring supervised entities’ online marketing activities/materials. This tool will enhance CySEC’s ability to collect, analyse and monitor the marketing communications of CIFs. Specifically, the system has the ability to detect all related mentions from any source globally including social media, news sites, forums, blogs, video sites and ad networks, and covers 187 languages. In addition, it has the ability to carry out real time monitoring with an instant alert trigger on any related keyword combination.
What does this mean for brokers?
You should be operating within CySEC’s legal framework anyway. But if you’ve got sloppy, now’s the time to revisit all marketing rules and to take full control over all social media networks and brand mentions. Carry out social listening to monitor brand mentions and consumer sentiment. All content posted, from one-line Tweets to long-form blogs should also be drafted and carefully signed off by the compliance team before going live to avoid a CySEC penalty. It’s worth having a very clear compliance process in place for all content creation, including video and AdWords. Or just get in touch with us. We know all the rules and regulations and compliantly manage multiple accounts for top finance brands.
CySEC Regulations and Content Marketing Guidelines for 2022
CySEC operates under recently updated MiFID II laws. These are fairly complex but as they have a direct and significant impact on brokerage marketing strategies, it’s important to know what you can and can’t do when promoting financial services. So here are our updated guidelines for 2022.
Fair, Clear and Not Misleading
Under MiFID II regulations, all information addressed to clients or potential clients, including marketing information must be fair, clear and not misleading. In other words, you can’t paint a picture that your services will make someone super rich because it might never happen and could encourage someone to make a poor financial decision.
With regards to retail clients, firms must always give a fair and prominent indication of a relevant risk when referencing any potential benefits of a service or financial instrument. The font size of the risk warning must also be at least as prominent as the predominant font in the communication and the layout must also ensure prominence. So, no hiding important statements. CySEC are watching and they’ve got a new tech tool to help them.
What’s more, the information must be presented in the same language as all other information to that client, unless the client has requested otherwise. Below is a good example of financial compliance in action on social media.
Top tip: Avoid words that could be considered misleading such as ‘success’ ‘win’ ‘gains’ ‘impressive leverage’ ‘best returns’ and more as these are likely to trigger alerts in 2022 and beyond. Even words like “investment” can raise eyebrows in the wrong places.
Regarding ‘indications of future performance,’ these mustn’t be based on or refer to simulated past performance. They should be based on reasonable assumptions. And any fees/charges must be disclosed. Marketing material must also contain a warning that future performance indications are not reliable. Information must be based on performance scenarios in different market conditions (both positive and negative) and should reflect the nature and risks of the specific types of instruments included in the analysis.
When it comes to marketing you must also think about the images you use as these are also subject to compliance rules and regulations. So forget anything with people in suits rolling around in cash or investors throwing handfuls of money into the air. Such imagery is a huge no-no. Think about the message each image portrays and whether it’s compliant or not. Even if the image is accompanied by a risk warning, you could get in trouble if the image is suggestive in a rule-breaking way.
No Investment Advice
CySEC has been clamping down on aggressive marketing that involves investment advice in relation to financial instruments. Companies are instead required to distribute a sales script to their employees that guides them about the regulatory framework. As you can see, brands are carefully tiptoeing around legislation to avoid any kind of penalty
Working with Partners
As a CySEC regulated broker operating under European law, brokers are responsible for the messaging put out by their partner or affiliates. So to avoid the non-compliant partner marketing issues touched on earlier, it’s important to take the reins. Instead of allowing your third-party connections to write whatever they want on social media, try to provide them with approved text and imagery that’s been signed off by your compliance team. Offer to add their logo or name to personalise the offering, safe in the knowledge that no rules have been broken.
What Works for CySEC?
Knowing the rules is a must. But what marketing rules work under strict CySEC guidelines?
Become a Go-To Source for Knowledge
You can’t offer trading advice or make outlandish statements about how rich you can make your clients. But you can get attention in other ways. Becoming a go-to source of knowledge, for instance, is a marvellous idea as it’ll keep trading enthusiasts coming back for more. Offer daily reports, weekly overviews, currency pair comparisons and FX news that might impact your clients. Be informative, factual and to-the-point and make sure you post regularly to keep the buzz alive. We love the updates provided by Acuity Trading. With a focus on investor and trader mindset, the brand looks at topical issues from a fresh and informed angle.
Create an Education Centre
By creating an education centre, you can answer FAQs in an intelligent and informative way. You can also direct people to a specific part of your site that deals with queries of all different trading levels. Educational articles are ideal for populating social sites too and provide magnificent long and short-tail keyword opportunities. We love the education centre by Admiral Markets because it segments beginner, intermediate and advanced content. Talk to our team for education centre content.
Share Your Company Culture
Showcasing a positive company culture is great for everyone. Traders love to put faces to your team and regulators will not object to showcasing positive team news. Include CSR news, event coverage, charity work and team achievements to the mix. We love these posts from companies like Tickmill.
Talk to us about compliant content marketing. We follow CySEC, ESMA, MiFID II, ASIC, FCA and more to ensure you never break the rules.