Affiliate Marketing

Should Forex & CFD Affiliates Be Regulated?

The regulation of the Forex
Forex

Foreign exchange or forex is the act of converting one nations currency into another nations currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the worlds largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a countrys currency to fluctuate in value in relation to another currency this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a countrys currency value.

Foreign exchange or forex is the act of converting one nations currency into another nations currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the worlds largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a countrys currency to fluctuate in value in relation to another currency this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a countrys currency value.
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space around the world has been getting stronger over time. This is because the regulatory entities have reinforced their rules in order to combat crimes such as money laundering or the financing of terrorism.

However, the topic of affiliates and introducing brokers (IBs) has always remained a gray area where the laws do not fully govern it, at least in the vast majority of jurisdictions globally.

The market for Forex and CFD affiliates is a very large one and moves millions of dollars for brokers worldwide. The importance given to this niche is so great that many brokers have focused their marketing strategies on strengthening this front within their line of business, prioritizing them above others.

In this analysis, we talked to two experts in the field who will give us their thoughts on the question: should Forex and CFD affiliates
Affiliates

Affiliates serve as an essential component of a brokers client acquisition tactics and marketing. One of the most important functions of affiliate marketers is the sending of leads to the broker, which are directly opening an account or visiting the brokers website. There are several ways in which brokers are compensating affiliates based on the number and type of clients they refer to the company and whether or not or how much they end up depositing.Understanding CPA or Cost Per Acquisition The broker pays only for the clients which end up opening an account. The affiliate marketer doesnt get any compensation unless the lead ends up depositing. After the acquisition the broker kicks back a predetermined amount to the affiliate. The figure can be fixed or a percentage of a customers deposit.This is where CPC or Cost per Clicks come into play. This option is used to drive traffic to the brokers website. The affiliate is getting paid regardless of whether the client ends up opening an account. Nowadays, this option is rarely used howeverIn the FX space, it is certainly possible to be successful affiliate marketer. However, you need to utilize websites with requisite levels of traffic. For many brokers, affiliate marketing is not their primary source of revenue as the results can be unpredictable and sporadic.

Affiliates serve as an essential component of a brokers client acquisition tactics and marketing. One of the most important functions of affiliate marketers is the sending of leads to the broker, which are directly opening an account or visiting the brokers website. There are several ways in which brokers are compensating affiliates based on the number and type of clients they refer to the company and whether or not or how much they end up depositing.Understanding CPA or Cost Per Acquisition The broker pays only for the clients which end up opening an account. The affiliate marketer doesnt get any compensation unless the lead ends up depositing. After the acquisition the broker kicks back a predetermined amount to the affiliate. The figure can be fixed or a percentage of a customers deposit.This is where CPC or Cost per Clicks come into play. This option is used to drive traffic to the brokers website. The affiliate is getting paid regardless of whether the client ends up opening an account. Nowadays, this option is rarely used howeverIn the FX space, it is certainly possible to be successful affiliate marketer. However, you need to utilize websites with requisite levels of traffic. For many brokers, affiliate marketing is not their primary source of revenue as the results can be unpredictable and sporadic.
Read this Term
be regulated?

Regulatory Scheme in Specific Regions

Giancarlo Lionti, Global Head of Affiliate Marketing at Skilling, believes that the environment should be regulated and provided the following reasons: Considering the increasing number of requirements coming from the Financial Regulators and the limited control that a CFD Broker can have on its affiliates businesses, I would personally support the regulation of the Affiliate Business in Forex & CFD trading. Its not rare that publishers and marketers dont follow the indications provided by the regulated brokers they work with and, in my opinion, it is not fair that a Broker can get in regulatory and financial troubles for something that is not 100% under its control.

He added that this would reduce the internal cost of time and resources required to run a compliant affiliate business and protect both brokers and users from fraudulent affiliate activities.

In the same line, Eduardo Delgado, Director at Fintexify, shares the vision of agreeing that affiliates should be regulated, but specifically in regions like the US and the European Union. I think that a clear regulation for introducing brokers and affiliates makes their business more transparent and sustainable over time. Nowadays, unregulated introducing brokers and money managers face big challenges to carry out their activity. They are forced to go work with offshore entities which entails different forms of risks for them and their clients, he said.

An ‘Affiliate License’?

Lionti also talked about the introduction of a hypothetic license for affiliates: On the other hand, the introduction of an Affiliate License would reduce the number of potential partners available on the market, who would then increase their Cost per Acquisition (CPA) expectations, decreasing the profitability of the Affiliate Business in the industry.

Delgado shared his experience in terms of regulation in EU: Based on my experience, in some EU countries, most IBs and MMs do not clearly understand the process to be compliant with their respective countrys regulations. Oftentimes the legal government officials themselves do not provide clear guidance. Precise and comprehensive guidance from regulatory authorities would help.

EDITOR’S NOTE: This analysis is part of a series of Finance Magnates articles dissecting the latest trends in the online retail forex industries around the world. You can also read about developments in the retail forex scenes in Africa, the United Kingdom, North America, Australia, and Latin America by following the links.

The regulation of the Forex
Forex

Foreign exchange or forex is the act of converting one nations currency into another nations currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the worlds largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a countrys currency to fluctuate in value in relation to another currency this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a countrys currency value.

Foreign exchange or forex is the act of converting one nations currency into another nations currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the worlds largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a countrys currency to fluctuate in value in relation to another currency this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a countrys currency value.
Read this Term
space around the world has been getting stronger over time. This is because the regulatory entities have reinforced their rules in order to combat crimes such as money laundering or the financing of terrorism.

However, the topic of affiliates and introducing brokers (IBs) has always remained a gray area where the laws do not fully govern it, at least in the vast majority of jurisdictions globally.

The market for Forex and CFD affiliates is a very large one and moves millions of dollars for brokers worldwide. The importance given to this niche is so great that many brokers have focused their marketing strategies on strengthening this front within their line of business, prioritizing them above others.

In this analysis, we talked to two experts in the field who will give us their thoughts on the question: should Forex and CFD affiliates
Affiliates

Affiliates serve as an essential component of a brokers client acquisition tactics and marketing. One of the most important functions of affiliate marketers is the sending of leads to the broker, which are directly opening an account or visiting the brokers website. There are several ways in which brokers are compensating affiliates based on the number and type of clients they refer to the company and whether or not or how much they end up depositing.Understanding CPA or Cost Per Acquisition The broker pays only for the clients which end up opening an account. The affiliate marketer doesnt get any compensation unless the lead ends up depositing. After the acquisition the broker kicks back a predetermined amount to the affiliate. The figure can be fixed or a percentage of a customers deposit.This is where CPC or Cost per Clicks come into play. This option is used to drive traffic to the brokers website. The affiliate is getting paid regardless of whether the client ends up opening an account. Nowadays, this option is rarely used howeverIn the FX space, it is certainly possible to be successful affiliate marketer. However, you need to utilize websites with requisite levels of traffic. For many brokers, affiliate marketing is not their primary source of revenue as the results can be unpredictable and sporadic.

Affiliates serve as an essential component of a brokers client acquisition tactics and marketing. One of the most important functions of affiliate marketers is the sending of leads to the broker, which are directly opening an account or visiting the brokers website. There are several ways in which brokers are compensating affiliates based on the number and type of clients they refer to the company and whether or not or how much they end up depositing.Understanding CPA or Cost Per Acquisition The broker pays only for the clients which end up opening an account. The affiliate marketer doesnt get any compensation unless the lead ends up depositing. After the acquisition the broker kicks back a predetermined amount to the affiliate. The figure can be fixed or a percentage of a customers deposit.This is where CPC or Cost per Clicks come into play. This option is used to drive traffic to the brokers website. The affiliate is getting paid regardless of whether the client ends up opening an account. Nowadays, this option is rarely used howeverIn the FX space, it is certainly possible to be successful affiliate marketer. However, you need to utilize websites with requisite levels of traffic. For many brokers, affiliate marketing is not their primary source of revenue as the results can be unpredictable and sporadic.
Read this Term
be regulated?

Regulatory Scheme in Specific Regions

Giancarlo Lionti, Global Head of Affiliate Marketing at Skilling, believes that the environment should be regulated and provided the following reasons: Considering the increasing number of requirements coming from the Financial Regulators and the limited control that a CFD Broker can have on its affiliates businesses, I would personally support the regulation of the Affiliate Business in Forex & CFD trading. Its not rare that publishers and marketers dont follow the indications provided by the regulated brokers they work with and, in my opinion, it is not fair that a Broker can get in regulatory and financial troubles for something that is not 100% under its control.

He added that this would reduce the internal cost of time and resources required to run a compliant affiliate business and protect both brokers and users from fraudulent affiliate activities.

In the same line, Eduardo Delgado, Director at Fintexify, shares the vision of agreeing that affiliates should be regulated, but specifically in regions like the US and the European Union. I think that a clear regulation for introducing brokers and affiliates makes their business more transparent and sustainable over time. Nowadays, unregulated introducing brokers and money managers face big challenges to carry out their activity. They are forced to go work with offshore entities which entails different forms of risks for them and their clients, he said.

An ‘Affiliate License’?

Lionti also talked about the introduction of a hypothetic license for affiliates: On the other hand, the introduction of an Affiliate License would reduce the number of potential partners available on the market, who would then increase their Cost per Acquisition (CPA) expectations, decreasing the profitability of the Affiliate Business in the industry.

Delgado shared his experience in terms of regulation in EU: Based on my experience, in some EU countries, most IBs and MMs do not clearly understand the process to be compliant with their respective countrys regulations. Oftentimes the legal government officials themselves do not provide clear guidance. Precise and comprehensive guidance from regulatory authorities would help.

EDITOR’S NOTE: This analysis is part of a series of Finance Magnates articles dissecting the latest trends in the online retail forex industries around the world. You can also read about developments in the retail forex scenes in Africa, the United Kingdom, North America, Australia, and Latin America by following the links.

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