The classic offer worked like this. A client deposits 1,000. The broker adds 1,000 of credit. The platform now shows 2,000 of equity, and margin is calculated against that number, so the account can open roughly twice the exposure the client actually funded. The credit itself cannot be withdrawn. Somewhere in the terms sits a turnover condition: trade a stated volume, often expressed in lots per unit of bonus, and the credit converts to withdrawable cash. Withdraw early and the credit vanishes, sometimes along with the profits attributed to it.
Read that structure again with a compliance eye. The client is paid to increase position size and to keep trading until a volume target is met. That is why the offer is gone from regulated European brokers, and why it survives on other licences.
What regulators actually objected to
When ESMA introduced its product intervention measures for retail contracts for difference in 2018, the package covered several things at once: leverage limits by asset class, a standard margin close-out level, negative balance protection, standardised risk warnings, and a prohibition on monetary and non-monetary benefits offered to retail clients. National regulators across the EU turned the temporary measures into permanent national rules, and other regimes adopted similar prohibitions in their own product intervention orders.
The objection was not that free money is bad. It was that the incentive points the wrong way. A benefit conditioned on trading volume rewards activity rather than judgement, and it lands hardest on inexperienced clients who are the least able to evaluate the trade-off. The same reasoning produced the leverage caps and the restrictions in CFD marketing rules. Bonuses were part of one intervention, not a separate crusade.
Credit, cash and rebates are three different animals
| Type | What the client receives | Effect on the account |
|---|---|---|
| Credit bonus | Non-withdrawable balance added on deposit | Raises equity used for margin, so larger positions become possible on the same deposit |
| Cash bonus with turnover | Cash locked until a volume target is met | Creates a direct reason to trade more than planned, and to hold the account open |
| Volume rebate | Part of the spread or commission returned per lot | Reduces trading cost, and still pays more the more the client trades |
Rebates sit in a grey area that depends entirely on the licence and on who receives them. A rebate paid to an introducing broker is a commission arrangement with its own disclosure requirements. A rebate paid to the client is a benefit, and in regimes with an inducement ban it is treated accordingly. The safe assumption for a licensed firm is that anything of value flowing to a retail client because they traded needs the compliance team to sign it off before the marketing team designs the banner.
The bonus is rarely the risk on its own. The risk is what the bonus lets the account do: hold positions sized against money the client never deposited, while the loss on those positions is entirely the client's.
The margin arithmetic clients miss
Suppose the credit doubles displayed equity. Nothing about the market has changed, but the account's tolerance calculation has. The client sizes positions against 2,000 rather than 1,000, so a move that would have cost 20% of real capital now costs 40% of it. When the account approaches the close-out level, the broker's engine liquidates positions, and the credit is removed at the same time. Traders discover at that exact moment that the buffer they were relying on was never theirs.
This interacts badly with the mechanics described in margin and margin calls. Free equity is the number that keeps a position alive, and credit inflates it artificially. It also complicates negative balance protection, because the firm has to decide whether the protection applies to the client's own funds or to the inflated total, and clients almost never read which.
Where bonuses still exist, and what that tells you
Plenty of jurisdictions still permit bonus promotions, and brokers holding those licences run them openly. That is a legitimate legal difference rather than proof of bad intent, but it does carry information. A group that markets a 100% bonus is almost certainly doing so from an entity outside the EU inducement ban, which means the client is contracting with that entity and gets that entity's protections. Before accepting any promotion, it is worth reading which legal entity the account belongs to, using the checks in regulated versus unregulated brokers and the register lookups in how to check a broker licence.
The pattern of one brand operating a strict European entity and a permissive offshore entity is common and legal. It only becomes a problem when the marketing does not make clear which one a client is signing up to.
What firms run instead
Acquisition teams in regulated markets moved the budget rather than deleting it. Reduced commission tiers for higher volumes, faster or free withdrawals, better platform tooling, published research and education, and partner or introducing broker programmes with proper disclosure all survive an inducement ban when they are structured correctly. Retention shifted towards service: quick payouts, a support desk that answers, and account tooling that clients keep coming back to.
Operationally, any firm still running promotions in a permitted jurisdiction needs the accounting to be exact. Credit has to be a separate ledger entry from client cash, visible to the client, removed under stated conditions, and fully reconstructable from an audit log when someone disputes it eighteen months later. That is a back office problem before it is a marketing one, and it is the part a Broker CRM has to get right, because a bonus that cannot be explained line by line becomes a complaint that cannot be defended.
"A bonus is not a gift, it is a volume contract. The client is signing up for the lots, not for the money."
— Roman Onta, Executive Director, SINGUARD
Key Takeaways
- Credit bonuses inflate the equity that margin is calculated against, so the account carries exposure the client never funded while keeping the whole loss.
- The EU inducement ban arrived inside the same 2018 CFD intervention package as leverage caps, close-out levels and negative balance protection.
- Turnover conditions are the real product: the offer pays for volume, which is why regulators treat it as an incentive to overtrade.
- A visible bonus offer usually identifies the legal entity behind the account, so check which entity you are contracting with before the deposit.
Frequently Asked Questions
Are deposit bonuses banned everywhere?
No. Monetary and non-monetary inducements to retail CFD clients are prohibited in the European Union and in several other major regimes, and firms licensed there cannot offer them to retail clients. Many offshore jurisdictions still allow bonus promotions, which is why the same brand can advertise a bonus on one entity and not on another.
Can a trading bonus be withdrawn as cash?
Usually not directly. Most bonus schemes are credit rather than cash: the amount supports margin but cannot be withdrawn, and it is removed when the client withdraws their own funds. Schemes that do convert to cash attach a turnover condition, meaning a set volume must be traded before the amount becomes withdrawable.
Why is a bonus considered risky if it is free money?
Credit raises the equity that margin is calculated against, so the account can carry larger positions than the client's own deposit would support. The client still takes the full loss on those positions. Turnover conditions push in the same direction by rewarding volume rather than good decisions, and leveraged trading carries a high risk of loss.