The FCA-regulated online broker, Plus 500 released its trading update for Q3, in which it reported over 40 per cent decline in net revenues compared to previous on the back of stringent ESMA leverage cap. 

In the Q3-2018, Plus 500 has registered a total revenue of $100.1 million, which is 40 per cent lower than the previous quarter and a third of record revenues of Q1-2018 at $297 million. The Q3-2018 numbers include the first two months of ESMA’s stringent regulation that capped leverage offered to clients by up to 30X  for major FX pairs and 2x for cryptocurrency FX pairs.

The Average Revenue per User in the Q3-2018 came down to $981 compared to $1232 in Q3 last year. The decrease in ARPU was also due to comparatively low volatility in Q3 than Q1 and Q2. Also, the cost of acquiring a new customer also went up significantly during the period to $1581 compared to just $677 in the first six months of this year.

The stock of the company has also bear the burnt of stringent regulations by ESMA, which is now almost down by 40 per cent from August level. The company said that now 8 per cent of EEA have elected to become professional clients representing almost 38 per cent of the revenue compared to 5% EEA customers in Q2 contributing almost 20 per cent in revenue. In the long term, the company believes that only 30 per cent of the revenue will be impacted by EEA clients.

The company has also initiated a $10 million share buyback programme and has appointed Liberum Capital Limited to manage the whole programme. 

Asaf Elimelech, Chief Executive Officer of Plus500, commented:

Our results for the third quarter continued to show satisfactory levels of trading activity of our Active Customers in comparison to previous years, despite regulatory changes and low market volatility. We continue to focus on our core markets and acquiring high value customers supported by our innovative technological edge and the prospect of potential new licences outside the EEA. We now expect to be ahead of current market expectations for 2018.

Karthik Subramanian

Karthik Subramanian has been a professional trader and fund manager over the last 18 years. He is basically a software developer who made the transition to financial domain around 18 years back as the attractiveness of the financial markets proved too much for him. He lives in Chennai in India along with his wife and son. He began his career as a software developer in 1999 and then gradually moved into the financial industry as he began trading stocks in his pastime. He then moved into the financial markets full time and then shifted his focus to the FX markets due to the liquid nature of these markets. Since then, he has been trading FX diligently and his favourite pair are the EURUSD and EURJPY. Over the last couple of years, he has found blockchain to be of high interest and considering his background in software and finance, he has since assembled a team of highly talented developers who have since worked on a variety of projects like crypto exchanges and blockchain architecturing. Now, he balances his time between trading and commenting on both the FX and crypto markets. He has worked with many publications including FX Street and Finance Magnates, which has helped him gain experience and also recognition across the industry. He loves to write and this passion has helped him to reach out across the FX and crypto industry. Right now, he works on his pet projects in the FX and crypto industry and spends his time writing and managing his blockchain team and helping it to reach higher.