The AIM-listed trading technology provider TechFinancials (LON:TECH) today decided to suspend paying any dividends as 24option, the leading binary options broker and its largest software licensee, plans to terminate its relationship with the group.
TechFinancials informed stockholders that it has received a notification from Richfield Capital, owner of www.24option.com, which is rumored to lead the business in terms of market share, informing the technology provider that it will migrate its trading activity to an in-house system, effective 1 April 2017.
“The Company is in discussions with Richfield in order to support the migration of trading activity to an in-house system during 2017, which may involve future services to be provided by the Group,” the statement further declares.
While the company confirmed that the termination of the agreement will have no material impact on the results for Q1 2017, it added that this event could have an adverse impact for the rest of the current year.
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Based on this, the board of TechFinancials will defer a decision on paying a dividend until the effects of 24option’s departure on its financial metrics are reassessed later in the year.
The provider of financial trading services and technology expects its diversification strategy, which includes new product and regional expansion, to aid growth and mitigate the risks of losing such a big client.
Although TechFinancials has been successful in onboarding more new customers over the past years, it’s clear that 24option still represents the lion’s share of the group’s platform revenues. The actual percentage is unknown but TechFinancials often states that it derives a “substantial proportion of such white-label partnerships”.
Meanwhile, 24option has decided to go against the normal brokerage model in the industry by developing its own patented software to mirror its offering to the market. The broker may want to run away from the one size fits all concept, or perhaps it just decided that its growth potential in the years ahead cannot be captured by the conventional white-label solutions provided by TechFinancials, or similar developers.
Founded in 2009, 24Option is one of the leading and longest running binary options brokers. The company operates throughout Europe and is registered in several EU countries.