Plus500 Expects Trading for 2018 to Beat Expectations Despite Slump in Q3

Volatility was low in the third quarter, however, Plus500 has already seen a recovery heading into Q4.

After a record first-half for Plus500, the online contracts for differences (CFDs) and forex brokerage has yet again made a positive announcement – the firm now expects trading for 2018 to beat expectations.

The announcement was attached to the firm’s results for the third quarter and the nine months ending September 30, 2018, which it announced today via the London Stock Exchange. According to the statement, the broker is now entering into the fourth quarter with positive momentum after an uptick in volatility.

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Plus500 weathers the ESMA storm

The third quarter was bound to be a tough month for all brokers in the United Kingdom and Europe. This is, of course, referring to the implementation of regulation from the European Securities and Markets Authority (ESMA) on August 1, 2018, which resulted in low market volatility.

This low volatility is reflected in Plus500’s results, with revenue coming in at $100.1 million for the third quarter. This is a decrease of 14 per cent compared to the same period last year. However, when looking at the nine months ended September 30, 2018, it appears that ESMA has had little impact, as revenue was $565.6 million, an increase of 86 per cent year-on-year.

As is the case with many brokers, Plus500 is trying to encourage applicable retail clients to be reclassified as institutional traders. This means that they will no longer be subject to the ESMA regulations, such as the leverage restrictions.

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According to the statement, around 8 per cent of the broker’s European Economic Area (EEA) customers have reclassified as professional clients. These clients represent 38 per cent of Q3 EEA revenues. In the second quarter, this was 5 per cent of EEA customers, which translated to around 20 per cent of revenues within the EEA.

Looking ahead, the board remains steadfast in its belief that less than half of EEA revenues, which is only 30 per cent of group revenues, will be affected by the current regulatory restrictions in the region long-term.

Plus500 looks to the future with confidence

Volatility during the third quarter of 2018 was very low by historical standards. However, at the end of the quarter, Plus500 has seen a return of higher volatility across different asset classes. In addition, the firm also experienced consequently stronger trading, the statement said.

Because of this, the broker now believes its trading activity for 2018 will come ahead of market expectations. Furthermore, Plus500 adds that its future outlook is positive and despite regulatory uncertainties, it believes it will ultimately benefit from the changes.

Asaf Elimelech, CEO of Plus500
Asaf Elimelech

Commenting on the results, 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.”

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