Trading Point of Financial Instruments UK Limited, the operator of Trading.com, has become one of the many brokers to see an impact of the leverage and marketing restrictions imposed by the European Securities and Markets Authority (ESMA) in its 2019 performance.
Revenue of the FCA-regulated company went down by 78.4 percent, from £3.08 million in 2018 to £666,522 in 2019. The number of active clients on the platform also dropped to 4,718 from the previous year’s 15,074, and trading volumes further declined.
Revenue and client numbers are the two key performance metrics for brokerages, and ESMA’s restrictions on marketing and leverage have impacted these directly.
“2019 was a year of radical changes not just for the company, but for the industry as a whole,” a Trading.com spokesperson told Finance Magnates. “It was the first full year under the latest ESMA restrictions, for which there was naturally an adjustment period to account for. The prolonged uncertainty surrounding Brexit, and the status of UK-regulated brokers and EU clients naturally also had a negative impact in this environment.”
Further, the setback in the revenue dragged the brokerage into losses. For 2018, Trading Point reported a net yearly profit of £1.68 million. However, it ended 2019 with a net loss of £1.33 million.
Moreover, the losses resulted in a decrease of the return-on-asset of the company to 43 percent. Its net asset also dropped from £5.08 million in 2018 to £3.75 million in 2019.
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2019 – a Major Year for Trading Point
Apart from the implications of ESMA restrictions, Trading Point rebranded its platform to Trading.com in 2019. Previously it was known as XM.com.
Additionally, the company renewed its marketing strategies. As for the operating expanse, the brokerage reported £2.18 million in 2019, compared to £1.22 million in the previous year.
“Our rebranding of Trading Point of Financial Instruments UK Limited from XM to Trading.com was a major focus leading up to our July launch as we wanted to ensure that the transition was handled carefully and had no negative impact on our clients,” the spokesperson added.
“We also wanted to allow time for the changes to settle. As such, we committed to minimal marketing campaigns during the year, focusing mainly on solidifying our brand presence.”
Trading.com offers trending services across several asset classes, including forex, stocks, commodities and a few more. Last year, the platform gained approval from the National Futures Association (NFA) group to start its forex operations in the United States.
“As challenging as 2019 may have been, it has also been a year of development for the company, and we are confident that the foundations we have laid will prove extremely beneficial in the near future,” said the spokesperson.