Another Summer day, another half-year report published. This Wednesday, it was PlayTech, a company that mainly operates online gambling and gaming firms, that released its half-year report via the London Stock Exchange.
Unless they’ve invested in some PlayTech stocks, our readers are unlikely to be too interested in the company’s overall activities. PlayTech, however, also owns TradeTech, a provider of trading solutions, and Markets.com – a retail trading broker based in London.
Keeping in mind how industrious the Finance Magnates readership is, we’ve taken the time to go through the half-year report, so you don’t have to. From new licenses to revenue growth, this makes for scintillating stuff. So read on, as we look at three key points from PlayTech’s report for the first half of 2018.
Markets.com Gets New Licenses
According to PlayTech’s report, Markets.com has acquired two new licenses, in South Africa and Australia, to further its brokerage activities. This appears to have been a result of the European Securities and Markets Authority’s (ESMA) latest piece of regulation.
For those of you who are unaware, ESMA’s newest regulation came into effect at the beginning of August. Most significantly, it put caps on the leveraged trading of contracts-for-differences (CFDs) and placed advertising restrictions on brokers offering them.
As a result of this regulation, firms have been attempting to expand their services abroad, outside of ESMA’s jurisdiction. Markets.com will now be able to offer its services in Australia, via a license from the Australian Securities and Investments Commission, and in South Africa, with licensing from the Financial Services Board.
Both countries remain open to CFD trading, offering regulatory protections to consumers but not the extensive restrictions on brokers imposed by ESMA. How successful the broker will be in these two jurisdictions remains to be seen.
Despite regulatory pressure from ESMA, PlayTech’s financial division, which encompasses both Markets.com and TradeTech, saw a significant increase in year-on-year revenues.
The report released this Wednesday indicates that revenues for the firm’s financial division were up to €52.3 million ($60.48 million). That was a 16 percent increase on last year’s €45.1 million ($52.15 million).
In real currency terms, this growth was more impressive than it first appears. According to PlayTech, year-on-year growth was actually equal to 24 percent when inflation was taken into account.
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This growth took place despite a decrease in operational costs. PlayTech noted that its expenses, within its financial services division, were down by 7 percent. Last year the firm reported expenses of €29.1 million ($33.65 million). This year, that figure dropped to €27 million ($31.22 million).
Growing Trading Volumes
Alongside the growth in revenues, PlayTech also reported an increase in trading volumes for both Markets.com, which is business-to-consumer focused, and TradeTech, which is focused on business-to-business products.
In the first half of 2017, Markets.com reported total trading volumes of approximately $87.04 million. This year, for the same period, that figure grew by 52 percent to $132.3 million.
Wednesday’s report does not provide precise figures for TradeTech’s trading volumes. Nonetheless, the firm reported year-on-year trading volume growth of 109 percent, or 55 percent on a proforma basis. PlayTech noted that TradeTech’s trading volume for the first half of 2018 stood at close to $1 trillion.
Growth in volumes for Markets.com may have been due to higher volatility over the course of the year thus far. This has spurred retail customers into making more trades and boosting broker’s volumes.
For TradeTech, the firm’s growth in trading volumes may have been due to acquisitions. PlayTech’s report states that the “CFH and TradeTech Alpha acquisitions complimented [TradeTech’s] existing frontend and backend technology and enabled TradeTech to deliver an end to end solution for brokers.”
Well-Placed for the Years Ahead
A combination of external factors and internal decisions appear to have set PlayTech’s financial services division up well for the near future.
Higher volatility in the first half of 2018 boosted trading and, as a result, the firm’s volumes and revenues increased.
At the same time, cuts in spending appear to have been well made as they did not impact revenues.
Moreover, the firm’s decision to expand into Australia and South Africa could mitigate any potential damage resulting from ESMA’s newest regulation.