CFD broker Plus500 Ltd (LON:PLUS) issued a statement on Thursday, after its shares fell by nearly 18% during the day’s trading session on the London Stock Exchange.
LeapRate spoke with several London City traders, who indicated that speculation was that Plus500 and other retail forex brokers with Cyprus ties could be hurt by Cypriot regulator CySEC’s decision to ban deposit and other bonus payments to retail traders, a tactic which has been frequently used in the Retail Forex industry as both a client acquisition and retention tool.
CySEC also placed limits of the amount of leverage retail traders can be offered.
Plus500 is licensed by the FCA in the UK as well as by CySEC. Its Australia subsidiary Plus500AU Pty Ltd also has an AFSL license from ASIC.
Plus500 stated that it believes that the CySEC pronouncements will not have a material impact on the company or its operations.
Plus500 shares recovered somewhat after the statement was issued this afternoon, and at the time of writing are down 12.7% to £5.22, versus yesterday’s close of £5.98. Plus500 shares earlier dipped to as low as £4.92.
Plus500 recently reported fairly strong financial results for Q3 2016. And, we understand that November was a very strong month for trading volumes at Plus500 and other leading CFD brokers thanks to the pre and post US election volatility in the currency, equity and fixed income markets. So Q4 should line up nicely for Plus500.
The full Plus500 statement reads as follows:
01 December 2016
Plus500 Ltd.
(“Plus500” or “the Company”)
CySEC Update
Plus500, a leading online service provider for retail customers to trade CFDs internationally, notes the movement in its share price and market speculation following the publication on 30 November 2016 by the Cyprus Securities and Exchange Commission (“CySEC”) of a series of questions and answers in a circular relevant to the CFD industry in which the Company operates.
The Company does not believe that the topics covered in the circular will have a material operational or financial impact on the Company.