October 23, 2018 / 6:29 AM / 9 months ago

Online trader Plus500 upbeat after third-quarter regulatory hit

(Reuters) - Plus500 Ltd (PLUSP.L) said on Tuesday it expects this month’s rise in volatility on financial markets to help it ride out a regulatory clampdown and bring in trading for 2018 ahead of market expectations, pushing its shares 5 percent higher.

The online trading platform reported a 14.1 percent fall in third-quarter revenue due to a regulatory crackdown on leveraged financial betting by ordinary consumers.

But it said it had seen a return of higher volatility across asset classes since the end of September that should boost trading and left it optimistic on trading for the whole year.

The company warned in August that its “exceptional performance” in the first half was unlikely to be repeated due to the regulatory clampdown.

Like peers IG Group (IGG.L) and CMC Markets (CMCX.L), the company has been under scrutiny as regulators tighten rules on products which allow anyone with a bank card to make highly-leveraged bets on financial markets through their apps and online platforms.

Plus500, which allows individual customers to trade contracts for differences on more than 2,200 financial instruments, said the regulatory changes and low volatility in the third quarter had reduced revenue to $100.1 million (77.2 million pounds) from $116.5 million, a year earlier.

New customers who deposited real money into their own account for the first time more than halved to 20,684 in the three months ended Sept. 30.

However, the number of active customer, ones who made at least one trade using real money in the period, rose 8 percent as the company spent on marketing and client servicing.

The company, founded just a decade ago, also said average revenue per user had fallen 20 percent to $981 during the third quarter, hurt by “very low” market volatility in September. Average cost of acquiring a user also more than doubled in the quarter.

Reporting by Muvija M and Arathy S Nair in Bengaluru; editing by Patrick Graham

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