Plus500 plunges 30% on profit warning over stiffer regulation


New rules introduced by the European regulator have hit the Israeli contract-for-difference (CFD) online trading services platform.

The share price of Israeli contract-for-difference (CFD) online trading services platform Plus500 (LSE: PLUS) was down over 30% today on the London Stock Exchange after warning that its 2018 results will be hit by stiffer regulations introduced last August.

The new rules introduced by the European Securities and Markets Authority (ESMA) are an attempt to curb sales of complex derivatives to retail investors. Plus500 also said that 2019 revenue would be lower.

In early afternoon trading in London, Plus500's share price was down 32% at 1,113p, giving a market cap of £1.27 billion.

"Blomberg" reports that, "ESMA has been clamping down on the sale of contracts for difference, or CFDs, which allow retail investors to make risky wagers with borrowed funds on stocks, bonds, foreign exchange and cryptocurrencies."

Bloomberg adds that, "Companies like Plus500 have attempted to offset ESMA’s restrictions by converting customers to a “professional” client category, which is still permitted to trade leveraged CFDs. Plus500 said that it had converted 7,229 such customers into professionals in 2018, 44% of those who applied."

Published by Globes, Israel business news - - on February 12, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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