Plus500, the troubled trading firm that was hit with regulator woes last month, has weathered the storm and come out the other side.
Management said today that the vast majority of accounts at its UK business — 13,499 — have now been unfrozen, after the Financial Conduct Authority (FCA) told it last month to stop trading and re-verify every customer’s identity. That followed a review that found Plus500’s anti-money laundering checks weren’t up to scratch.
Plus500 also thinks it will be signing up new clients again within three weeks. The Israeli company is just hammering out the final details of plans with the FCA.
All in all, it’s back to “business as usual”, according to Plus500, which lets ordinary people make risky, leveraged bets on stocks and currencies through something called a contract for difference (CFD).
Amazingly, the crisis has left its business relatively unscathed.
Some 72% of accounts that have been unfrozen have kept on trading rather than running for the hills and second quarter revenue stands at $US43 million (£27.3 million). It’s a big drop on the first quarter’s $US82 million (£52.2 million) but compares pretty well with last year’s second quarter figure of $US45.5 million (£28.9 million). Overall, first half revenues are around $US19 million (£12 million) ahead of last year.
But Plus500 isn’t totally out of the woods yet. While it has managed to unfreeze accounts, the FCA hasn’t yet approved this process. A reviewer has sent a draft report to the FCA on the matter and Plus500 says the board is “confident” the FCA will rubber stamp it.
If it doesn’t, it could derail Israeli gambling software maker Playtech’s on-going takeover of Plus500.
After Plus500’s share price went into free fall last month Playtech swooped in with a low-ball bid. The fellow Israeli company’s offer is almost half the £862 million ($US1.3 billion) Plus500 was worth before the crisis blew up.
Plus500’s embattled management approved the bid, and looks likely to go through, but the offer has various break clauses in it that would allow Playtech to walk away.