Plus500 has posted record revenues in the final quarter of 2017. The company’s performance is driven by trading in cryptocurrency CFDs. Despite the limitations in leverage in the EU to 1:5, the firm has experienced extraordinary activity in this area.
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A total of 246,000 new clients were onboarded by Plus500 during 2017. The brokerage shared in a trading update that it expects that full-year profits and revenues will come in ahead of expectations. Shares of the company were trading higher by 13 percent at the start of London trading.
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Commenting on the news, the CEO of Plus500, Asaf Elimelech, said: “Momentum in the business has continued to be strong with increased interest in our cryptocurrency CFD offering and record new and active customer numbers, demonstrating our ability to serve our customers' trading needs through product innovation and technology leadership.”
Crypto Risk Management
The company has been pro-active in managing the risks associated with trading Cryptocurrencies . Plus500 introduced a very high overnight interest rate on its CFDs, aiming to prevent traders from holding long-term positions at the brokerage. The company's goal has been to minimize risks related to rapidly rising cryptocurrency prices.
Retail traders have been largely one-sided in placing bets on cryptocurrencies, with a number of brokers reporting that way over 80 percent of traders are placing bets on a continued rise. The providers of CFDs have been prompted to take steps and limit their offerings in order to offset their risk exposure.
Some have introduced weekly expiration on the CFDs contracts, with weekend price moves being another dent for the counterparties that are carrying risk. Plus500 has been actively offering cryptocurrency CFDs since 2013.
Massive Growth in New Clients
New clients at Plus500 increased dramatically when compared to 2016 when the firm acquired 104,432 customers. This year's 246,000 figure is largely a result of the ongoing crypto-boom. With the year starting with a bang for Ethereum and some smaller altcoins, the era of cryptocurrency trading might still be in its infancy.
Currently, Plus500 is offering 7 cryptocurrency pairs featuring Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Ripple, and IOTA. The brokerage is also offering a cross between Ethereum and Bitcoin.
