Friday morning (June 2, 2017), there was a sharp increase in the total number of traded shares of FCA regulated Forex broker Plus500 Ltd (LON:PLUS). To be precise, the shares went up by about 9%. These shares were being traded at 5.65 which is higher that a trading of 4 that was witnessed at the begging of 2017. Just remember that this is still below what it was trading at by the end of 2016.
As a licensed CFD broker, Plus500 Ltd announced that it has witnessed strong cash levels in addition to steady and healthy revenue growth in this Q2. It also revealed the planned $10 million share buyback. It’s these announcement that promoted the changes in the number of shares traded.
First, this company’s first quarter trading update that was released at the end of April revealed a positive trend in it trading activity. The announcement has confirmed that, this trend in still continuing even during this Q2.
Remember that this Q2 is about two-thirds over and Plus500 Ltd has confirmed that when it is compared to the first quarter, trading has been strong and the overall profit margins have been perfectly maintained. All these achievements have been made irrespective of the significant lower levels of volatility that were measured and reported by VIX Index than in 2016 during this exact period.
As a reminder, note that Plus500 Ltd Q1 record was fairly stronger with Revenues of about $77.5 million. According to the report, as at December 31, 2016, the firm’s net cash balances were standing at about $136 million. With its steady trading, its net cahs balances as at May 31, 2017, were at about $191million. This amount include about $75 million that will be paid out on July 3, 2017 in dividends. Note that the company’s policy is to offer a 60% pay-out ratio dividend to shareholders.
Plus500 Ltd operates in France, Germany, Cyprus and UK. In their report, it was stated that, based on the regulatory front, all of the regulatory changes that had been announced in all of the above areas of jurisdiction had a significant negative impact on the overall trading performance. The only thing foreseen to affect the second half of this year (2017) would be the outcome the FCA consultation. Actually, Plus500 Ltd is waiting for this outcome just like all the other leading CFD brokers in UK.
About Plus500’s Share Buyback Program
It’s this program that has caused the sharp increase in trading. The program features the aspects listed below
· The number of approved shares is $10 million.
· The buyback process will be carried out in open market transactions.
· Liberum Capital Limited is the company that manage this program.
· This program will commence today and continue through to August 31, 2017
Shares of all major CFD and Foxex market traders in the UK were significantly hit after FCA (a UK regulator) proposed new rules to govern leverage trading. The rules cited a hard 50x leverage cap on existing and new positions. The affected shares were almost cut in half. Although FCA is yet to announce its final decision about the above issue, leading company’s like CMC Markets Plc (LON:CMCX), IG Group Holdings plc (LON:IGG), Plus500 Ltd (LON:PLUS) are still hoping for their best.