October 23, 2018 / 11:39 AM / in 25 days

Trading platform Plus500 targets Japan after European clampdown

Oct 23 (Reuters) - Online trading platform Plus500 said it will look to expand into regulated markets such as Japan to offset the impact of a crackdown in Europe on high-risk financial betting.

Plus500, which allows individual customers to trade contracts for differences on more than 2,200 financial instruments, has been under scrutiny in Europe along with its rivals CMC Markets and IG Group.

“We are looking into regulated markets only at the moment,” Plus500 Chief Financial Officer Elad Even-Chen said, citing Japan as a good example for foreign exchange-related trading.

European regulators are tightening rules on products which allow anyone with a bank card to make highly-leveraged bets on financial markets via apps and online platforms, potentially leading to significant losses.

The European Union’s securities watchdog renewed a ban in August on the sale of ‘binary’ options to retail clients, saying there were still concerns about the risks.

An analysis on EU trading showed that 74-89 percent of retail accounts typically lose money on their investments, with average losses per client ranging from 1,600 euros to 29,000 euros ($1,836 to $33,277).

Liberum analyst Ben Williams said Japan would make sense as it has a tradition of trading foreign exchange and there is already a significant regulated retail marketplace.

Plus500 said on Tuesday the European regulatory changes and low volatility in the third quarter hit new customer numbers and average revenue per customer.

To mitigate the 30 percent impact on revenue it expects from the restrictions, Plus500 said about 8 percent of its European retail customers have become professional clients, which means they are shielded from the restrictions, up from the 5 percent reported at the end of second quarter. ($1 = 0.8715 euros) (Reporting by Muvija M in Bengaluru; Writing by Arathy S Nair and Alexander Smith)

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