February 14, 2018 / 7:56 AM / 9 months ago

UPDATE 3-Click for crypto: Plus500 uses currency craze to lure customers

* CEO says crypto customers staying on to trade other products

* Forecast 2018 revenue “significantly ahead” of consensus

* 2017 core earnings at $259.2 mln beat analysts’ expectations

* Well placed to manage new regulation -CEO (Adds CEO comments, details)

By Noor Zainab Hussain and Esha Vaish

Feb 14 (Reuters) - The hype around cryptocurrencies has drawn more customers to Plus500’s online trading platform, the company said on Wednesday, with many staying on to trade its products ranging from indices to commodities.

Plus500, a rival to IG Group and CMC Markets , forecast 2018 revenue “significantly ahead” of market expectations and said a regulatory crackdown on spreadbetting in Europe was unlikely to hurt its business.

Retail customers use its platform to trade contracts for differences (CFDs) and Chief Executive Asaf Elimelech said that about 15 percent of the company’s overall revenue in 2017 derived from cryptocurrency CFDs trading.

Interest in cryptocurrencies may start to decline this year in the face of more stringent regulations, Elimelech said, but Plus500 was sufficiently diversified to handle that.

“We also noted that the various customers (of cypotcurrency), and not a small portion, have continued to trade on other instruments as well,” he told Reuters in a phone interview.

The company’s annual results and outlook sent its shares to a record high on Wednesday.

Crypto products are very volatile: bitcoin, the best known cryptocurrency, soared by more than 1,000 percent in 2017 but has already lost about half of its value this year amid mounting calls for a regulatory crackdown on such assets.

Elimelech said that Pluss500 had set limits per customer, per cryptocurrency instrument and per type of category to manage its “risk” against trades in cryptocurrency instruments on its platform.

Plus500’s new customers jumped 136 percent to 246,946 last year, while the number of active customers doubled to 317,175.

Core earnings rose 72 percent to $259.2 million for the year ending Dec. 31, beating analysts’ expectation of $240 million, according to Thomson Reuters I/B/E/S.

Liberum analysts, who have a “buy” rating on the stock, said the outlook for Plus500 was “very positive”.

Plus500 shares, which rose 130 percent in 2017, gained as much as 12.2 percent on Wednesday to a record high of 1324 pence but then pulled back and were up 0.1 percent at 1181 pence at 1303 GMT.

NEW REGULATIONS MANAGEABLE

Plus500, set up in 2008, generally trades in CFDs, financial products that give investors exposure to price moves in securities without owning the underlying asset, such as a currency, commodity or stock.

Despite facing uncertainty from proposed regulation on these products, Plus500, IG Group and CMC Markets, have all reported strong revenue growth as they signed up record numbers of customers last year, partly due to the bitcoin boom.

Global regulators are cracking down on the fast-growing 3.5 billion pound ($4.9 billion) spread betting industry in which most retail investors lose money.

Elimelech said the company’s track-record showed that it could continue to make the necessary adjustments to comply with changes in European and British regulations without its business taking a hit.

He expects the industry to “consolidate around a smaller number of larger participants” in response to the new set of regulations.

“We must admit, we are not after M&A that are for buying a customer list, but rather maybe there is an interesting license out there that we don’t have,” he explained.

Plus500 has operating licences in Britain, Australia, Cyprus, New Zealand, Israel, South Africa and Singapore.

($1 = 0.7195 pounds)

Reporting by Noor Zainab Hussain in Bengaluru; Editing by Huw Jones/Edmund Blair/Susan Fenton

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