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The CFD broker Plus500 has seen the price of its shares surge during the first week of 2018, with the increase being attributed to booming interest in cryptocurrencies, such as Bitcoin. Based in Israel, Plus500 is listed on the London Stock Exchange’s Alternative Investment Market (AIM).
In a trade report, the firm revealed record quarterly revenues in Q4 of 2017. Plus500 also reported an increase in additional customer numbers of 246,000, which was explained in part by interest in the firm’s cryptocurrency contracts for difference (CFD). Plus500’s cryptocurrency CFDs have seen “strong volumes” with investors who were attracted by the market buzz surrounding cryptocurrency.
But the spread-betting and cryptocurrency industries have been under the microscope over recent months, as regulators have cast their eye over practices across both sectors.
In December, the European Securities and Markets Authority (ESMA) warned of potential new regulations being introduced to govern the trading of CFDs and binary options, while the UK’s Financial Conduct Authority has told investors speculating on Bitcoin that they should be prepared for the possibility of losing all their money.
Regarding spread betting, The FCA has also written a letter to the CEO of CFD providers, expressing serious concerns at some aspects of the contracts for difference market. The UK financial services watchdog conducted a review of CFD providers and distributors, and found that most were ‘unable to offer a satisfactory definition of their target market’ or ‘explain how they align the needs of this group to the CFD product they offered’.
The FCA review assessed 19 firms in total and only one of the 19 providers in the review could provide the FCA with evidence of due diligence when taking on new distributors.
Megan Butler, executive director of supervision at the FCA, said all distributors in the review “had conflict of interest management arrangements that were either ineffective or needed improvement. Several firms failed to record a single instance of a conflict of interest affecting their business and a number of others claimed there were no potential conflicts of interest.”
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