EU regulations weigh on number of new customers at Playtech’s financials division in H1 2018

Maria Nikolova

During the first half, as preparation for the new measures issued by ESMA, the management decided to take a prudent approach to marketing spend on new customer acquisition.

The effects of the new rules for CFD offering to retail investors introduced by ESMA are made apparent by the report of another company which is engaged on online trading – Playtech PLC (LON:PTEC), or more precisely, its financial division TradeTech Group.

In a filing with the London Stock Exchange today, Playtech said that, during the first half of 2018, as preparation for the new measures issued by ESMA, the management decided to take a prudent approach to marketing spend on new customer acquisition. Management has taken the view that the incoming regulation may potentially impact the ‘customer life time value’ and ‘accordingly cost per acquisition’ metrics across the market. This resulted in slower growth in number of new customers in the period.

On the brighter side, in the B2B business segment, TradeTech saw revenue up 39% and 15%, and volumes up 109% and 55% on a proforma basis. This brought the business close to reaching the $1 trillion level in trading volume from B2B customers in the 6 months of 2018.

Playtech notes the importance of the CFH and TradeTech Alpha acquisitions, which complimented the existing frontend and backend technology and enabled TradeTech to deliver an end to end solution for brokers, delivering a full suite of products from unique trading platform and CRM systems, to liquidity control, risk management, real time risk applications and more. TradeTech’s strategy is to continue to establish its capabilities across the entire value chain in the financial trading sector.

Revenue in the TradeTech Group was €52.3 in the first half of 2018, up 16% versus the first half of 2017. The functional currency of the TradeTech Group is US Dollars and, looking at revenue on a USD basis, the H1-2018 growth was 37%; reflecting growth in both the B2B and B2C verticals driven through higher volume of trading.

Cost of operations in the Financials division decreased by €2.1 million in the first six months of 2018. However, on a USD basis the adjusted cost base increased by 17.5% due to the inclusion of ACM during the first half of 2018. Excluding the ACM expenditure, like for like adjusted costs in USD for the TradeTech Group were relatively flat year on year.

In terms of overall performance of Playtech, the results were not quite rosy, due to headwinds in Asia. Total reported revenue increased by 4%, but Adjusted EBITDA decreased by 15%. Adjusted Net Profit decreased by 34% predominantly due to the decrease in revenue from Asia.

Read this next

Digital Assets

Binance upgrades Bahrain license to offer full-suite of crypto services

The Central Bank of Bahrain (CBB) has granted Binance its Category 4 license as a fully-fledged crypto-asset service provider (CASP).

Digital Assets

BitMEX spot exchange hits $24 million in daily volume

The newly-launched spot market of crypto exchange BitMEX reported a record of $24 million in 24-hour trade activity on May 25.

Retail FX

Financial Commission certifies offering of trade copier 4X Solutions

The Financial Commission, an independent self-regulatory compliance specialist for the financial services industry, has certified the trading technology offered by trade copier 4X Solutions.

Industry News, Inside View

LIVE from Devexperts webinar for brokers on Fractional Trading

Finance Feeds is providing live coverage of the event that aims to help brokers discover fractional shares as a key tool for a successful brokerage business in today’s trading industry.

Industry News, Retail FX

ASIC celebrates retail ban on binary options as 68% of wholesale clients lose money

In the 13 months before the ban, between 74% and 77% of active retail clients lost money trading binary options. The product intervention order does not apply to wholesale clients.

Crypto Insider

Investing in crypto: how to stay away from weak players

The main reason behind the hacks of crypto exchanges is weak key management. For example, all 4 hacks that took place in 2021 were caused by the ability of hackers to obtain access to hot wallets. 

Retail FX

Vantage launches swap-free gold XAUUSD trades for all clients until end of July

“As the greenback continues to strengthen, we want to support traders who remain bullish on gold or seek short term trading opportunities amid the volatility”

Industry News

Broadridge launches ESG reporting solution ahead of European regulation SFDR

The Broadridge managed solution for EET adds to existing Broadridge services, including European PRIIPs Template, European MiFID Template, Solvency II Tripartite Template and many more across the European jurisdictions.

Industry News

iCapital to acquire embedded structured investment platform SIMON

SIMON’s platform, SPECTRUM, is a multi-dimensional allocation analysis and portfolio construction tool designed to evaluate how structured investments and/or annuities may fit into a portfolio.