Plus500 buyback plan sees shares soar
Shares in online trading company Plus500 have surged after the company announced a share buyback and said revenue had picked up in the second quarter, despite record low volatility.
The Israeli-based, London-listed firm will spend up to 10 million US dollars (£7.7 million) buying back shares between Friday and the end of August, with trades handled by broker Liberum.
This will be paid for by Plus500's "significant cash resources" of 191 million US dollars (£148 million), which includes 75 million US dollars (£58 million) which it already plans to pay out in final and special dividends at the start of July, chief executive Asaf Elimelech said.
In a market statement, the spreadbetter said that following a 9% year-on-year drop in revenues in the first quarter, "subsequent trading revenue has been stronger and profit margins have been maintained".
It added: "This is despite considerably lower levels of volatility as measured by the VIX Index than in the same period of 2016."
Plus500 shares surged more than 9% to 567p in morning trading off the back of the news.
Shares in Plus500 and its peers took a tumble in recent months after European watchdogs moved to tighten rules around so-called contract for difference (CFD) products, which allow retail investors to place bets on financial markets.
Regulators have raised concerns that these complex derivatives are being sold to customers who do not fully understand the risks involved.
In early December, the Financial Conduct Authority (FCA) proposed a range of new measures, including making it compulsory for providers to disclose profit-loss ratios on client accounts and standardising risk warnings.
Plus500 told investors these measures could have a "material operational and financial impact" on its UK subsidiary, sending shares down 27% in one day.
Today, Plus500 said it has so far seen no "material impact" from the recent changes, but he warned the outcome of the FCA consultation - expected later this year - "could affect the second half".