London-listed retail brokerage group Plus500 recently released its half-year results for 2024. These were impressive but what was striking was the increasing amount of information about the broker’s US operations.
Plus500 acquired Cunningham Commodities, a futures broker, in 2021 and has begun rolling out a futures offering to US clients over the last 12 months.
Given that it’s at such a nascent stage, there hasn’t been that much information about how the company is performing so far. Plus500 also doesn’t break down US revenue into its own category in its financial results.
However, the latest results provided some clarity on goings on at the firm’s US division.
Plus500 US has thousands of registered clients
On an analyst call, Plus500’s Chief Financial Officer Elad Even-Chen said that the firm now has ‘thousands’ of clients that are registered to trade with the company.
Although there were no figures on active clients or revenue, it’s at least one sign that the sort of marketing efforts that Plus500 has undertaken in its CFD business are having some impact over in the US as well.
Plus500 US has c.$300m in client deposits
Another first in the presentation was the volume of client deposits in the US. Plus500 said this had reached approximately $300m at the end of H1. Interestingly, this is greater than their entire CFD business, albeit with the caveat that futures are unlikely to be anywhere near as profitable as that part of the business.
Nonetheless, to put that in some context, when IG Group acquired tastytrade in 2021 they published the latter’s most recent annual results. Those showed that tastytrade had client assets of $2.5bn at the end of 2020 and revenues for the year of $116.2m, with profits of $49.0m.
Whether those figures actually map on to Plus500’s business model remain to be seen but there is definitely a level of similarity to them. Firstly, Plus500 charges various dealing fees and then they are likely to collect rebates from sending flow to market makers.
Plus500 is doubling down on the B2B market
Looking at the US from the UK, or indeed Europe, one of the striking things is how prominent the introducing broker model is.
This is a regulated function in the US, as it now is in the UK and EU. However, unlike those latter two markets, it seems to be big business in the US and if you look at how Plus500 is positioning itself, there is a huge emphasis on attracting clients via these partnerships.
For example, you can use the company’s B2B offer to trade via Plus500 but using your own preferred trading platform. This is something you cannot do at all if trading CFDs with the broker. Similarly, the company has built a new platform – called Cosmos – for introducing brokers in the US.
We’ll find out whether or not this is successful but it’s a very different approach to what others in the market are doing, as well as what Plus500 has historically done.
Plus500 will expand its futures offering abroad
The final interesting point to note was also made by Even-Chen during the analyst call. In response to an analyst question, he revealed that Plus500 will expand its futures offering abroad over time.
Assuming that happens, Plus500 will become one of several companies attempting to ramp up an exchange-traded derivatives offering in the UK and Europe.
AvaTrade recently launched a futures offering and Webull and IG Group are already offering options trading to UK retail clients. Robinhood and CMC Markets are ramping up to do the same.
