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A change of strategy towards high net worths and professional clients has helped ETX turn the corner and buck the trend returning to profitability.
Despite the recent ESMA regulatory changes ETX Capital has moved back into the black. After recording a loss back in 2016, they returned to modest profit as they refocused their attention on high net worth individuals and highly volume traders. The revelations followed swiftly on the heels of more good news as the company was named Best Forex Trading Platform at the 2018 UK Forex Awards.
The spread betting brokers’ 2016 losses sparked a period of readjustment for ETX. Long time CEO, Andrew Edwards left to run Saxo and in came Arman Tahmassebi, as the spread betting firm realigned its sights.
The new strategy included a series of expenditure cuts and a focus on high net worth clients and those with higher trading volumes. The boom in cryptocurrency trading has clearly been a factor in new client acquisition for ETX.
The immediate result of this move was actually to reduce revenues on 2016 by 8.5% to £31.3million from £34.3million. The number of active clients also fell by 29%. A sign that smaller quantity clients are being replaced by fewer quality clients.
Against that, revenue from professional customers rose by 28% from £8.7million to £11.1million and the spread per customer increased by almost a quarter. Spread revenue fell to 67% of overall ETX revenues compared to 70% the year before.
It also saw a marked increase in the level of client assets it held. By the end of 2017, these had reached £129.6 million – an enormous jump from the £58.4million it held at the beginning of the year. Recent launches have also had a positive effect with the arrival of its crypto offering in October. ETX said trading in cryptocurrencies had been particularly busy in the final quarter of 2017.
The overall result of all this restructuring was to take the company from recording a loss to a small but significant profit of £264,000 for the year.
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Tom Cropper is a financial journalist with work which has appeared in titles such as the Guardian, Euromoney and many others.