Plus500 pays price as its luck runs out on spread betting

YOU can’t really fault the new rules aimed at protecting gambling addicts from blowing their family finances on suicidal spread betting.

As anyone who’s ever traded will tell you, the chances of losing your money massively outrun the prospects of winning. Furthermore, with the availability of credit to finance your bets — known as leverage — you stand to lose far more than just your stake.

So Brussels came up with a series of protective measures known as the ESMA rules, named after the European Securities and Markets Authority. They reduced the leverage retail investors could take on spreadbetting contracts for difference (CfDs), forced companies to close out bets when losses got too big and restricted the amount of bonus bets firms could offer in their marketing.

Furthermore, they also have to state publicly what percentage of their punters are actually in profit. Given that the national competent authorities last year calculated that 74-89% of punters lose money trading CfDs, that was never going to help recruit new clients.

The rules came in last August, and predictably, the spread-betting firms have been struggling badly since. Profit warnings have been strewn across the sector as punters traded less or — if you believe the industry’s lobbyists — switched to dodgy offshore platforms without ESMA’s restrictions.

Through it all, Plus500 somehow sailed serenely on, with a series of profit upgrades. We’re growing our businesses outside the ESMA regions of Europe, it said; more of our traders are professional investors who don’t fall under the ESMA rules.

Until now. Finally, Plus500 has admitted it is mortal after all. While it