In a recent stockholder press release by Tech Financials, the Binary Options platform provider disclosed that 24Option has decided to migrate to its own platform. Although this is not a new practice it is less common in an industry that tends to white label technology. 24Option, which is owned by Richfielf Capital made the decision recently and the migration is expected to be complete by the 30 April 2017. This obviously was unfortunate news for Tech Financials who have now decided to stop paying any dividends.
Tech Financials, which is listed on the London Stock Exchange will no doubt suffer from the decision as 24Option is its biggest client. Although the company claimed that there would be no impact on their first quarter results, it will no doubt have an impact on their 2017 financial year. This was the main reason behind the company deciding to halt its dividend. Whether this will impact the company’s strategy for expansion into the U.S. market with Cantor Fitzgerald.
In the same announcement, Tech Financials mentioned that “The Company had prepared for such an event and has invested in a diversification strategy that commenced in 2016 to mitigate the effects of this. While the Company expects income in the first quarter of 2017 to be in line with management expectations, it is likely that this event will have an adverse impact for the rest of 2017, both on the Group’s income and on EBITDA.” It can be quite hard to ascertain exactly how much the 24Option contract with Tech Financials was worth. This is mainly because the partnership was no doubt based on a revenue share basis.
Other brokers that have decided to use their own platforms include Anyoption and IQoption. Although costly to develop and maintain, there are benefits of a broker running its own platform. The broker can be more receptive to any regulatory changes as they have full control over the tech in their platform. This also allows a broker to develop a platform that markedly differentiates itself from the competition. It also gives the broker a piece of intellectual property that can increase its valuation.
The move by 24Option does raise concerns for other platform providers such as SpotOption. The latter, which must have suffered from the closure of Banc De Binary, will no doubt be examining its key relationships and trying to reinforce them. What sort of platform 24Option will use is uncertain yet one can expect them to have developed a product that would not be too hard for current traders to use.
24Option is the biggest and longest running Binary Options broker in the world. Founded in 2009, the company is regulated in Cyprus via CySec and is therefore allowed to offer services to EU clients given the financial passporting rules allowed under MiFid. You can read more about the broker in our 24Option review.