Alpha FX unable to serve certain EU clients until Malta unit is operational

Alpha FX Group PLC said it will now be concluding the final setup of its Malta unit following the expiration of the Brexit transition period as limitations on the free-trade agreement mean the U.K.-based company is currently unable to serve derivative clients in certain EU member states.

The U.K. left the EU's customs union and single market when the transition period ended Dec. 31, 2020, but the agreement it signed with the bloc did not cover financial services in a significant way.

In a Jan. 12 trading update, the foreign-exchange service provider said it will service European derivative clients through reverse solicitation while operating on an execution-only basis. Under reverse solicitation, the company can only offer derivative services to clients who request these services.

Reverse solicitation is not being uniformly implemented across the EU, so the group will be unable to service derivative clients in certain countries in the bloc, Alpha FX said. A small number of the group's existing clients will thus be unable to place new derivative trades until its wholly owned unit in Malta is operational, which is expected by the end of the first quarter.

Most of the preparations for the new unit were completed before 2021, but the group chose not to initiate the final setup until a Brexit outcome was confirmed, the company noted.

Alpha FX said it expects revenue for full-year 2020 to be approximately £46 million and that underlying operating profit will be "slightly ahead" of most recent expectations. Concluding the establishment of the group's European base is expected to have a minimal impact on its revenues.