Spreadbetting firm CMC sees sector challenges from regulatory clampdown

Global Brokerage

26/01/2017 08:10

Jan 26 (Reuters) - Spreadbetting group CMC Markets Plc 
 CMCX.L  on Thursday warned of continued uncertainty from a 
regulatory clampdown on spread betting, but said client trading 
activity in the third quarter had seen "some" improvement from 
the previous quarter.  
    Britain's financial watchdog in December joined other 
European regulators to protect individuals in the fast-growing 
3.5 billion pound ($4.4 billion) industry, where it said most 
retail investors lose money.  urn:newsml:reuters.com:*:nL5N1E11M0 
    Shares in CMC were down 6.7 percent at 105.01 pence at 0808 
GMT on the London Stock Exchange, making it the bottom performer 
on the FTSE Midcap Index  .FTMC . 
    CMC, which listed on the London stock market in February, 
said net operating income for the three months ended Dec. 31 was 
unchanged from a year earlier, with active clients numbers 
rising 13 percent from a year earlier.  urn:newsml:reuters.com:*:nRSZ1422Va 
    The rise in client numbers, however, was offset by a 13 
percent fall in revenue per client, the company said, adding it 
was not possible to tell whether the recent improvement in 
client activity would be sustained in the final quarter.  
    "The regulatory changes that will be implemented later in 
the year will undoubtedly present the Group with some short-to 
medium-term challenges as clients and the industry adjust," 
CMC's Chief Executive Peter Cruddas said.  
    However, that CMC's competitive position will be 
strengthened in the longer term, when compared to competitors 
whose business model is more focused towards inexperienced 
clients, he added. 
    CMC was set up nearly three decades ago by Cruddas, who is 
also one of the City of London's most prominent supporters of 
Britain's exit from the European Union. The company's rivals 
include Plus500  PLUSP.L  Denmark's Saxo Bank and FXCM Inc 
 FXCM.O . 
    Operating in an industry which is regulated by European 
Union rules which have no caps on leverage, CMC on Thursday 
joined rival IG Group  IGG.L  in offering clients "Limited Risk" 
accounts, which mean they can lose no more than their deposit. 
 urn:newsml:reuters.com:*:nL4N1FE2N7 
 
 (Reporting by Noor Zainab Hussain in Bengaluru) 
 ((noor.hussain@thomsonreuters.com; Within UK +44 20 7542 1810; 
Outside UK +91 80 6749 2764; Reuters Messaging: 
noor.hussain.thomsonreuters.com@reuters.net)) 
 
Keywords: CMC MARKETS OUTLOOK/