CMC Markets defends global interests, confirms engagement with regulators on CFD rule changes
CMC Markets confirms no changes to its corporate structure in light of impending CFD regulations, the extension of its product offering with the launch of ‘Knockouts’ in Germany and Austria, and close working relationships with regulators as changes to how leveraged OTC products are provided are implemented
British electronic trading stalwart CMC Markets has today made an official statement as the end of the third quarter draws to an end, stipulating the company’s position with regard to the recent announcements from regulatory authorities in England, France and Germany that aim to change the means by which the marketing and distribution of leveraged OTC derivatives are distributed.
CMC Markets has categorically confirmed this morning that, as well as an expected impact on core business, it is difficult to accurately quantify the scale of the impact that proposed regulatory changes will have on client behaviour, and therefore performance of the business, particularly as the final terms and timings of any changes are not yet finalised.
In an official corporate dialog, CEO Peter Cruddas stated “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.”
“However, as a well-capitalised and established business with 14 offices globally, a strong institutional offering and a business model that is focused on experienced clients, I believe that in the longer term the Group’s competitive position will be strengthened compared to competitors whose business model is more focused towards inexperienced clients” continued Mr. Cruddas.
“We are engaging fully with our regulatory bodies, and in principle, we are supportive of a clear and consistent regulatory approach that all providers have to follow to ensure client interests are best served” he continued, echoing the company’s stance when speaking to FinanceFeeds in the immediate aftermath of the announcements of proposed changes to the means by which CFDs can be distributed to retail clients in the UK, France and Germany last month.
At that time, many mainstream news sources, including Sky News in Britain, made claims that CMC Markets would move its head office to Germany, something that FinanceFeeds understands will never happen.
In order to establish the nature of CMC Markets’ remit to remain in London, servicing a market in which over 70% of its longstanding and loyal clients reside, FinanceFeeds spoke to a senior executive within the firm, who explained “There are no plans at this stage, as the board of directors of this company have discussed anything at all.”
“What has happened thus far is that we are going through the process of consultation with FCA and with the German regualtor, BaFin, which also issued a consultation paper on CFDs, and part of the consultation process is that as an industry, as well as a corporation, and in the interest of our clients we are lobbying the regulator and putting our point of view across, and hopefully there will be revisions to the consultation paper. As a consequence it is impossible to agree to anything before we have the full information on all of these factors.”
“We of course are trying to be as careful as possible, and things have been misinterpreted” explained CMC Markets.
“We can confirm that there has been no decision made. To completely clarify this, any decision would have to be ratified by the board and we wouldn’t be making such a decision of this nature that quickly. We cannot categorically say we are going to end up on a specific jurisidiction. We have to come out of that consultation process with full information, which will form a basis as to what to decide in terms of policies going forward” explained CMC Markets.
Most certainly, it is FinanceFeeds opinion that CMC Markets being a stalwart of the intrinsically British CFD and spread betting industry, and will remain a prominent and top quality company within its home territory of London, the number one center for this industry in terms of technology, liqudity, infrastructure and commercial leadership prowess.
In addition to the claims made by CityAM, Sky News reported that CMC Markets will consider relocating its HQ, where around 350 staff are based, to Germany.
CMC Markets does indeed have significant business in Germany, however its mainstay is its British client base, which have been garnered over a 27 year time period, during which the company has understood its domestic market to a high level, resulting in the loyal British customer base that it has today, forming the vast majority of its retail clients.
Mr. Cruddas, who was an active supporter of the campaign which was in favor of Britain’s exit from the European Union in the run up to the referendum this summer, to the extent that he donated £1 million to the cause of encouraging British politicians and voters to leave the European Union, is a massive believer in London’s superiority as the world’s number one financial center.
This morning, in concluding, Mr. Cruddas concluded:
“We will be evolving our product offer to limit clients’ downside risk with the launch of a limited risk account and continue to offer our guaranteed stop loss order. The focus on developing our Next Generation trading platform including our mobile offering will continue as this is critical to attract and retain higher value and experienced clients. The sector will clearly continue to be challenging while the structure and timings of the regulatory changes are confirmed. However, we believe our business is well able to adapt and we look forward to continuing our successful development within the new regulatory framework.” – Peter Cruddas, CEO, CMC Markets
Image: CMC Markets $100 million proprietary platform on display at 133 Houndsditch head office