CMC Markets says it is becoming more than CFD business

Maria Nikolova

“It is clear that we are becoming more than a CFD business with income also being derived from technology partnerships, such as the ANZ deal”, says CEO Peter Cruddas.

Online trading services provider CMC Markets Plc (LON:CMCX) has provided its pre-close trading update for the six months ended September 30, 2019, with the company pinning its hopes on tech partnerships, such as the one with ANZ.

The brokerage said its net trading revenue was strong during H1 2020 (that is, the six months to end-September 2019), generated through higher valued clients and growing income from its technology (B2B) business. The stockbroking business revenue is expected to increase to approximately £14 million for H1 2020 (H1 2019: £5.5 million). This is mainly as a result of the revenue generated from various white label partnerships in Australia of which ANZ Bank is the largest. This echoes CMC’s statement about the for the three months ended June 30, 2019 (Q1 FY20).

Today, CMC said the CFD business generated client income (client transaction costs) only slightly down in comparison to those recorded in H1 2019, despite the prior year comparative including four months of trading pre-regulatory change in the ESMA region. This has been generated by moderately lower active client numbers than H1 2019, underlining the Group’s focus on, and ongoing success in, attracting and retaining high value clients. Also, changes made to the internal business model have resulted in the retention of a greater proportion of client income, meaning that CMC expects the CFD business net trading revenue to be approximately £22 million higher than the £63 million reported in H1 2019 at approximately £85 million.

In terms of outlook, the Board is now confident that net operating income will exceed £170 million for the full year and profit before tax is expected to increase, benefitting from the operating leverage in the business.

Peter Cruddas, Chief Executive Officer, commented:

“It is clear that we are becoming more than a CFD business with income also being derived from technology partnerships, such as the ANZ deal. This is an exciting area of the business which will continue to grow through further planned partnerships.

On the regulatory front, we welcome the consultation by the Australian Securities and Investments Commission (ASIC). The Group is supportive of regulatory change to ensure that all providers operate to the highest standards, ensuring fair client outcomes and we believe that a stronger and better industry will emerge from these changes. We anticipate the ASIC changes will come into effect in the second half of the financial year, although exact timing is still to be determined.”

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