CMC Markets says Q2 trading volumes drop 15-20%

abdelaziz Fathi

CMC Markets PLC (LSE:CMCX) warned of subdued financial markets and lower trading volumes in the first quarter of its fiscal year 2024. The listed broker joins other UK platforms complaining of a slowdown in market activity, which has compounded the effect of the regulatory crackdown. 

CMC Markets today issued a trading update for the first quarter of the financial year 2024, covering the period from 1 April to 30 June 2023. As anticipated, the first quarter saw quiet market conditions, leading to a 15-20% year-on-year decline in client trading and investing activity.

Despite these conditions persisting into the beginning of Q2, the impact on client activity was mitigated by stronger interest income. Therefore, the overall net operating income remains on a similar trajectory as the same period last year. The company also assured investors that its key performance indicators, such as client money, assets under management, and active clients in both trading and investing businesses, continue to show resilience.

CMC Markets expects to deliver a robust performance for the financial year ending 31 March 2024, with investment plans and operating expenses, excluding variable remuneration, expected to align with previous guidance.

The company also highlighted the development upgrades across both its investing and trading platforms continue. Specifically, its UK non-leveraged platform for its British staff, CMC Invest, expanded its offering with the recent addition of ETFs, ISAs as well as responsible ESG screening functions. CMC noted that the platform will offer both B2C and B2B potential to the wider market.

CMC Markets PLC reported last month flat growth in revenues and customer income for the financial year 2023 as the market environment stabilised. The spread betting and online trading company reported its FY 2023 net revenue at £288 million, up two percent from £282 million a year earlier.

The company warned in its latest trading update of higher costs, prompting analysts to slash their earnings forecasts. Specifically, CMC’s operating costs for the twelve months ending March 2023, including variable remuneration, jumped by 24 percent to £236 million from £190 million in FY 2022.

Overall, the company’s profit before tax was down 43 percent to £52 million from £91 million the previous year.

The listed brokerage firm said in a trading update that February and March posed a more challenging environment with lower equity volumes and a higher proportion of lower margin institutional trading activity.

The firm’s notable updates included the ‘soft launch’ of its new online and mobile trading platform, “CMC Invest”, in Singapore. CMC says the move comes as the firm continues to diversify and expand its geographic footprint through its technology, leveraged institutional offering, and non-leveraged platforms.

The online trading and investment broker confirmed its plans to grow net operating income by 30% over three years based on the 2022 results and underlying conditions.

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