CMC Markets says it is ready to mitigate impact from ESMA’s proposals

Maria Nikolova

CMC Markets notes that its focus on higher value clients, as well as its geographic diversity and growing institutional business will help it mitigate the impact from ESMA’s plans to impose new restrictions on CFD and binary options offering to retail clients.

The statement issued by the European Securities and Markets Authority (ESMA) on Friday regarding its review of certain restrictions on the offering of CFDs and binary options to retail clients has provoked reactions from online trading company CMC Markets Plc (LON:CMCX).

In a filing with the London Stock Exchange today, the broker noted that thanks to its proprietary technology, it can quickly respond to regulatory change as illustrated with the introduction of negative balance protection in Germany and a limited risk product in the UK this year. CMC stressed that margin close-out and standardised risk warnings are already in place throughout the Group.

Regarding the restrictions planned for binary options, CMC explains that such products generated £2.1 million of revenues from the UK and Europe in the first half of the current financial year and therefore any prohibition on the marketing of binary options to retail clients will be immaterial in a group context.

With regard to proposed margin changes, the company anticipates these are likely to have an impact on how clients trade, although at this stage it is not possible to quantify the impact.

CMC notes that it has focused on higher value clients and has one of the highest revenue per clients in the industry. This, along with geographic diversity, growing institutional business and a partnership with ANZ Bank to provide stockbroking services in Australia from September 2018, is set to help to mitigate any impact from ESMA’s proposals.

CMC admits that these proposed changes may have an impact on the Group, but it welcomes a consistent approach to regulation, a ‘level playing field’ and the raising of standards in the industry.

In fact, CMC Markets’ focus on attracting high value and experienced clients and its strong balance sheet, means that CMC is well positioned to take advantage of market opportunities that will arise from these proposals.

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