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CMC Markets boosts revenue ahead of regulatory crackdown


Online trading platform CMC Markets has boosted its revenue ahead of the introduction of new European regulations which will clampdown on the sector.

Net operating income for the quarter to 30 June was “moderately ahead” of the same period last year while a focus on premium clients boosted revenue-per-client by eight per cent.

Read more: CMC Markets profits rise as it focuses on 'big fish' clients

The focus on premium clients has been dubbed “project tuna” by CMC, because tuna is the tastiest, most expensive fish in the sea, it has previously said.

Regulatory changes affecting the sector are being introduced by the European Securities and Markets Authority (ESMA) on 1 August.

In March the regulator announced it was banning binary options and restricting contracts for differences (CFDs) sending shares of spread betting firms plunging.

Binary options allow an investor to "win" a lump of cash if the value of an agreed underlying asset is above a certain price at the preset time the option expires.

CFDs allow investors to bet on the underling price movements of an asset without actually having to own it. But because they are leveraged contracts with a broker, the amount an investor could lose if the value of the asset falls is much larger.

Read more: Regulatory overhang takes gloss off CMC's record quarter

As a reaction to the changes CMC said it was focusing on growing revenue from professional clients, who are not included in the crackdown.

It said it expects at least 40 per cent of UK and European revenue to come from these clients. Conversion of existing clients to professional status remains a “key focus for the business”, it said.

Broker Peel Hunt welcomed the update, arguing that market pessimism around ESMAs reforms was already built into CMCs share price.

“In our view, CMCs focus on high-value professional clients will show regulatory resilience and the shares will continue to re-rate as the market sees the sustainability and attractions of this model,” its analysts said.

CMC also said it was making good progress in its partnership with ANZ Bank in Australia and New Zealand.

Chief executive Peter Cruddas said: “Our strategy of focusing on high value clients, technology and partnerships is supporting the delivery of long term sustainable growth. At the same time, we are successfully diversifying CMC's business model into markets where we can leverage our technology, such as through our growing institutional business and stockbroking partnerships in Australia.”


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