Spreadbetter CMC Markets’ revenue hit by regulatory measures

Spreadbetting firm CMC Markets continued to feel the effects of new regulatory measures at the end of last year, the firm reported today.

In its first full quarter trading update since the European securities and markets authority (ESMA) cracked down on CFD trading, CMC said revenue between October and December was down year on year in line with expectations.

However, revenue improved significantly on the previous quarter and shares were up more than four per cent this afternoon. 

Clients are continuing to trade despite the implementation of the new regulations and retail client activity was steady during the period, the company said.

ESMA regulations have restricted the marketing, distribution and sale of contracts for differences (CFDs) to retail investors.

The group has made an “encouraging start” to the fourth quarter of the financial year and aims to continue to adapt to the regulatory changes.

CMC Markets chief executive officer Peter Cruddas said: “After the first full quarter following the introduction of the ESMA measures, we now have a better understanding of changing client behaviour and are adapting our model accordingly.

“I founded this business in 1989 and we have weathered many changes in the financial markets and their regulation during my time as chief executive.

“I have confidence that over time CMC will benefit from these changes and I remain fully committed to the business and its future potential.”

Analysts at Shore Capital Markets said today’s update provided a “reassuring message” and that recovery was underway.