CMC Markets profits dive 76 per cent on regulatory changes

Spread betting platform CMC Markets reported a 76 per cent dive in profits this morning, causing shares to fall more than six per cent.

The forex trader’s poor performance was driven by a deterioration in market volatility and range bound markets, worsened by the introduction of new retail trading regulatory changes in August, it said in its half-year results.

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

The firm also revealed it has applied to open a regulated subsidiary in Germany to maintain passporting rights within the EU after Brexit.

Earnings per share were down 69 per cent from 8.7p to 2.7p and net operating income fell 21 per cent from £89.6m to £70.6m. However, the number and value of trades increased, up 14 per cent and four per cent respectively.

CMC Markets chief executive Peter Cruddas said: "Whilst trading in the first quarter outperformed the same period last year, as previously announced, the second quarter was particularly difficult.

“Volatility was low, and unusually the majority of asset classes traded in tight ranges. This was further compounded by the impact of European regulatory change that came into force on 1 August. As a result, overall profit after tax was significantly lower than the same period last year.

“The Group remains focussed on future growth and diversification. In the second quarter we successfully migrated 103 intermediaries, and over 500,000 clients to our stockbroking platform following the migration from ANZ Bank; this makes the stockbroking business a much more meaningful part of the overall Group. This will also provide a springboard for further growth in the APAC region.”