Shares in online spread betting company CMC Markets have tumbled after it said tighter regulation and low market volatility had hit trading activity.
The company's share price dropped more than 12 per cent after the trading update warned income for 2019 would be lower than expected.
European regulators tightened controls on the retail online trading market earlier this year by restricting contracts for difference (CFD) by limiting the amount clients can borrow to leverage their bets.
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CMC Markets said the European Securities and Markets Authority (ESMA) measures had reduced client activity.
It said: “The implementation of the ESMA measures has reduced UK and European retail client activity as expected.
However, after just two months it remains too early to draw any real conclusions as to how clients will adapt to the new rules.”
The company said its CFD and spread bet revenue for the full year is now expected to see a 20 per cent reduction year-on-year – below the previous guidance of a 10-15 per cent reduction.
Last week rival online trading platform IG reported a 4.7 per cent profits drop in the first quarter, and also blamed lower levels of market volatility and reduced client activity.