Thursday 6 June 2019 11:06 am

CMC Markets profit plunges on regulatory crack down

CMC Markets profit plunged 89 per cent last year as the spreadbetter struggled with ramped up regulations.

The figures

Profit before tax fell from £60.1m to £6.3m in the year to the end of March.

Operating income dropped by 30 per cent from £187.1m to £130.8m, in line with market expectations following a trading update in April.

Read more: CMC Markets warns revenue and profit will be hit by regulatory crack down

Earnings per share plummeted by 88 per cent to 2p. The ordinary dividend per share was slashed by 77 per cent from 8.9p to 2p.

Why it’s interesting

CMC Markets warned in April that revenue and profit would be affected by the introduction of new European regulations.

The firm was hit by the introduction last August of European Securities and Markets Authority (ESMA) measures targeting contracts for difference platforms.

ESMA retail clients using CMC Markets were around 35 per cent of pre-August levels, the company said.

However, professional client numbers remained stable and CMC Markets said it had “weathered the ESMA transition” .

Grant Foley, chief operating and financial officer, will step down tomorrow. Euan Marshall, current group head of finance, will take over as interim finance chief.

What CMC Markets said

Peter Cruddas, chief executive officer, said: “Our business is much more balanced today than it has ever been, with a larger stockbroking business and important growth in our institutional business alongside our stabilised CFD and spread bet business all underpinned by our technology platform.

Read more: CMC Markets revenue hit by regulations

“We have demonstrated that our ability to use technology to provide a high quality service and access to innovative investment opportunities means we are an attractive partner for a wide array of customers and partners around the world.

“As regulatory change continues to be a key positive driver in our markets, we believe that our strong product offering, client service, technology platform and balance sheet will ensure our ongoing success.”