Recently listed CMC Markets lures in the traders to boost its profits; as chief executive Cruddas waves away Brexit “scare mongering”
Recently listed CMC Markets proved it was quite a catch for traders in its results for its year ended in March, with trading activity significantly increasing.
The figures
The derivatives dealer revealed that its profit before tax had grown to £53.4m, up 23 per cent on the prior year's £43.5m. Meanwhile, net operating profit increased to £169.4m, up 18 per cent on £143.6m the year before.
The number of trades the company put through in the year increased to 66.8m, a boost of 50 per cent compared with 44.6m last year. The value of those trades was also up 27 per cent, while the number of active clients increased to 57,329, up 14 per cent on 50,303 last year.
Shares in the company were trading up 0.4 per cent at 277p at time of writing.
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Why it's interesting
CMC Markets started trading on the London Stock Exchange in February, making today's announcement its first set of results as a listed company. The company has also been taken a punt on new technology, and the gamble seems to be paying off, with almost half (48 per cent) of its Next Generation client trades now being completed on a mobile device.
As well as growing its mobile side CMC intends to rejuvenate its business to business operation, which before 2007 was major segment. The company will reveal plans for the B2B side of the business in coming months.
"The B2B business is developing, we're talking to institutional clients. We're going to let other brokers and banks trade on our network," CMC's founder, chief executive, and the company's largest share holder Peter Cruddas told City PM
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Compliance is expected to remain a big expense for the company.
"Regulation is a big challenge, though we think it's more of a challenge for our competitors. We've taken the brunt of the compliance costs on already but we spend millions every year to make sure we're compliment," said Cruddass.
Earlier this year the financial watchdog warned that companies offering contracts for difference (CFDs) may not be doing enough to vet their clients before taking them on.
The Financial Conduct Authority (FCA) wrote to firms advising them to make sure the required systems are in place in February – threatening it would be carrying out checks.
Cruddas, who personally supports the campaign for the UK to leave the European Union, doesn't expect the cost of regulation to change if Brexit happens.
"The two year period of negotiation time is key. I think we can get a good deal over that time," he said.
If the UK votes to leave the EU on 23 June there will be a two year period before the UK formally leaves the bloc where it will be able to establish trade deals.
It has been suggested by anti-brexit campaigners that two years isn't long enough make the deals.
"We would expect business to carry on as normal after the vote no matter what," said Cruddas. "Then once everyone has calmed down we will be able to get a good deal that benefits both the City and the UK public."
Cruddas is one of the biggest financial service sector donors to the Out campaign and a former Tory party treasurer.
"There has been a lot of scare mongering from the In campaign so far," he said.
What CMC Markets said
"Our clear strategy to provide our clients with the best trading platform, superior service and competitive pricing, with a strong focus on innovation, has delivered another strong performance, with profit before tax up by over 20 per cent," said Cruddas.
"But we're not standing still. We continue to add new products, open new offices and offer new features and tools through our award-winning Next Generation trading platform.
"Despite a recent easing of trading activity, with these developments and our excellent team, I am confident that CMC will continue to deliver further strong growth."
In short
A positive set of figures for the firm's first results since becoming a listed company.