CMC Markets Sees Solid H1 of FY2020, CFD Unit Shows Strength

CMC Markets Plc, an online trading provider, has published its pre-close trading update for the first half of its 2020 fiscal year this Thursday, which is the six months ended September 30, 2019.

During the first half of its 2020 fiscal year, the UK-based firm reported a strong net trading revenue, driven through higher valued clients as well as an increase from its technology (B2B) business.

CFD business shows strength

In terms of its contracts for difference (CFD) business, the generated client income (client transaction costs) is slightly down in comparison to what was recorded in the same period of the previous year.

However, it is important to keep in mind that the first half of fiscal 2019 only had two months that were subject to the European Securities and Markets Authority’s (ESMA ESMA European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t Read this Term) product intervention measures, whereas the most recent period had all six months subject to the measures.

Since ESMA’s measures were put in place, CMC Markets has been focusing on attracting and retaining high-value clients. Furthermore, changes to its business model have led to the retention of a great portion of client income, the statement said.

As a result, the financial derivatives dealer expects that its CFD business net trading revenue will come in at approximately £85 million ($104.3 million) in H1 2020. This is £22 million, or 34.9 per cent, higher than the £63 million reported in the first half of fiscal 2019.

Stockbroking brings in solid revenue for CMC Markets

In H1 of fiscal 2020, the company’s stockbroking business revenue is expected to reach around £14 million. This is significantly higher than the £5.5 million stockbroking revenue reported in the first half of fiscal 2019, by 154.5 percent.

According to the statement, this solid uptick in stockbroking revenue is largely the result of the revenue generated from the trading firm’s various white-label partnerships in Australia, with ANZ Bank being the largest.

Commenting on the results, Peter Cruddas, Chief Executive Officer, said: "I am pleased with our first half performance. This time last year we had the uncertainty of regulatory change hanging over the sector and the uncertainty of how clients would react to the changes in minimum margin levels. A year on, we are seeing clients adapting to the new changes and still maintaining their interest in the products and the trading platforms we offer."

"It is clear that we are becoming more than a CFD business with income also being derived from technology partnerships, such as the ANZ deal. This is an exciting area of the business which will continue to grow through further planned partnerships."

Future outlook

Looking to the future, the Board of CMC Markets is now confident that, following on from H1 2020’s strong performance, net operating income will be £170 million for the full year. In addition, the company expects that profit before tax will also increase.