CMC Markets States High-Value Clients Rise, Shares Spike 10%

The brokerage has continued to diversify its client base in the face of the new regulatory environment

CMC Markets on Thursday issued a trading update via the London Stock Exchange’s RNS, outlining its performance for the second half of fiscal 2018. The brokerage elaborated that client activity has picked up since the start of the year, in line with industry trends.

Overall CMC Markets estimates its second-half performance to be somewhat higher when compared to the first half of the year and materially higher when compared to a year ago.

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Rising volatility

Increasing volatility across equity and currency markets has been the main theme for the brokerage industry in the first half of 2017. As the year started, FX volatility picked up materially, followed by equities in the beginning of February.

After the market plunge that sent ripples across the global financial system in a reminiscence to 2008, brokers have continued to see increased client activity.

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CMC Markets developments

CMC Markets also outlined that it expects rising costs due to increased marketing spending, discretionary remuneration, and expenses around the integration with ANZ, which was started last year.

The proportion of high-value clients has increased, driving a significant improvement in revenue per client compared to the prior year. Overall, active client numbers are slightly below the previous year, although the final quarter has seen an increase from the prior year.

The integration with ANZ Bank is continuing on track for delivery at the end of the third quarter of 2018.

Shares spike 10 percent

Overall the numbers have been digested by the market rather quickly, as shares spiked higher by 10 percent. The most likely catalyst for the move is the announcement that CMC Markets is successfully managing to diversify its client base.

Brokers that are a mix of higher-value clients are unlikely to feel the pinch from the ESMA regulations as hard as those relying on low-value retail clients. Shares of the company have dropped only slightly on yesterday’s ESMA announcement as the market had already anticipated the move.

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