September 25, 2018 / 6:30 AM / 23 days ago

CMC Markets issues net income warning, cites regulation

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LONDON, Sept 25 (Reuters) - Online spreadbetting firm CMC Markets PLC posted a stark warning on its 2019 net operating income on Tuesday, blaming low market volatility and regulatory constraints for curbing client trading activity.

CMC said its key earnings figure was now expected to be below previous guidance but it was tightening its costs to partially mitigate the impact.

Contracts-for-difference and spread bet revenue for the full year was likely to see an approximate 20 percent reduction year on year, compared with previous guidance for a reduction of 10-15 percent year on year, the company said.

CMC said investments in strategic initiatives to drive future growth would continue, but discretionary spending around staff and marketing would fall below earlier guidance to offset the hit to group profitability in its fiscal full year.

Founded by Chief Executive Peter Cruddas with a 10,000-pound investment in 1989, CMC and other rival firms have been hit hard by bans in the sales of so-called “binary” options sales to retail clients and restrictions on the sales of CFDs, as regulators look to protect investors from significant losses.

Binary options and CFDs are financial products that give an investor exposure to price movements in securities without actually owning the underlying assets such as a currency, commodity or stock. (Reporting By Sinead Cruise, editing by Clara Denina)

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