June 7, 2018 / 6:35 AM / 11 days ago

CMC Markets' full-year income boosted by high-value customers

(Reuters) - CMC Markets Plc (CMCX.L) posted a 16 percent rise in full-year net operating income on Thursday as the spreadbetting group continued to benefit from its increased focus on high-value clients, and said it made a good start to the new financial year.

CMC said net operating income grew to 187.1 million pounds in the year ended March 31, from 160.8 million pounds a year ago, and pretax profit rose 24 percent to 60.1 million pounds.

Analysts had expected net income of 186.2 million pounds, and profit of 55.5 million pounds, according to Thomson Reuters data.

CMC said a rise in the proportion of high-value clients, which comprised 10 percent of the total number of clients this year, led to an 18 percent rise in revenue per client in the year.

However, full-year client numbers fell 2 percent over last year.

CMC — founded by Chief Executive Peter Cruddas as a foreign exchange broker with a 10,000-pound investment in 1989 — was hit by a sector-wide clampdown by the European Union’s securities watchdog, European Securities and Markets Authority (ESMA), in March.

ESMA said it would ban ‘binary’ options sales to retail clients and restrict the sales of Contract for Differences (CFDs) 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.

    CMC said on Thursday that the regulatory changes were likely to have some short-term adverse effect on the company as “clients adjust their trading behaviour to these new requirements.”

    Binary products generated 4.5 million pounds in revenue from the UK and Europe in 2018, the company said.

    Ahead of regulatory changes being introduced in August, CMC said it is on track to have more than 40 percent of UK and European revenues derived from professional clients.

    Separately, rival retail trading firm Plus500 (PLUSP.L) “materially” raised its expectations for 2018, benefiting from volatility in the markets and high levels of trading in its cryptocurrency offering.

    (This version of the story corrects to show Plus500 does not offer spreadbetting)

    Reporting by Justin George Varghese in Bengaluru; Editing by Sunil Nair

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