January 25, 2018 / 8:01 AM / a year ago

CMC Markets posts strong third quarter as focus on high-value clients pays

(Reuters) - Spreadbetting firm CMC Markets Plc (CMCX.L) said on Thursday its revenue per client surged 33 percent in the third quarter, as its focus on high-value clients helped offset challenges from a sector-wide regulatory clampdown and lower levels of volatility.

Active clients, however, fell 6 percent in the quarter ended Dec. 31 from a year earlier to 38,859, CMC said in a statement.

“The regulatory uncertainty continues and the group remains cautious around the impact any potential changes could have on group performance in the short-term,” it said.

However, the longer-term outlook remained positive, with its strategy of targeting high-value, experienced clients helping it manage regulatory change, CMC added.

Earlier this month, the European Union’s markets watchdog started a public consultation on its anticipated plans to restrict the sale of contracts for differences (CFDs) and binary options by spreadbetting companies.

CFDs allow people to bet on moves in share prices without having to buy the underlying stock.

The European Securities and Markets Authority (ESMA) flagged the plans last month, sending shares of spreadbetting firms tumbling.

Britain’s markets regulator, the Financial Conduct Authority, also warned earlier this month about the serious risk of harm from CFDs.

Chief Executive Peter Cruddas set up CMC Markets as a foreign exchange broker with a 10,000 pound investment in 1989. Its rivals include IG Group Plc (IGG.L), Denmark’s Saxo Bank and Global Brokerage Inc GLBR.O, formerly FXCM Inc.

Reporting by Noor Zainab Hussain in Bengaluru; Editing by Amrutha Gayathri and Sunil Nair

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