March 20, 2020 / 7:24 AM / 21 days ago

Online broker CMC raises forecast again as trading volumes surge

FILE PHOTO - A financial trader works at their desk at CMC Markets in the City of London, Britain, April 11, 2019. REUTERS/Peter Nicholls

(Reuters) - Trading platform CMC Markets (CMCX.L) on Friday boosted its annual earnings target for the fourth time in less six months, as the frantic selling driven by the coronavirus drove huge rises in financial market volatility and trading volumes.

Shares in CMC, which facilitates the trade of complex financial instruments, leapt by 6% on the FTSE small-cap index by 0805 GMT.

“The group has experienced continued high levels of client trading activity over the period which has been in excess of double that seen in more normalised market conditions in both our CFD and stockbroking businesses,” CMC said.

CMC’s rival IG Group (IGG.L) this week reported a jump in quarterly revenue as client activity on its website peaked due to “exceptionally high” market volatility, while another peer Plus500 (PLUSP.L) upgraded its outlook earlier this month.

The CBOE Volatility Index , popularly known as Wall Street’s fear gauge, has recently hit levels last seen during the 2008 sub-prime crisis.

While the coronavirus outbreak has instilled fears of a global recession, a fallout between top oil producers Saudi Arabia and Russia has sent crude prices spiralling lower by a third.

High volatility tends to help businesses like CMC as it means more transaction volumes on their websites.

CMC expects net operating income (NOI) ahead of current market consensus of 219 million pounds for the year ended March 31. Last year, it reported NOI of 130.8 million pounds.

Reporting by Muvija M in Bengaluru; editing by Patrick Graham, Bernard Orr

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