Capital Markets, Financial

BGC Partners eyes new platform to trade US Treasuries

BGC Partners plans to launch a new platform to trade US Treasuries early next year, in a bid to return to a market in the middle of evolution, according to people familiar with the plans.  The company, spun out of Howard Lutnick’s Cantor Fitzgerald in 2004, sold eSpeed, the second-largest interdealer platform for trading Treasuries, […]

Continue Reading

Financial

Sales in Rocket Internet’s portfolio companies rise 30%

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”. Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed. Rocket said the adjusted margin for earnings before […]

Continue Reading

Currencies

Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

Continue Reading

Currencies

Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

Continue Reading

Property

Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

Continue Reading

Categorized | Financial

CMC Markets suffers 29% profit fall as clients rein in trading


Posted on November 23, 2016

CMC Markets revealed that first-half profits fell by almost a third as the online trading company failed to capitalise on the market volatility that followed the UK’s EU referendum.

While many markets, such as currencies and derivatives, experienced big moves, activity on share markets — where a large proportion of CMC’s clients trade — was more muted in the past three months. CMC said the sharp swings in share prices that immediately followed the EU vote had been shortlived.

Clients, “particularly in indices”, had experienced “more limited trading opportunities” during the quiet market periods during the summer, the company said. Revenues from index betting accounted for 39 per cent of its revenue for the six months to September 30, down from 49 per cent a year earlier.

Analysts said CMC’s performance did not reflect the sector. “This looks like a specific company shooting themselves in the foot,” said Jonathan Goslin, an analyst at Numis.

Rival IG Group reported a 5 per cent rise in revenues during the corresponding quarter. Online trading platform Plus500 said revenues fell 4 per cent for July to September but its nine-month revenues were up 14 per cent.

Shares in CMC dropped 5 per cent on Thursday to 193p. CMC became a public company in February, floating at a price of 240p per share and triggering a windfall of more than £200m for Peter Cruddas, who set up the group in 1989.

Mr Cruddas, chief executive and a supporter of Brexit, described the 29 per cent year-on-year fall in pre-tax profits, to £18.8m, as “disappointing”.

Despite CMC’s client base growing 8 per cent, the value of client trades was 18 per cent lower.

Net operating income fell 4 per cent to £75.5m. CMC issued a trading update on September 7, alerting investors that revenues were likely to be lower than forecast.

To protect itself against extreme market volatility around the EU referendum, CMC raised the margin requirements for customers by as much as 500 per cent on some products. Traders are required to supply margin — the insurance that backs trades — to keep their positions open.

Many retail brokers and online venues were caught out last year by the sudden appreciation of almost 30 per cent of the Swiss franc in a matter of minutes. Many suffered heavy losses and some had to be rescued by third parties.

Grant Foley, CMC’s chief financial officer, defended the group’s recent strategy. “By raising margin requirements ahead of the referendum, we deterred clients from overtrading and taking on unreasonable levels of risk, which in turn reduced CMC’s exposure. It was without doubt the correct thing to do in the circumstances,” he said.

Mr Cruddas, who donated £1m to the Vote Leave campaign, said he still expected Brexit to pay off for his business: “It is going to generate volatility for us over the coming months and years as Britain negotiates its exit from the European Union. We think it will be good for business.”

However, some analysts signalled that they would be downgrading their forecasts.

Mr Goslin at Numis said he would be revising down expectations. Paul McGinnis of Shore Capital wrote that the group expected “to be reducing our fair value” on CMC, while a note from Liberum said CMC’s “very confusing outlook statement [was] likely to cause some concern.”

CMC said it would be making an interim dividend payout of 2.98p, a third of the full-year dividend.

Additional reporting by Philip Stafford