Financial spreadbetting firm CMC Markets Plc (LON:CMCX) posted a drop in full year pre-tax profit as reduced client activity dragged revenue lower.
The company, which was demoted from the FTSE 250 in February, reported a 9% decrease in pre-tax profit to £48.5mln for the year to 31 March 2017.
Revenue per active client fell 11% to £2,517 as lower levels of market volatility meant fewer trading opportunities for clients.
The number of active clients rose 5% to 60,082 but the number of trades dropped 6% to £62.7mln and the value of trades dipped 3% to £2.1bn.
Low volatility hits trading. says CMC
CMC said despite an initial spike in volatility after Donald Trump’s US Presidential win in November and the Brexit vote last June, markets were more subdued. Low levels of volatility, particularly in the first half of the year, saw clients trade less than the previous year with net operating income down 5% to £160.8mln.
“It is disappointing that reduced client activity impacted revenue performance for much of the year, but I am pleased that the strength of our platform, team and service proposition has continued to attract new, high quality clients and our existing clients are putting more money to work with us,” said chief executive Peter Cruddas.
Cruddas said the group has made headway with strategic initiatives as it completed its first full year as a listed company. CMC signed a partnership with ANZ to service the Australian bank’s stockbroking business, launched new products and developed its next generation platform.
CMC Markets warns on regulatory changes...
CMC Markets said there would be some short to medium-term impact on the business from regulatory proposals in the UK and Europe to protect retail investors with changes to minimum retail margins, risk warning, client incentive schemes and the marketing of leveraged products.
But it said its business model was more focused towards inexperienced clients, which would strengthen its competitive position in the longer term.
Chairman Simon Waugh said 2018 “will be an important year for the group as the regulatory changes are finalised”.
The group said its financial performance at the start of full year 2018 improved on the same period last year but was cautious on its outlook.