Spreadbetting group CMC Markets Plc (LON:CMCX) blamed low market volatility and an industry-wide crackdown by regulators as it warned on full-year profits.
Shares slumped 10.4% to 148.2p in mid-morning trade on Tuesday.
Over summer, European regulator ESMA brought in a range of new controls designed to protect customers, including limiting losses and restricting aggressive marketing.
READ: IG quarterly revenues slide
CMC had already guided for a 10-15% drop in contracts-for-difference (CFDs) and spread bet revenue this year.
It now believes that the changes, alongside the low market volatility, mean revenues are likely to be 20% below last year’s figures, while net operating income forecasts have also been lowered.
As for the longer-term implications of the new rules, the £500mln company, founded by former Tory treasurer Peter Cruddas, said it was too early to tell how clients would adapt going forward.
City broker cuts estimates
“While obviously a disappointing announcement, quarterly volatility is not a new phenomenon (trading is said to have improved in September), the difficulty is disentangling it from the new regulation,” said Shore Capital analyst Paul McGinnis.
“Provisionally this would lower our full-year revenue figure by around £17mln to £161mln of which around £7m would impact the bottom line (the intention is to keep costs flat, versus our previous assumption of a £10m increase), reducing our forecast PBT by 17% from £41mln to £34mln.”
The full set of half-year results for the period to September 30 will be published on November 22.