CMC Markets confident on outlook even as it braces for Australia clampdown
* CMC says full year results will top analyst expectations
* Australian regulator considering tougher rules
* CMC and rivals already dealing with European regulation
* Australian consultation to close on Oct. 1
* CMC shares jump
(Adds Plus500 comments)
By Noor Zainab Hussain and Muvija M
Aug 22 (Reuters) - British online trading firm CMC Markets
Plc said on Thursday it expects its full-year results
will top analysts' forecasts as it bounces back after being hit
by regulatory changes in the industry.
Shares in CMC briefly jumped more than 7% after the company
said its net operating income and pretax profit for the year
ending next March would slightly exceed analysts' highest
estimates. However, it also said that Australia planned to
tighten regulations as well later this year and by 1448 GMT its
shares were up just 1%.
CMC and rivals Plus500 Ltd and IG Group
lost clients after regulators in Europe and Britain tightened
online trading rules last year, but their recent trading updates
have signalled the situation has stabilised.
Australia is now set to follow, and has proposed a ban on
the sale of binary options to retail clients, and restrictions
on the sale of Contracts for Differences (CFDs) among other
products, CMC said in its results statement.
Plus500 and IG also released separate statements about
proposed changes by the Australian Securities and Investments
Commission (ASIC) to rules that allow anyone with a bank card to
make highly-leveraged bets on financial markets.
CFDs give an investor exposure to price movements in
securities without owning the underlying asset.
REGULATION DOWN UNDER
Plus500, whose clients can trade CFDs in more than 50
countries, said on Thursday that it will assess the possible
impact on revenue from Australian customers, which made up for
about 15% of the total revenue in the first half of the year.
"The transition period after any new regulations is
challenging, but as seen in Europe, client trading patterns
rapidly adjust and stabilise - this is what Plus500 would also
expect to see in Australia," it said.
Plus500 shares, however, were down 3.2% in London trade.
CMC Markets said it was prepared to respond quickly and
manage any regulatory changes. Its Australian business
represented 31% of the group's net operating income in the year
Meanwhile, IG, which had flagged the possibility of stricter
rules in Australia in July, said on Thursday that it still
expects to return to revenue growth in its fiscal year ending in
May 2020 and that it can adapt and thrive in a stricter
IG said the new rules could come into effect in the second
half of its financial year and that the ASIC consultation on
banning binary options to retail clients was set to close on
Last month CMC reported a rebound in first-quarter net
operating income from a year earlier, boosted by higher revenue
per active client as traders adjusted to the regulatory curbs.
(Reporting by Noor Zainab Hussain and Muvija M in Bengaluru;
Editing by Arun Koyyur and Susan Fenton)
First Published: 2019-08-22 13:22:58
Updated 2019-08-22 16:55:17
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