CMC Markets

Last updated
CMC Markets
Company type Public Limited Company
LSE:  CMCX
Industry Financial services, Forex trading, CFDs, Spread betting, share dealing
Founded1989 (1989)
Founder Peter Cruddas
Headquarters
London
,
United Kingdom
Area served
Worldwide
Key people
James Richards (Non-Executive Chairman)
Peter Cruddas (Chief Executive)
ServicesOnline trading, CFDs and spread betting
RevenueDecrease2.svg £311.2 million (2023) [1]
Decrease2.svg £54.5 million (2023) [1]
Decrease2.svg £41.4 million (2023) [1]
OwnerPeter Cruddas (60.3%)
Subsidiaries
Website www.cmcmarkets.com

CMC Markets is a UK-based financial services company that offers online trading in shares, spread betting, contracts for difference (CFDs) and foreign exchange across world markets. CMC is headquartered in London, with hubs in Sydney and Singapore. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.

Contents

History

1989–2000: Early years

The company was founded in 1989 by Peter Cruddas as a Foreign Exchange market maker under the name Currency Management Corporation. [2] The name was later abbreviated to CMC and then changed to CMC Markets in September 2005. [3]

In 1992, CMC Markets became authorised and regulated in the UK by the AFBD which later became the Financial Services Authority (FSA). [4]

In May 1996, the company launched a real-time FX trading platform and has made claims to have done the first FX deal on-line over the internet. Although not verifiable, CMC Markets was certainly one of the first companies to offer on-line trading over the internet. The company pioneered internet trading technology with its MarketMaker software platform. [5]

From 1996 to 2000, Information Internet Limited, as well as supplying CMC Markets, sold the software to a small number of banks. In 2000, Peter Cruddas bought out the other owners, made the software exclusive to CMC Markets and the remaining parts of Information Internet Limited became the internal IT function of CMC Markets. [6]

2000: Introduction of CFDs and financial spread betting

In 2000, CMC Markets began to offer contracts for difference (CFDs) [7] and the following year it introduced online spread betting on financial markets. These two products would become the bulk of the business for CMC Markets. [8]

2000–2006: Global expansion

In 2002, the company began embarking on a major global expansion drive. It expanded quickly between 2002 and 2007 and opened offices in a large number of countries, as well as growing the spread betting business in the UK and the CFD business internationally. This began with its first overseas office in Sydney, Australia headed by Goran Drapac [9] and David Trew. [10]

The first North American office was opened in 2003 in New York headed by Josh Levy. [11] This was followed by the acquisition of Canadian broker Shorcan Index, which became its Toronto office in 2005 headed by Simon Grayson. [12] [13]

From 2001–2005, CMC Markets also operated the brand name deal4free.com. This brand was designed to promote the zero commission charge service, used primarily for its UK-based spread betting business. Commissions were later re-introduced and this brand was dropped as part of the re-branding in September 2005. [14]

In 2006, the company planned to become a public company via an initial public offering; however, the IPO was cancelled at the last minute due to market conditions. [15] [16]

2007: M&A activity

In 2007, CMC Markets acquired financial media and technology company Digital Look which ran the financial information site Digitallook.com and sold financial data to third party sites. The company was merged into CMC Markets' main operations in London, but continued to run the website and data services for third parties. [17]

Subsequently, CMC Markets bought the Australian stock broker, Andrew West. This was merged with the CMC Markets Australian operation and renamed CMC Markets StockBroking. It continued to offer physical share broking services in Australia. [18]

Later in 2007, Goldman Sachs bought a 10% stake in the company for £140m, effectively valuing the company at £1.4bn. [19]

2008–2013: Global financial crisis

In 2008 and 2009, CMC Markets saw profits decline with the global financial crisis. In response, Peter Cruddas changed his management team and closed seven offices and reduced the company headcount from a high of 1,100 employees. [20]

In 2010, CMC Markets launched its Next Generation trading platform to the UK market. The new trading software improved on previous MarketMaker software; amongst other things being able to quote market prices to additional decimal points and provide trade execution without re-quotes. [21]

In 2011, the Digital Look business unit was sold to Spanish-based Web Financial Group. [22]

2014–2020: Public stock launch

After a return to profits in 2014, speculation emerged that CMC Markets was again looking at an IPO. [23] [24]

In July 2015, CMC Markets started to offer binary options and launched a particular binary option product known as a Countdown. [25]

On 5 February 2016, CMC Markets was first listed on the main market of the London Stock Exchange at 240p equating to an initial market capitalisation of £691 million. [26] On 25 April 2016, CMC Markets launched a range of binary products specifically designed for mobile, tablet and desktop. [27] On 2 June 2016, it was confirmed that from 20 June 2016, CMC Markets would be included as a constituent of the FTSE 250 Index. [28] On 15 November 2016, CMC Markets was awarded "Best CFD Broker" at the Finance Magnates London Summit. [29]

On 6 February 2017, Norwegian Central Bank Norges took 3% stake in CMC Markets. [30]

On 25 September 2018, CMC Markets issued a profit warning [31] which was followed, on 21 November 2018, by an announcement that CMC Markets had suffered a 76% drop in profits. [32]

In April 2019, CMC Markets announced that its CFO & COO, Grant Foley, would leave the business after the shares hit a record low following a profit warning. [33] The following year, the Head of Operations Dave Worsfold also parted ways with CMC Markets. [34]

2021–present: Acquisition of StrikeX

In 2022, CMC Markets became the official sponsor for St Kilda Football Club for 3 seasons. [35]

On 9 June 2023, it was reported that CMC Markets acquired a 33% stake in a UK-based blockchain technology firm, StrikeX, for an undisclosed sum. The investment in StrikeX is the first from CMC Markets’ in positioning itself in trading outside its typical CFDs and Forex markets. [36] In partnership with StrikeX, CMC markets will be working on releasing TradeStrike, a centralised exchange with tokenized assets. [37] The diversification attempt into the blockchain industry comes after CMC Markets' 2023 annual report highlighted that the company's net profits had dropped 43% and the number of active traders decreased by 9%. [38]

Operations

No reliable data exists for the over-the-counter CFD and spread betting industry. However, in 2009, some industry participants commissioned a survey to look at the UK market and results indicated that CMC Markets' market share in 2008 was lower than its main competitor. [39]

Related Research Articles

Spread betting is any of various types of wagering on the outcome of an event where the pay-off is based on the accuracy of the wager, rather than a simple "win or lose" outcome, such as fixed-odds betting or parimutuel betting.

A binary option is a financial exotic option in which the payoff is either some fixed monetary amount or nothing at all. The two main types of binary options are the cash-or-nothing binary option and the asset-or-nothing binary option. The former pays some fixed amount of cash if the option expires in-the-money while the latter pays the value of the underlying security. They are also called all-or-nothing options, digital options, and fixed return options (FROs).

In finance, a contract for difference (CFD) is a legally binding agreement that creates, defines, and governs mutual rights and obligations between two parties, typically described as "buyer" and "seller", stipulating that the buyer will pay to the seller the difference between the current value of an asset and its value at contract time. If the closing trade price is higher than the opening price, then the seller will pay the buyer the difference, and that will be the buyer's profit. The opposite is also true. That is, if the current asset price is lower at the exit price than the value at the contract's opening, then the seller, rather than the buyer, will benefit from the difference.

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References

  1. 1 2 3 "Results for the year ended 31 March 2023" (PDF). CMC Markets. Retrieved 18 February 2024.
  2. ↑ "Brexit backer Peter Cruddas to sell £200m-plus of CMC Markets shares". The Guardian. 13 January 2016. Retrieved 25 August 2017.
  3. ↑ "Branding: No such thing as a free deal". 1 November 2005. Retrieved 26 August 2017.
  4. ↑ "CMC Markets UK plc". Financial Conduct Authority. Retrieved 26 August 2017.
  5. ↑ Davey, Catherine (2011). Making Money From CFD Trading: How I Turned $13K Into $30K in 3 Months. John Wiley & Sons. ISBN   9781118303917.
  6. ↑ "Reflecting on a true rags-to-riches story". FT. 13 May 2006. Retrieved 26 August 2017.[ permanent dead link ]
  7. ↑ "How The CMC Markets Help For Traders?". Digital Connect Magazine. Retrieved 26 August 2017.
  8. ↑ "Capital spreads". Spread Betting Bible. Archived from the original on 27 August 2017. Retrieved 26 August 2017.
  9. ↑ "smh.com.au – The Sydney Morning Herald". www.smh.com.au. Retrieved 2017-08-24.
  10. ↑ "Amid latest FX Solutions rumors – an interview with the new CEO David Trew | Finance Magnates". Finance Magnates | Financial and business news. 2011-06-02. Retrieved 2017-08-24.
  11. ↑ "CMC to launch in N America – FX Week". FX Week. 2003-06-23. Retrieved 2017-08-24.
  12. ↑ "London-based CMC Group acquires Canada's Shorcan Index - Article - investmentexecutive.com". investmentexecutive.com. Retrieved 2017-08-24.
  13. ↑ "Web-based platform brings CFD trading to Canada – Back Issue". investmentexecutive.com. Retrieved 2017-08-24.
  14. ↑ "CMC Group announces rebranding". Internet Business News. 16 September 2005. Archived from the original on 11 September 2016.
  15. ↑ "Volatile market conditions force CMC to pull float". The Independent . 24 May 2006.
  16. ↑ Quinn, James (13 August 2009). "Peter Cruddas prepares for CMC flotation". The Daily Telegraph.
  17. ↑ Quinn, James (19 February 2008). "Cruddas' appointments bolster CMC board". The Daily Telegraph.
  18. ↑ "CMC Markets grows bigger in Australia, set to service 500,000 ANZ retail stockbroking clients". Finance Feeds. 8 March 2017. Retrieved 26 August 2017.
  19. ↑ "Goldman takes 10% stake in CMC". Financial Times. 22 November 2007.
  20. ↑ Quinn, James (14 August 2009). "Peter Cruddas has taken CMC Markets back to basics". The Daily Telegraph.
  21. ↑ "CMC Markets announces Revamped trading platform". Financial Spread Betting. 12 August 2010.
  22. ↑ "Digital Look Acquired by Web Financial Group". Web Financial Group. 10 February 2011.
  23. ↑ "Peter Cruddas eyes £1bn float for CMC Markets". The Daily Telegraph. 5 September 2014.
  24. ↑ "Peter Cruddas flags up £1bn float after CMC storms into profit". 5 September 2014.
  25. ↑ "CMC Markets Launches Binary Options Offering Called Countdowns". Finance Magnates. 20 July 2015.
  26. ↑ "CMC Markets defies volatility with £691 million listing". London Stock Exchange. Archived from the original on 2016-02-05. Retrieved 2016-02-05.
  27. ↑ "The new era for binary trading has arrived as CMC Markets launches new product". CMC Markets group site. Archived from the original on 2016-04-25. Retrieved 2016-04-25.
  28. ↑ "Inclusion in FTSE 250 Index from 20 June 2016". CMC Markets. 2 June 2016. Archived from the original on 16 April 2017. Retrieved 5 May 2017.
  29. ↑ Patterson, Jeff (15 November 2016). "Winners of the 2016 Finance Magnates London Summit Awards Just Announced!". Finance Magnates.
  30. ↑ Staff, LeapRate (February 6, 2017). "Norwegian central bank Norges takes 3% position in CMC Markets".
  31. ↑ "CMC lays bare impact of investment crackdown with profit warning". The Daily Telegraph. 25 September 2018.
  32. ↑ "Profits collapse 76% at CMC Markets as regulation bites". The Financial Times. 21 November 2018.
  33. ↑ "CMC shares hit record low on profit warning as finance chief plans exit". Reuters. 3 April 2019. Retrieved 4 June 2019.
  34. ↑ "Dave Worsfold Parts Ways with CMC Markets after 11 Years". Financial and Business News | Finance Magnates. October 2, 2020.
  35. ↑ "CMC Markets invests in the future of the Saints". saints.com.au. November 21, 2022.
  36. ↑ "CMC Markets acquires 33% stake in UK blockchain firm StrikeX - FinanceFeeds".
  37. ↑ "CMC Markets Enters Blockchain Space with New Investment". Financial and Business News | Finance Magnates. June 9, 2023.
  38. ↑ "CMC Markets' FY23 Net Income Follows Guidance, Profit Drops 43%". Financial and Business News | Finance Magnates. June 13, 2023.
  39. ↑ Ross, Alice (10 November 2009). "Investors switch between spread betting providers". Financial Times.
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