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CMC Markets, one of the UK’s largest online spreadbetting platforms, posted a sharp rise in profits in its first half as efforts to target richer customers paid off, but was cautious about its short-term outlook ahead of an expected regulatory crackdown.
Pre-tax profits in the six months to the end of September jumped 58 per cent to £29.8m from £18.8m, on record revenues up 19 per cent to £89.6m.
This was driven by “high value client trading business”, the London-listed group said. The company has been making a push – dubbed “Project Tuna” internally – to target wealthier, more experienced clients, some of whom may fall out of the scope of expected regulatory changes.
While the number of clients actively trading over the period slipped 2 per cent year-on-year, revenue per client grew 22 per cent to £1,814.
The bumper results come at a time when the online trading sector is under review by European regulators, who could move to restrict certain derivatives instruments as early as January next year, prompted by fears they are too risky for have-a-go punters.
Peter Cruddas, CMC’s chief executive officer, said:
We….believe that CMC’s business model will benefit from such proposed changes. Our business model is to attract and retain high value, experienced clients that understand the product. I believe this puts us in a stronger position than many of our competitors.
Nevertheless, the group added that it remained “cautious in its short-term outlook” due to uncertainty around the regulatory environment, and said it had begun the second half trading in line with market expectations.
Separately, the group also announced that its chairman of around four years, Simon Waugh, was retiring at the end of the year and would be replaced by James Richards, a board member with a background in law.