Our business
Our business model
We continue to focus on client service, ensuring we provide the best trading experience possible to our clients. This focus on clients helps to not only attract new clients but retain existing clients, providing long-term value to the Group.
Transactional spreads
Revenue earned through maintaining a transactional spread (the difference between the buy and sell price) on CFD and spread bet products.
Commissions
These are charged on both CFD equity trades and institutional DMA trades. Clients are either charged a minimum commission or a percentage based on the value of the trade.
Financing
Positions held by clients overnight may be subject to financing costs, which can be positive or negative depending on the direction of their holding and the applicable
financing rate.
Risk management
Revenue or losses from management of client positions that the Group inherits. This consists of gains or losses which accrue to the Group through client positions and, secondly, the gains or losses which accrue to the Group through the hedge positions entered into by the Group.
CMC Markets continually invests significant resources in developing both the Next Generation and the stockbroking platforms to ensure we stay at the forefront of the industry by constantly delivering the latest innovations.
Technology and operations have always been key to the success of CMC Markets and this has won the business recognition as the leader in our industry for innovation and service. Our aim is to provide our clients with the ability to take ownership of their personal financial investments. Our platform has been built to provide complete control and flexibility. Investment in our technology infrastructure is central to delivering this.
Our markets
The Group generates the majority of its revenue from CFD and spread bet products, and this part of the business is globally diversified with revenue and clients relatively evenly split between our three regions, the UK, Europe and APAC & Canada. Our Australian stockbroking business generates a growing proportion of the Group’s net operating income.
Regulation
Regulation of CFD and spread bet products have been a major area of focus for regulators over the last 2 years and regulatory change will be a major external driver of revenue performance in future periods. At CMC, we believe we differentiate ourselves within the sector through our focus on fair client outcomes and the high standards of regulatory compliance we uphold. The sector, however, has been subject to intense and increased regulatory scrutiny in a number of jurisdictions globally, particularly in Europe where ESMA intervention powers were implemented on 1 August 2018.
CMC believes this scrutiny is well overdue given the risks posed by a large number of firms providing these products on a cross-border basis, often unauthorised and acting illegally, targeting unsophisticated or inappropriate clients through aggressive and misleading advertising. CMC has been and continues to be engaged in an active dialogue with regulators, both individually and through industry associations, championing the consistent implementation and effective enforcement of well-considered and proportionate standards across jurisdictions to improve client outcomes and the percentage of clients that have lost money trading CFDs.
Volatility
Volatility in the financial markets undoubtedly acts as a call to action for the Group’s CFD and spread bet target market, resulting in increases in trading activity both from existing clients trading more frequently and new or previously inactive clients starting to trade. However, it should be noted that short bursts of market activity which result in high-velocity movements in the products that we offer are not necessarily beneficial to our clients nor the Group.
Stockbroking
The Australian stockbroking business has been through transformative change through the ANZ Bank partnership, with the retail go live in September 2018. This provides CMC with continuing diversification as a result of becoming the second-largest retail stockbroker in Australia.
Our enablers
Our ambition is to provide an unparalleled experience to all of our clients, offering competitive pricing, products and great trading experience.
Client service
Our ambition is to provide an unparalleled experience to all of our clients, offering competitive pricing, products and great trading experience.
Competitive product offering
CMC Markets continually invests significant resources in developing both the Next Generation and the stockbroking platforms to ensure we stay at the forefront of the industry by constantly delivering the latest innovations.
Technology and operational excellence
Technology and operations have always been key to the success of CMC Markets and this has won the business recognition as the leader in our industry for innovation and service. Our aim is to provide our clients with the ability to take ownership of their personal financial investments. Our platform has been built to provide complete control and flexibility. Investment in our technology infrastructure is central to delivering this
People
CMC Markets is committed to recruiting, developing, retaining and motivating exceptional people who are talented, innovative and focused on delivering excellence. We acknowledge that this goes hand in hand with the Group’s ongoing and future success. This is achieved through embedding Group values throughout the workforce as well as offering competitive rewards and benefits.
Financial strength
We aim to maintain our secure capital and liquidity structure, ensuring that it is appropriate for the future growth and success of the Group. This includes maintaining long-term levels of capital to withstand the demands of financial fluctuations in the markets and access to a healthy level of surplus liquid resources in line with the size of our business and the growth opportunities.
Risk management
The Group’s business activities naturally expose it to strategic, financial and operational risks inherent in the nature of the business it undertakes and the financial, market and regulatory environments in which it operates. The Group recognises the importance of understanding and managing these risks and that it cannot place a cap or limit on all of the risks to which the Group is exposed. However, effective risk management ensures that risks are managed to an acceptable level.