CMC Markets

CMC Markets Considers Split: Retail Trading Platform And Leveraged Operation

CMC Markets is considering splitting its online investment group into a retail-focused trading platform and a leveraged operation, the firm stated as to confirm a previous report by Sky News.

The trading company was founded in 1989 and has grown to become one of the largest players within the trading industry globally.

Discussions are apparently at a “very early stage”, but breaking up the leveraged and non-leveraged divisions would “unlock shareholder value”, which is consistent with the board’s “continuous evaluation of strategic opportunities to maximise shareholder value”.

CMC shares rose more than 8 percent in early trading on Monday, valuing the business at £823m, and closed the day with gains of 6.37%.

The firm plans to launch a new UK investment platform next year in an attempt to compete with Hargreaves Lansdown and Interactive Investor. The new platform will feature investment products, shares, tax wrappers and third party funds.

Since the split discussions are “exploratory at this stage, they may or may not lead to a managed separation of these businesses in due course”, the firm warned, adding that the board will be reviewing the proposal before the end of the year, to be completed by June.

In September, CMC Markets acquired ANZ’s Share Investing client base to CMC for AUD$25 million in a deal that included ANZ handing over half a million clients of its share investing services to the online trading and institutional trading platform, with total assets in excess of AUD$45 billion.

CMC’s existing cash resources will fund the AUD$25 million consideration as the deal marks another significant step in the ongoing diversification of the company’s global business and in the Australian market.

The broker is thus addressing the high demand for retail stockbroking services in a very strong period for the asset class worldwide.

CMC has been the white-label technology partner for ANZ’s share investing business since 2018, having generated £39.5 million in net trading revenue for CMC in FY 2021.

The AUD$25 million deal for ANZ’s 500,000 clients also means that partnership will come to and end as CMC’s trading technology will no longer power ANZ’s share investing business.

The new 500,000 clients onboarded by CMC will be offered a wide range of additional benefits currently unavailable with ANZ, including its mobile apps and complementary education tools and resources.

ANZ Share Investing clients will also benefit from lower brokerage charges across four major international markets and the local Australian market, according to CMC Markets, who will have the opportunity to drive greater value from its enlarged client base.

The deal has removed the uncertainty around the finite term of the existing ANZ white label partnership, which will end in 12 to 18 months as clients transition platforms.