CMC Markets Lowers Revenue Guidance for FY2019 Due to Increased Regulatory Challenges and Sustained Volatility

David Fineberg, Group Commercial Director at CMC Markets
David Fineberg, Group Commercial Director at CMC Markets

London-based Fx and CFD brokerage firm, CMC Markets (LON: CMCX) has issued a trading update before the end of company’s second quarter for the FY 19. The company is expecting a big fall in revenue realization for the full fiscal year which ends on March 31st, 2019. 

The company has blamed the situation due to lower trading activity because of a sustained period of low market volatility and range bound trading activity towards the end of traditional UK summer period. Also, regulatory changes which lowered the leverage exaggerated the situation. The situation is not limited to only CMC Markets but has affected the whole forex space in the region.

The company said that Contracts-for-Difference and Spread bet revenue for the full year is likely to witness a fall of approximately 20 per cent year-on-year, compared to previous guidance for a reduction of 10-15 per cent year-on-year. The investments around strategic initiatives to drive growth would continue but spending around staffs and marketing would be curtailed and will be below earlier guidance to compensate for the revenue loss in its full fiscal year. 

“As a result, net operating income for 2019 is expected to be below previous guidance, with the overall impact on profitability partially mitigated by tight cost control.”

The group remained focused on increasing the proportion of the UK and European revenue that is generated by professional clients. On a 12 months rolling period, over 40 per cent of UK and European revenue is now generated by professional clients, in line with previous guidance including institutional business which has been increased to 50 per cent. 

The group also announced that the financial statement for the first half period will be announced on 22nd November 2018.