Small spreadbetting firms will “suffer greatly” from European regulation which could come into place as early as January, according to the boss of CMC Markets.
The European Securities and Markets Association is due to announced the results of a review of the leveraged trading markets which could see significant changes imposed on the industry.
Peter Cruddas, founder and chief executive of CMC Markets, insisted his firm, one of the largest spreadbetters in the UK, would benefit from stronger regulation, as he unveiled a 58 per cent year-on-year increase in profits before tax for the six months to the end of September.
Cruddas told City A.M.: “Some of the smaller players will suffer greatly.”
“If they push up retail margins to a higher level it would certainly have an impact on the smaller players.”
CMC has pursued a strategy of attracting higher-value clients who remain clients for longer, Crudas said. “Now that metric is coming through” in profits, he added, with revenue per client up by 22 per cent and 80 per cent of business generated by 10 per cent of the clients.
The firm has not set aside any extra cash to cover any technological changes necessitated by regulation.
CMC also today announced its chairman, Simon Waugh, will retire at the end of the year, while also contributing to building a board in Australia, an expanding market for the firm. He will be replaced by current board member James Richards.
Cruddas gave a confident outlook in spite of the uncertainty around a regulatory “road bump” which is still burdening the share price.
“We’re on the front foot,” he said. “Bring it on.”
Shares in CMC Markets rose by more than five per cent at the time of writing.
Read more: CMC Markets chair expected to step down