27 March 2018
CMC Markets Plc
ESMA Announcement
CMC Markets Plc ("CMC") notes the announcement by the European Securities and Markets Authority (ESMA) issued today.
ESMA's announcement introduces temporary product intervention measures on the provision of contracts for difference (CFDs) and binary options to retail investors. The measures announced today are largely unchanged from those proposed by ESMA in December 2017. The FCA expects to consult on whether to apply these measures on a permanent basis. The measures introduced include the following:-
1. A prohibition on the marketing, distribution or sale of binary options to retail clients; and
2. Restrictions on the marketing, distribution or sale to retail clients of CFDs, including rolling spot forex and financial spread bets as follows:
- leverage limits on the opening of a CFD position by a retail client between 30:1 and 2:1, depending on the volatility of the underlying asset;
- a standard margin close-out rule on a per-account basis;
- negative balance protection on a per account basis;
- a prohibition on firms offering monetary and non-monetary benefits to retail investors; and
- a standardised risk warning, including firm-specific figures on the percentage of clients that have lost money trading CFDs.
CMC is well prepared for these measures and through its proprietary technology, will ensure that they are implemented as required. Fair client outcomes have always been a focus of the Group, with account level margin close-out and standard risk warnings already in place throughout the Group, as well as negative balance protection being offered in certain countries.
Binary products generated £2.1m of revenues from the UK and Europe in H1 18 and therefore any reduction in revenue will be immaterial in a Group context.
Margin changes are likely to have an impact on how clients trade, although at this stage it is not possible to quantify the impact. However, CMC remains confident that its strategy of targeting high value, experienced clients that could be categorised as 'elective professionals', puts it in a strong position to manage regulatory change.
Enquiries
CMC Markets Plc +44 (0) 20 7170 8200
Grant Foley, Chief Operating and Financial Officer
Camarco +44 (0) 20 3757 4984
Geoffrey Pelham-Lane
Ed Gascoigne-Pees
Jennifer Renwick
Notes to Editors
CMC Markets plc ("CMC"), whose shares are listed on the London Stock Exchange under the ticker CMCX (LEI: 213800VB75KAZBFH5U07), was established in 1989 and is now one of the world's leading online financial trading businesses. The company serves retail and institutional clients through regulated offices and branches in 14 countries, with a significant presence in the UK, Australia, Germany and Singapore. CMC Markets offers an award-winning, online and mobile trading platform, enabling clients to trade up to 10,000 financial instruments across shares, indices, foreign currencies, commodities and treasuries through contracts for difference ("CFDs"), financial spread bets (in the UK and Ireland only) and, in Australia, access stockbroking services. More information is available at http://www.cmcmarkets.com/group/
