CMC Markets shares jump as it raises profit guidance as Australia proposes regulatory clampdown


CMC Markets Plc (LON:CMC) shares jumped as the spreadbetting firm said it expects pre-tax profit and net operating income to be “marginally ahead” of analysts’ forecasts.

The company upgraded its guidance just days after saying its first-quarter net operating income improved on the back of an increase in revenue per active client as it recovered from the impact of a regulatory clampdown on the online retail trading sector in Europe last year.

CMC noted that Australia has proposed tightened rules on the sector but it was “well prepared to respond quickly and manage any regulatory changes as required”.

The Australian Securities Investments Commission (AISC) wants to change regulation that allows anyone with a bank card to make highly-leveraged bets on the financial markets. The AISC has recommended changes in binary options and leverage ratio limits, similar to rules implemented by the European Securities and Markets Authority.

CMC said its Australian business accounted for 31% of its net operating income in the year ended March.

Shares rose 5.9% to 93.2p in morning trading.

IG Group Holdings PLC (LON:IGG) also responded to Australia’s proposals, saying any changes would not affect its guidance for revenue growth of 3-5% over the medium term.

It added that it continues to expect a return to revenue growth in fiscal year 2020.

“The group’s focus on serving sophisticated and knowledgeable clients means that IG’s business is well placed to adapt and thrive in a stricter regulatory environment,” the company said.

IG said it expects the new rules to come into effect in the second half of its financial year. The ASIC consultation on banning binary options to retail clients is set to close on 1 October.

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