April 3, 2020 / 6:27 AM / 3 months ago

CMC revenues surge as locked down traders take to their mobiles

(Reuters) - Online trading firm CMC Markets (CMCX.L) reported a near doubling in annual trading revenues on Thursday, spurred by volatile financial markets and the growing popularity of its mobile app among traders working from home.

CMC and rivals IG (IGG.L) and Plus500 (PLUSP.L) have benefited from a surge in volatility as investors scramble to exit positions ahead of an impending recession due to the economic damage from the coronavirus pandemic.

The price of oil has plunged to about $30 a barrel from $72 earlier in the year, as concerns over demand and a price war between top producers have dealt a double blow.

“There has been a big focus on commodities, we have seen a lot of interest in the oil price. Normally they (customers) trade shares and indices but there has been a big focus on oil lately because that’s been quite topical,” CMC Chief Executive Peter Cruddas told Reuters.

CMC specialises in so-called contracts for difference (CFD), which give an investor exposure to price movements in securities without owning the underlying asset.

The company said it expected CFD net trading revenue to nearly double to 214 million pounds ($265 million) for the year ended March 31, with higher transaction volumes offsetting a hit from regulatory restrictions on the sale of complex financial products to retail clients.

CMC has been targeting professional clients, who are typically unaffected by the regulatory restrictions.

“When clients see shares dropping so rapidly and the price of oil dropping and the price of gold going up, they feel that there is a distortion in the market and they want to trade,” Cruddas said.

“If you are sitting at home and you can’t do your normal day’s work, people get on the internet and they want to trade,” he added, referring to lockdowns across the world aimed at containing the coronavirus outbreak.

The company’s mobile app, CMC: CFD Trading, has over 100,000 downloads on the Google Play Store alone, but the company declined to put a figure on its growth rate.

At 1115 GMT, CMC shares were up 4.9% at 201.26 pence.

Reporting by Muvija M in Bengaluru; editing by Bernard Orr and Mark Potter

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