Comment: How CMC brexiteer Cruddas cashed in by doing the right thing

Jim Armitage @ArmitageJim21 November 2019

IF you ever wanted proof that doing the right thing is better for business, long term, the big spreadbetting companies are it.

Last year, UK and European regulators stopped the industry taking money from small punters taking big risks. CFDs, or contracts for difference, can quickly see you losing your house, wife and kids if you don’t know what you’re doing, they reasoned.

CMC Markets was one of the few that actually welcomed the move. Why? It had decided long before that it needed to get out of the little league game, primarily because it cost so much in marketing to get in the punters.

Instead, it put the advertising dollars into technology to build a bells-and-whistles platform that would attract and retain sophisticated traders.

Figures today showed the shift is working. Average clients now spend 45% more with CMC than a year ago and are less likely to flit to rivals.

Meanwhile, CMC has been selling the new-look platform to third parties like ANZ Bank in Australia to run its retail broking service. That one deal brought in £10 million profit in the past six months.

The shares, which tanked after the regulatory move, have rallied but are still well shy of their 240p float price. Concerns linger about similar rule changes in Asia, but CMC still seems relatively cheap.

Its market capitalisation is £400 million but it has £190 million of cash, so its actual value is £210 million. Considering it made £30 million pre-tax profit in the past six months and is about to pay an £8 million interim dividend, it starts to look worth a flutter.

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in

MORE ABOUT