CMC Markets warns on full-year income after August trading slide

CMC Markets warned on Friday that full-year net operating income would likely miss previous guidance, after “subdued” trading conditions in August saw investing revenue tumble 20%.

The online trading platform said in an unscheduled update that income is now expected between £250-280 million for the year ending March 2024. That compares to £288.4 million generated last financial year.

CMC said a “higher proportion of lower margin institutional volume” meant the monetisation of client trades dropped markedly in August versus last year. Though it did not provide an exact figure, the 20% fall highlights how weak summer trading has impacted brokers.

The downbeat update sent CMC’s shares plunging 15% in London, extending the stock’s losses over the past year to around 60%.

CMC benefited enormously from ultra-volatile markets during the pandemic as amateur traders piled into platforms like Robinhood. But activity has slowed significantly in 2022 as central bank tightening calms markets.

August’s further deterioration comes after CMC warned in late July over “subdued” market conditions denting income. Its reliance on market swings to generate revenue makes the company vulnerable when volatility vanishes.

Today’s warning suggests tough comparisons from last year’s trading bonanza will make hitting financial targets difficult, even as costs remain stable.

CMC still expects total operating expenses of around £240 million for the 2024 financial year, unchanged from previous guidance. But with income set to miss forecasts, pressure on profit margins has intensified.