BREAKING NEWS

BREAKING NEWS

CMC Markets cuts CFD and spreadbet revenue target, shares fall 20 percent

Text size Aa Aa

(Reuters) - Online trading platform CMC Markets Plc on Friday forecast a bigger fall in fourth-quarter revenue for the unit that offers complex financial products to retail clients in the face of tighter rules by European regulators.

The statement came just hours after Britain's Financial Conduct Authority said the European Securities and Markets Authority's temporary curbs on contracts-for-difference (CFD) will become part of the UK domestic law when it leaves the EU on March 29.

CFDs give investors exposure to price movements in securities without owning the underlying asset.

CMC expects its quarterly CFD and spreadbet revenue to fall 25-35 percent compared with a prior forecast of a 20 percent drop, it said in an unscheduled trading update on Friday.

Shares of CMC touched a two-year low, falling over 20 percent to 93.2 pence by 1457 GMT after the company called the first two of 2019 "challenging". Rivals IG Group Holdings and Plus500 Ltd were also down more than 6 percent.

"This is a period of adjustment for CMC and the industry following the implementation of the ESMA rules," said CMC Chief Executive Officer Peter Cruddas in a statement.

CMC's revenue warning was in stark contrast to its third-quarter trading update last month when it said U.S.-China trade tensions had boosted client activity on its online trade platform.

Plus500 had said last week that a drafting error in its 2017 report resulted in the company failing to disclose some losses from customer trading, which raised concerns over the state of affairs of online trading platforms.

(Reporting by Muvija M in Bengaluru; Editing by Arun Koyyur)

euronews provides breaking news articles from reuters as a service to its readers, but does not edit the articles it publishes. Articles appear on euronews.com for a limited time.