CMC Markets

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CMC Markets
Type Private (Peter Cruddas and family 86%, Goldman Sachs 10%)
Industry Financial Services
Founded 1989 (1989)
Founders Peter Cruddas
Headquarters London, United Kingdom
Area served Worldwide
Key people Peter Cruddas (Founder/Chief Executive)
Services Online trading, CFDs and spread betting
Revenue Increase £142.0m (2014)[1]
Operating income Increase £33.5m (2014)[1]
Net income Increase £24.4m (2014)[1]
Total assets Increase £169.1m (2014)[1]
Employees 450 worldwide (2014)[1]
Website www.cmcmarkets.com

CMC Markets is a UK-based financial derivatives dealer. The company offers online trading in spread betting, contracts for difference (CFDs) and foreign exchange (forex) across world markets. CMC is headquartered in London, with operations in Frankfurt, Sydney and Singapore and a total of 12 offices internationaly.[1]

History[edit]

1989-2000: Early years[edit]

The company was founded in 1989 by Peter Cruddas as a Foreign Exchange market maker under the name 'Currency Management Corporation'. The name was later abbreviated to CMC and then changed to CMC Markets in September 2005.

In 1992, CMC Markets became authorised and regulated in the UK by the AFBD which later became the Financial Services Authority (FSA).

In 1996, the company launched a real-time FX trading platform and has made claims to have done the first FX deal on-line over the internet. Although not verifiable, CMC Markets was certainly one of the first companies to offer on-line trading over the internet. The company pioneered internet trading technology with its MarketMaker software platform.

The software was developed by Information Internet Limited, a sister company jointly owned by Peter Cruddas and the two developers that designed and built the first version of the software, Terry Johnston and Ben Fisher. From 1996 to 2000 Information Internet Limited, as well as supplying CMC Markets, sold the software to a small number of banks. In 2000 Peter Cruddas bought out the other owners, made the software exclusive to CMC Markets and the remaining parts of Information Internet Limited became the internal IT function of CMC Markets.

2000: Introduction of CFDs and Spread Betting[edit]

In 2000, CMC Markets began to offer contracts for difference (CFDs) and the following year it introduced online spread betting on financial markets. These two products would become the bulk of the business for CMC Markets in the following years.

2002-2006: Global expansion[edit]

In 2002 the company began embarking on a major global expansion drive. It expanded quickly between 2002 and 2007 and opened offices in a large number of countries, as well as growing the spread betting business in the UK and the CFD business internationally. This began with its first overseas office in Sydney, Australia, with a number of other offices following in next few years including Beijing, Hong Kong, Frankfurt in 2005, Auckland in 2006 and Stockholm in 2007.

The first North American office was opened in 2003 in New York. This was followed by the acquisition of Canadian broker Shorecan Index, which became its Toronto office in 2005. CMC Markets subsequently pulled out of the US market and closed its New York office in 2008, which was primarily because it was unable to offer its main CFD and spread betting products there due to regulatory restrictions.

From 2001-2005, CMC Markets also operated the brand name deal4free.com. This brand was designed to promote the zero commission charge service which it used primarily for its spread betting business in the UK. Commissions were later re-introduced and this brand was dropped as part of the re-branding in September 2005.[2]

In 2006 Peter Cruddas planned to float the company and CMC Markets was prepared for IPO.[3][4] However, the IPO was cancelled at the last minute with Peter Cruddas citing market conditions.

2007: M&A activity[edit]

CMC Markets bought financial media and technology company Digital Look,[5] which ran the financial information site www.digitallook.com, as well as selling financial data to third party sites. The company was merged into CMC Markets' main operations in London, but continued to run the website and data services for third parties. In 2008 CMC Markets bought the Australian stock broker, Andrew West. This was merged with the CMC Markets Australian operation and renamed CMC Markets StockBroking. This continued to offer physical share broking services in Australia.

Goldman Sachs bought a 10% stake in the company for £140m, valuing the company at £1.4bn.[6]

2008-2013: Global financial crisis[edit]

In 2008 and 2009, CMC Markets saw profits decline with the global financial crisis. In response Peter Cruddas changed his management team and closed seven offices.[7]

In 2010, CMC Markets launched its Next Generation trading platform[8][9] to the UK market. The new trading software improved on previous MarketMaker software, with amongst other things being able to quote market prices to additional decimal points and provide trade execution without re-quotes.

In 2011 the Digital Look business unit was sold to the Spanish-based Web Financial Group.[10]

2014 onwards[edit]

After a return to profits in 2014 speculation emerged that CMC Markets was again looking at an IPO, with up to £1bn valuation[11][12]

Operations[edit]

International presence[edit]

CMC Markets operates and has offices in the UK, Australia, Germany, New Zealand, Singapore, Spain, Italy, Sweden, Norway, France and Canada. Most operations are run from its head office in London and runs a trading desk in London and in Sydney.

Regulation[edit]

Additionally, CMC Markets is highly regulated and must adhere to strict standards of financial stability. Its primary regulator is the UK's Financial Conduct Authority, but it is also regulated in other countries where there is an office.[13] CMC's Tier 1 regulatory capital ratio of 18.6% (2014) surpasses that of major banks and investment banks.

Market position[edit]

CMC Markets is one of the companies that launched CFDs products to the retail market in 2000 and is one of the major CFD providers. No reliable independent data exists for the over-the-counter CFD and Spread Betting industry. However, in 2009 some industry participants commissioned a survey to look at the UK market and results indicated that CMC Markets market share in 2008 was lower than its main competitor.[14]

References[edit]

External links[edit]