Shares in spread betting company drop following income warning

CFD and spreadbetting provider CMC Markets shares declined sharply following an income warning from the company this week citing tighter regulations and a volatile market.

Our readers will recall that recently Playtech disposed of its holding in the rival Plus500 company.

CMC shares dropped 12 percent after the trading update warned income for 2019 would be lower than expected.

European regulators tightened controls on the retail online trading market earlier this year by restricting contracts for difference (CFD) by limiting the amount clients can borrow to leverage their bets.

CMC Markets said the European Securities and Markets Authority (ESMA) measures had reduced client activity.

“The implementation of the ESMA measures has reduced UK and European retail client activity as expected,” the company said Tuesday. “However, after just two months it remains too early to draw any real conclusions as to how clients will adapt to the new rules.”

The company said its CFD and spread bet revenue for the full year is now expected to see a 20 percent reduction year-on-year – below the previous guidance of a 10-15 per cent reduction.

Last week rival online trading platform IG reported a 4.7 percent profits drop in the first quarter, giving similar reasons.