Brokers News

CMC Markets mulls moving out of the UK after FCA capped leverage

Forexbrokerz.com learned that financial spread-betting and CFD giant CMC Markets is thinking over moving away from the UK after the FCA’s decision to cap leverage to 1:50 and to introduce other restrictive measures to forex and CFD trading. According reports of Sky News, the broker is mulling to relocate chunks of its business to Germany, where it has already established itself as a leading CFDs provider.

 

Sky News quoted own sources in the company, according to which the board of directors of CMC Markets is planning to discuss the idea of moving the its headquarters, as well as approximately 300 employees (from its London-based CFD operations) to Germany.

 

The news of the pending regulatory changes in the UK wiped out a significant portion of the market capitalization of the major LSE-listed forex brokers, including CMC Markets. The stock price of the company fell by 36.7% on the day the news broke and has not recovered ever since.

CMC Markets’ shares traded for GBX 117.34 apiece on December 5 at market close and after FCA announced its decision their price fell to GBX 185.30 (at market close on December 6).

 

On one hand, the relocation idea appears to be quite logical, since CMC Markets is already the largest retail CFD provider in the country. On another hand, however, the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) has also announced its intentions to “limit the marketing, distribution and sale of financial contracts for difference (CFDs) with an additional payments obligation” to retail clients.

 

The Cyprus Securities and Exchange Commission (CySEC) also undertook measures to tighten the rules for margin trading and CFDs, proposing a default leverage of 1:50. In fact, these measures are in line with the recommendations of the European Securities and Markets Authority (ESMA), issued earlier this year.

 

It looks as if a new regulatory trend is forming in Europe, (more or less) following the steps of the US, where the Dodd-Frank Act (2010) capped leverage to 1:50 and introduced the FIFO rule, that in fact prohibited hedging. As a result, US retail forex market shrunk (currently there are only six brokers operating legitimately) and most brokers moved their business outside the country. Probably many EU brokers will soon find themselves in a similar situation and will have to find ways to move on.

TAGS: CMC Markets  UK  forex brokers  leverage cap  CFDs  FCA 

Related forex news

Broker Country Regulation Platform Min Deposit Review
Cyprus CySec MT4, MT5, Web $5 Review Website
US, UK, Australia CFTC/NFA, FCA, ASIC MT4, Web,
Mirror Trader,
Trading
Station,
NinjaTrader
$50 Review Website
UK, Australia, Singapore FCA MT4, Web,
ProRealTime,
2Dealer
$1 Review Website
UK, Cyprus FCA, CySec MT4 $5 Review Website
UK, Cyprus FCA, CySEC MT4, MT5, Web,
cTrader,
SuperTrader,
FxPro Markets
$100 Review Website
Seychelles FinaCom MT4 $10 Review Website
UK, Bulgaria FCA, FSC Web $150 Review Website
Belize IFSC MT4, MT5 $100 Review Website
Cyprus CySEC MT4, MT5 $300 Review Website
New Zealand FMA MT4 $1000 Review Website
Belize IFSC MT4, Web $500 Review Website

More Forex Brokers News

Fibo Group launches trading account with gold as a base currency

Feb 17 2017 09:38:07

Forex brokerage Fibo Group has added yet another option to its extensive offerings: its clients can now choose gold (GLD) as a base currency for their MT4 accounts. Read more

FXCM’s Jan metrics: trading volumes up 18% MoM, US operations making up less than 20%

Feb 15 2017 14:42:05

Major forex broker FXCM (NASDAQ:FXCM) reported its trading metrics for January. Read more

Client feedback is driving the development of IG’s new web platform

Feb 15 2017 09:05:36

In a note to its clients, IG, one of the largest forex, CFD and spread betting providers, announced some key features of its new web platform, as well as tools which are currently in development. Read more

FXCM pays $650 K CFTC fine for 2015 undercapitalization

Feb 14 2017 13:13:17

FXCM's woes see no end. After last week's shocking regulatory actions against it that forced it to exit the US forex market, where it was the leader, this week the broker took action to resolve another old regulatory issue and pay a $650 000 fine. Read more

FXCM expects its US exit to trigger international growth

Feb 13 2017 10:10:07

A couple of days after the news about FXCM [NASDAQ:FXCM] leaving US forex market and selling its client base to peer Gain Capital broke, the top forex broker announced key metrics for the nine months, ended 30 September, 2016. According to the data disclosed, FXCM generated a net loss of $13. Read more

Forex.com reports 40% annual drop in January volumes

Feb 13 2017 09:06:16

Forex.com, the OTC retail forex brand of the US brokerage Gain Capital, has posted a 40.1% drop of its average daily volume in January 2017, compared to last January. According to the company report, it amounted to $9. Read more

Gain Capital to pay up to $500 for each FXCM client, conditions apply

Feb 10 2017 08:49:12

Following the regulatory penalties and dramatic exit of the largest US forex broker FXCM from the country and the subsequent announcement that Gain Capital is buying off FXCM's retail forex clients, new details are emerging about the deal. Read more

IG offers Snapchat CFD as grey market trading ahead of eventual March IPO

Feb 09 2017 14:05:32

IG, one of the largest forex, CFD and spread betting (UK only) brokers, announced it is launching CFD trading and spread betting on the eventual IPO of the technology company Snap Inc. that stands behind the Snapchat mobile application. Read more

Plus500 gets South African license

Feb 09 2017 08:18:23

Plus500, one of Europe's leading forex and CFD brokers, obtained a license from South Africa's non-banking financial companies regulator, the Financial Services Board (FSB). It allows Plus500 to operate an online trading platform for retail customers to trade CFDs in South Africa. Read more

It's finalized: Gain Capital gets FXCM's US retail forex clients

Feb 08 2017 08:46:16

Just a day after FXCM – the largest retail forex broker in the US – lost its NFA and CFTC licenses and got fined $7 million for misleading clients and misinforming the regulators, its main competitor Gain Capital confirmed it is acquiring FXCM's US retail clients. Read more