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Shared from Sky News: Spread-betting giant CMC to mull jobs, HQ move amid FCA crackdown
The financial spread-betting giant CMC Markets Plc (LON:CMCX) is to consider relocating chunks of its business away from the UK if the City watchdog presses ahead with plans to curb bets placed by retail customers, as reported by Sky News.
The board of CMC, founded by the prominent Conservative Party donor Peter Cruddas, is likely to put the potential move of hundreds of jobs on its agenda ahead of a crackdown by the Financial Conduct Authority (FCA).
Such a move could mean shifting CMC’s headquarters as well as its London-based contracts-for-difference (CFD) operations, where approximately 300 staff are based, to Germany, according to an insider.
The idea of CMC relocating its HQ and significant numbers of jobs is at an embryonic stage, and any decision will not be taken until after the conclusion of the FCA’s consultation next year.
More than £1 billion was wiped off the value of the London stock market’s main financial spread-betting groups – CMC, IG Group Holdings plc (LON:IGG) and Plus500 Ltd (LON:PLUS) – when the FCA unveiled proposals last week to cap the level of financial risk that retail investors can take when using their services.
CMC is already the largest provider of CFD products – a form of spread-betting instrument – to retail clients in Germany, and it last week welcomed a blueprint published by BaFin, the country’s main financial regulator, which was less draconian than that of the FCA.
Sources shared that Peter Hetherington, IG Group’s chief executive, was in Germany on Tuesday to hold talks with BaFin about the reforms.
IG clients have received an email from Mr Hetherington warning them that under the FCA’s proposals, they would need to deposit up to 10 times more money with the company in order to trade with it.
He encouraged clients to contact the City watchdog to protest at its proposals.
The FCA said last week that it had “serious concerns that an increasing number of retail clients are trading in CFD products without an adequate understanding of the risks involved, and as a result can incur rapid, large and unexpected losses”.
It added that its analysis of a representative sample of client accounts for CFD firms had found that 82% of clients lost money on such products.
CMC, which listed on the London Stock Exchange earlier this year, has seen its shares more than halve since the flotation, while the other quoted spread-betting companies have been similarly affected.