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Why open a financial spread betting account with CMC Markets?

CMC Markets is a private company founded by its executive chairman, Peter Cruddas, and he and his family still control approximately 85 per cent of the business.

A market maker in online retail financial services, CMC Markets is both a global leader in the provision of Contracts for Difference (CFD's) and one of the largest Financial Spread Betting service providers in the UK. Its global offices now house over 1000 CMC Markets staff following a 47% growth in staff numbers in 07/08, delivering a localised service to clients in 85+ countries. The trading service allows clients to access twenty-three International financial markets offering over 3,000 individual trading instruments distributed over 30 markets covering Equity, Indices, Commodities and Foreign Exchange all via the MarketMaker® trading platform.

What they say

Marketmaker® was first launched in 1996 in the UK when CMC Markets transacted the first ever FX trade online. January 2000 saw CMC Markets become the first company to offer online commission free CFDs. Following the success of the CFD service, CMC Markets re-invented spreadbetting and launched Rolling Cash Bets® in 2001. By combining our commitment to tight spreads and the intrinsic tax benefits* of Spread Betting, we believe Spreads are the pinnacle of our efforts to reduce the financing cost of trading for retail/personal/private investors."

CMC Markets handled over 20 million trades during financial year 2007-2008 with the trades executed having a total value of $1.4 trillion across the full CFD product range (including Foreign Exchange and Financial Spread Betting). Today the trading platform is used by clients in more than 70 countries with over 98% of global trades with CMC Markets conducted online.

Our hands on experience of CMC Markets backed by reader comments, general experiences and observations -:


General Points (we will strive to keep this review up-to-date)

  1. Spread bets on more than 1,000 instruments, including global shares and indices, as well as other major financial markets such as currencies, treasuries and commodities.
  2. CMC Markets offers stocks from the FTSE 350 plus 350 other small cap UK stocks (Not from AIM). The margin for individual shares can range from 3% to 10%, depending on the market cap.
  3. CMC has recently almost doubled its coverage of UK stocks and now allows clients to bet on the top 690 companies listed in the UK... However, this came with increased spreads as we will see below.
  4. Accounts (including a joint account option) can be opened on-line and funded with the usual cards. The minimum trade size across all the website's spread betting products is then £1 per point. The minimum account opening deposit is now £200, the minimum stake is £1 per point, and they don't specify a maximum as this will depend on market liquidity. CMC requires you to have a minimum of £200 deposited to open an account. And do keep in mind that you need to maintain £100 in the account, if your account goes below this all your positions are closed.
  5. Two types of accounts are available - fixed risk accounts (aka as limited risk accounts with other providers) where all stops are guaranteed (but come at an extra spread for the 'insurance premium') and regular accounts (no guaranteed stop losses).
  6. Credit facilities are available for accounts that hold more than £10,000 on their accounts. You can also open more than one account or open a Joint Account and/or Company Spreadbet account.
  7. There are no maintenance fees nor inactivity fees but there is a 1.8% fee on credit card deposits albeit CMC say that they can waive this fee for the initial deposit. Note that credit card deposits are expensive for merchants as they have to pay processing credit card fees so they are basically passing on the processing fees to the client - a better way to fund your account would be by BACS or wire.
  8. Punters can also take a view on the performance of major UK stock market sectors. These are made up of a selection of five to 100 companies in particular industries as a weighted average of their share prices (say telecoms or pharmaceuticals) and spread betters can then use them as a speculative or hedging tool, depending on how other aspects of their investment portfolio are constructed.
  9. CMC only really deal with the FTSE 350 shares not small caps, which is why their margins are small and the spreads tight. They have recently widened the spreads though, they say its so they can extend their product range (!!), anyway still cheaper for spread betting stocks than IG or City Index.
  10. There are different rules for different stocks depending I suppose on their liquidity, how gappy the order book is and also how popularly they are traded by clients. Some have a widened spread, such as SVT, WOS and EMG when the spread is tight on the orderbook, and others seem to have a requirement of a minimum number of shares on the orderbook before CMC will offer you market price, such as XTA and RIO. The exact amount they need to see on L2 does vary, sometimes from minute to minute. Basically their rules are not hard and fast, and can be difficult to predict.
  11. With CMC if a trade is declined you get a re-quote meaning that a box jumps up showing the next best bid or offer (depending on whether you tried to buy or sell), and a chance to either deal on the price or not. If you do not deal, nothing gets done.
  12. No difference between the CFD trading and the spread betting offerings...apart from the tax exempt status of spread bet gains...a CMC sales guy said to me recently that CFDs were used mainly by overseas clients who did not have to pay UK taxes.
  13. With CMC you can add to your existing positions, eg. buy, and buy again later (before you eventually sell), but it will not be treated as 2 separate positions, it will just be increasing the exposure on an existing position. You can do this as many times as you like.
  14. CMC Markets do a range of free and paid-for seminars and workshops. The paid-for ones cost around £200 and they teach you a lot. There's no need to pay thousands for certain other trading courses! CMC has also recently launched an eight-week training program called Trading IQ presented by actor James Nesbitt. This programme includes a day's free trading on the FTSE 100 index at £2 per point. You get to keep your profits and CMC Markets will assume any losses...
  15. Hedging: 'Some analysts said CMC's hedging practices, as described in its prospectus, showed less hedging of risk than expected, although Mr Cruddas said the company's hedging was appropriate.' Financial Times.
    'We once met up with the then head trader of CMC a few years ago, he told us they only hedge 10% of all bets, when asked why, he said so many loose that's all they needed to cover, I spoke to the new head dealer a few weeks ago, and he said this was incorrect, I'd love to know all their true stats and % etc...' - a trader by the name of Ruth posted this on the MoneyAM board.
  16. Guaranteed stops at CMC Markets are available for all instruments. GSO's must be placed at the same time as entering the market. If you wish to edit the stop, you must close out the position at market and then re-enter with the new GSO attached. CMC also have an additional limitation in that guaranteed stop losses cannot be placed in the last hour of trading. There is no maximum distance you can place the GSO from the current market price. The minimum distance to place a GSO on a share is 5% from the current price (for sectors and indexes it is at 1%).
  17. Anyone seen the CMC airport infomercial adverts? Is it me or is this David character a prime case of how not to trade with spreadbetting. I'm sure I read somewhere that getting emotional about trades is not a good thing?
    This guy looks like if he carries on like this he's gonna have an emotional breakdown. Have to admit though in the early days I can recognise some of the emotions he goes through and I do find it entertaining. But trading like this surely a quick way to burnout/big losses?
  18. Mobile trading is handy but doesn't keep track quite as quick and like someone else said, be careful to cancel stops and losses.
  19. Takes 95% of all trades via the web. It was the first to pioneer the idea of the rolling cash bet (where the financing element is charged separately to the account each night so the price of the spread bet is much closer to the underlying market), though many other firms have since followed suit.
  20. CMC have ceased offering spread betting accounts to people located outside the UK & Ireland (in which case you can open a contracts for difference account...but this lacks the tax free benefits of spread betting).
  21. CMC Markets Plc acquired Digital Look in May 2007 -> 'Founded in 1998 by former JP Morgan executive Mark Pritchard, and financial journalist Andy Yates, Digital Look has grown to become one of the UK's largest and most popular financial and investment portals offering a comprehensive range of market leading data, tools, and research to help private investors and traders make informed investment decisions.'

Comparing some Popular Market Spreads at CMCMarkets

    UK Shares: 0.15% either side
    US Shares: 0.075% either side
    FTSE 100: 2 points
    Wall Street: 4 points
    EUR/USD: 2 points
    GBP/USD: 3 points

Good Points

  1. CMC are known to offer competitive spreads for shares although they are not the tightest.
  2. Low margin requirements: 1% on all indices, 3% on top FTSE 100 stocks, 5% on US stocks, 10% on FTSE 250 and so on.
  3. CMC Forex - Very competitive spreads, 2-3 pips on the majors and a huge selection of currencies (although be warned that spreads are dynamic and linked to the volumes on the underlying markets).
  4. Three platforms are now available - a download software based application, a slimmed-down web version (Marketmaker® Web) as well as a mobile platform for those on the move.
  5. Overall good spreads. One thing I would say is that you need to ensure that you have good memory on your PC otherwise the CPU can get overloaded leading to the platform freezing.
  6. Initially their reputation, or lack of it, on the customer service side was a worry. However whenever I have had to speak to a dealer or ask for assistance they have been great. Also, they have a chat system built into the software which helps rectify issues immediately if they arise.
  7. Good commitment to enhancing the platform. CMC has invested $60 million in MarketMaker's development over the last few years and it is supported and continually developed by a team approaching 100 in-house staff. More than 13.5 million trades were successfully processed through Marketmaker® last year (boasting 1 trade every 1.7 seconds, 2,117 trades every hour, 50,823 trades every day). Having been a client at CMC for over 3 years now and I have seen that how their software has grown in functionality and stability and how much effort they put on their system.
  8. CMC MarketMaker is excellent with good charting facilities if you know how to set up the trading layouts. All the panels are movable and resizable so you can arrange the desk as you want it. I have the system just showing the FTSE 100 index price in a little floating window up in the top right hand corner of my screen as I write this - allowing me to keep an eye on that and do other things and even better this system will allow you to set alarms when whatever you are watching reaches a certain level! Being able to set up alerts is really useful and there are three types of alerts which can be selected. The first is a visual alert - it throws a bright red box into the centre of the screen - great if you only have half an eye on the screen. The second is an audio alert - it will play audio files and the third is the email alert - I set this to email my mobile if I am going to be away from the PC for any length of time.
  9. CMC Markets also has good news flow which pops out automatically onto whatever site you happen to be on when a significant announcement is made...so latest oil inventory figures or non-farm payrolls or profit warning will be flagged up instantly.
  10. Punters can also take a view on the performance of major UK stock market sectors. This is great to take a more general view on a number of companies without necessarily having to know the exact ins and outs of each constituent.
  11. All positions are automatically rolled over until you close out the position, at which point your profit or loss is then crystalised. This means that CMC's Daily Rolling Cash Bets are open-ended contracts that are automatically rolled over into the next business day. The fact that Daily Rolling bets are rolled over every day without having to open/close the bet every day (with just a small financing charge being charged) is more transparent than having to close/re-open the spread bets every day crystallizing any profits/losses. This is proving so popular that CMC claim that around 90% customers are now using the daily rolling spread bet instead of the standard quarterly futures spread bet.
  12. Recent additions include One-Click Dealing, meaning trades can be executed in just one click of the mouse. Technical analysis has also been upgraded this year, providing professional-level real-time charting with up to 42 different indicators available.
  13. Recently started offering 'if done' orders on the spread betting platform which is good (they have had it on the CFD platform for some time) - an If-Done order is a way of linking two conditional orders together, so that if one of the orders is executed, then the other order is placed in the market as a result. For example, a trade may use a stop-buy order to open a long position with an associated stop-sell order to limit any potential losses. Therefore, if the stop-buy order gets executed, then the stop-sell order is placed in the market. However, if the stop-buy order is not executed, then the stop-sell order does not become active in the market.
  14. Interest: CMC pays Libor minus 2 per cent on amounts over £10k.
  15. CMC Markets have just launched a new initiative, Trading IQ, which they claim is one of the most comprehensive education packages available in the spread betting market place. The Trading IQ programme covers all the basics with accompanying DVDs presented by actor James Nesbitt. This programme includes a day's free trading on the FTSE 100 index at GBP 2 per point. You get to keep your profits and CMC Markets will assume any losses.
  16. Excellent to use if you're profitable and a swing-position type trader. There are usually very few problems in my 5 or so years experience with CMC other than when the markets are moving very fast or, presumably at times when everyone is winning!

Bad Points

  1. No demo account although you can see the live platform after filling the application form. The downloadable platform is not for newbies.
  2. Recently increased spreads means that they may no longer be the cheapest in the market for spread betting UK stocks.
  3. In order to save money CMC have decided to only offer their in-house charts and have taken the ITT charts off their platform (ITT stands for ITT Financial - owners of Prorealtime). Unfortunately this is not their area of expertise and I would say they have delved into the old familiar territory of false economics as their new charts are inferior to the Prorealtime package.
  4. Main trading platform is not web based unfortunately although they have recently launched Marketmaker® Web (a lite web version of the platform), you install their platform onto your PC and it's not the most user friendly, but OK when you get the hang of it - I use them for any trades that have to be rolled over as they do it automatically and cheaply too.
  5. Reports of platform freezes/disconnections especially during busy periods. You might also experience re-quotes (delays) especially in fast markets.
  6. Apparently, CMC will not allow you to open a March short and a Sept long in the same instrument. In fact, further to this CMC will restrict you to trade only the nearest available contract. If there were multiple contracts available, of 888 for instance, in both June and September, then you would only be able to trade the June contract. Even if Marketmaker is quoting a price for the September contract, it will not be available until the June contract has expired. The contract which is available to trade is the contract that is closest to the current date.
  7. With CMC you can't amend your orders, you must cancel previous active orders and put in new ones. This is not so with Finspreads, for instance where you can just amend your orders without needing to cancel previous ones. Another thing I like with Finspreads is their chart - allows you to use up to 3 moving averages, CMC Markets only allows 1 moving average.
  8. Not suitable for scalpers (use FuturesBetting if you wish to scalp!). Their platform is best for 'long term trading' or 'short term investing'. If you try to scalp them you will quickly end up on dealer referral. Being put on 'refer to dealer' effectively means it takes at least a few seconds to confirm your trade and/or you get a re-quote when you open or close a trade. Seems to me that CMC have never wanted the scalping business although they are not prepared to admit this. That is not in the least surprising, since they are dependent on trading on the LSE order book to match positions taken by what is probably a largish number of traders, often acting in unison or nearly so. Even with clever computers they would be dependent on trading using aggressive orders thereby costing themselves the spread and making 'dealing for free' totally uneconomic for those trades.
  9. This company has a reputation for running stops and moving prices that do not reflect the underlying index. Also, there have been reports of re-quotes and spiked out stops. However, it would be unfair on them to single them out, as their behavior is common throughout the market maker world.
    As they say "CMC Markets is a market maker and as such sets the applicable price. It is the customer's responsibility to decide whether or not they wish to deal at those prices."
    Scott F from Australia commented "I've been both a professional broker and a private trader for 15 years. I've seen a lot and heard a lot in that time. One thing I have never said to a client is 'Sorry about that, bad price feed, however the trade is still yours' or 'You shouldn't have had your stop loss so close to the market' (4% away????). I think I have heard one of these at least five or six times from this lot of shysters in the last 6 months. I've met some of the management of this firm in Australia through various industry functions and all I can say it that they appear to be some whiz bang kids straight out of university with a lot of brains and an attitude. Be wary of dealing here my friends."
  10. Spreads may get wider (reports of spreads as big as 30 at times) if there is a huge increase in client trading on a particular product.
    As they say: CMC Markets quote a two-way price and the quote indicates the price at which we are prepared to deal with you. However, this price is not available irrespective of the size in which you want to deal. As term 6.4 of our terms of business state, "if you place a Bet which by virtue of its size is deemed by us to be abnormal by reference to the relevant instrument or its volatility or its liquidity, it may be subject to special conditions and requirements as notifed to you by us at the time you place the Bet. In particular, we may quote a revised price or spread applicable to the proposed Bet which you are free, at your absolute discretion, to accept or reject."

Curiosities

  1. CMC Markets was initally established as a web-based forex firm. After a sheepish start, and over recent years, CMC Markets has developed into one of the leading global derivatives provider.
  2. CMC stands for Currency Management Corporation (CMC), the parent company of CFD and Spread Betting provider CMC Markets.
  3. Peter Cruddas, founder of CMC Markets and a well-known businessman and philanthropist earned £16m last year from chairing his company, the derivatives company CMC Markets. Peter Cruddas is the largest donor to The Prince's Trust and The Duke of Edinburgh's Award International Association for whom he is Global Benefactor.
  4. CMC Markets was founded in 1989 and today has operations in the UK, Australia, Canada, Germany, Singapore, China, New Zealand, Hong Kong, Sweden and the US with clients in over 70 countries worldwide.
  5. Today CMC is one of the global leaders in online derivatives, have an annual transactional turnover of about £1 trillion and Goldman Sachs have acquired a 10% stake in the business in 2007.
  6. The company employs over 1000 people around the world. Between 4,000 and 6,000 new CMC accounts are being opened each month by private clients. In August 2008, CMC announced 130 redundancies at their London offices, amounting to about 10% of the UK workforce but industry insiders suggest this was because CMC Markets had become too top heavy compared with its competitors.
  7. For the 6 months to 30 September 2008 CMC Markets Plc reported a monthly average of 2,128,833 trades with a value of US$138bn. The second half of the financial year started very strong with 3,652,852 trades valued at US$174bn and a record high for new client up-take.

Regulation

CMC Markets is regulated by NFA(USA), FSA(UK), ASIC(AU), BAFIN(DE), OSC(CA) and CBRC(China).

Verdict: CMC offer a wide array of betting opportunities. The leverage is great, the liquidity is good on most markets, the spreads aren't too bad for forex and indexes (silver is a shocker, gold is bearable) but their charts need improving. Overall I would say CMC Markers offer a good backup platform. Avoid if you are a beginner. Best for swing traders. Not suitable for scalpers.

More information on CMC Markets here

If you are located in the UK you can request a free no obligations brochure about CMC Markets and the latest products and services they offer by clicking here

Please note that here we are only giving an account of our experiences and readers comments/contributions, please do not take this as advice to open/close/avoid any firms - your experience might be different! Send us your comments by filling in the form below.

Comments Date
    By sd2009-02-27 01:38:54

it is very good company but security point of view is not proper
    By sally farmer2008-12-24 05:45:47

They take much more than the commision they advertise. It/s supposed to be 2pts on the uk ftse but if you watch your blotter you will see it is much more like 5 points per trade and even mopre sometimes, though it is true that rarely they only take two. I had to give up trading due to the expense. they will also start cancelled orders or use your stop to continue a bet you think has been stopped out so watch out when trading with these people. I can quite see why they don't need to hedge. They make sure you lose
    By Trader2008-11-20 15:36:47

Charting is now changed. ProRealtime was great and now they created their own, very limited and buggy version. No more backtesting or creating own indicators. Software is really limiting trading. It will consume your computers resources and freeze if you do not know how to change the Java that comes with the platform to more robust version. You can have only a very limited number of indicators to charts or you need a supercomputer. Stops will be hit if price is close enough (a few pips). Market price normally fair, sometimes 1 pip slippage. Help desk provides standard answers but normally do not answer the question or solve problems. Normally they have not even heard about similar issues (ie. software freeze and memory leak) or they are working to solve the problem (year after year). CMC Plus is not open for everyone. They do not even tell the criteria who will get that service (that is bad marketing). I use CMC Markets until I find more reliable company. They have all the potential to be number one, but somehow I have a feeling that they only wait to get your money so why put any money to make a more realible platform and service as most people will loose anyway?
    By Cheddar2008-08-10 12:21:14

I got a call, which I missed then an e-mail, then 15 mins later they closed a trade at exactly my fund value less 10% (presumably that was their 'cretins' fee; they are welcome to the £210). I'll never darken their door again.
    By Linda2008-02-15 16:17:27

CMC has all the features you would expect but no free level 2 with CFD's as per IG. Good for day trading the index as I can trade fast direct from the chart with one click, save my settings & trend lines etc. I can also instantly flick between 1 min and 5 min charts to see if they are both giving the same signal. CMC also has a SMI indicator which I use and can't find on any other site. It is a stochastic with an additional momentum input so four settings instead of three. I prefer CMC now to any of the others but takes a bit of getting used to.

CMC also has good news flow which pops out automatically onto whatever site you happen to be on when a significant announcement is made...so latest oil inventory figures or non-farm payrolls or profit warning will be flagged up instantly. Never ever had a connection/trade problem with CMC.

    By Steve2008-01-19 08:41:20

I've use CMC marketmaker, IG & Man spread betting. CMC far superior imo with ability to move quickly in and out of multi preset windows but does not have access to as many smallcaps & aim as IG & Man who offer any over....I believe £15M M/cap. I very seldom trade aim so not a problem. CMC much better for US markets and commodities. CMC good live chart package - Man 15min delayed - can't remember IG's. CMC gave me faster dealing....never had a problem slippage when closing as I did occasionally with Man & IG. I would suggest you think about the size of companies you want to deal in and phone CMC to see if they provide for them; not sure but I think you maybe limited to SETS & SETSmm.

    By CFDumbMoney.blogspot.com2007-11-30 16:50:38

Great infomercial -- what sucks big time is the fact that CMC Markets only offers a very limited number of silver stocks. Coeur, a HUI component, should be a given.
    By dave2007-05-19 13:03:21

Been with CMC for around 5 years now and have had no major problems (in the last couple of years!). I have found their after sales care to have really improved and they now have a 24-hour help desk that I have never had any problems getting through to... unlike the CMC of old. I do hold other accounts and tend to trade off the best spread but I find their charting and CMC PLUS tools very helpful for my analysis, a real step ahead of the competition in that respect. Despite the fact they have widened their spreads on equities they are still cheaper than any of their competitors so am still very happy to be trading with them.

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