Curiosities about CMC Markets
Founding and Growth
CMC Markets, founded in 1989 by Peter Cruddas with just £10,000, has grown from a small forex trading firm into one of the leading global derivatives brokers. Operating in over 70 countries, it offers innovative online trading solutions and unparalleled market access.
The name CMC originally stood for “Currency Management Corporation.” Today, it operates as one of the world’s largest providers of online derivatives trading, including CFDs and spread betting.
Founder’s Background
Peter Cruddas, the son of a Smithfield market porter, left school at age 15 to work as a telex operator for Western Union. He established CMC Markets in 1989 and remains a significant figure in the company. Cruddas owns a large majority stake in the business, having sold 10% to Goldman Sachs in 2007 for £140 million.
Cruddas is also a notable philanthropist, being the largest donor to The Prince’s Trust and a Global Benefactor for The Duke of Edinburgh’s Award International Association.
Corporate Operations
- Global Reach: CMC operates in countries including the UK, Australia, Germany, Singapore, Canada, and New Zealand.
- Technology Leader: It pioneered innovations such as the “rolling cash bet,” allowing a closer alignment of spread betting prices to underlying markets. Rolling cash bets involve the financing element being charged separately to the account each night so the price of the spread bet is much closer to the underlying market. Many other firms have since followed suit.
- Client Base: The company serves thousands of active clients, with a reported annual transactional turnover exceeding £2 trillion.
Challenges and Restructuring
CMC Markets has faced challenges, including a pre-tax loss of £15.1 million in 2009 due to restructuring costs and goodwill write-downs. The financial crisis led to significant staff redundancies and office closures but prompted a leaner operational structure.
Recent years have seen profitability return. For example, in 2014, a £4 million loss turned into a £32.8 million pre-tax profit, and the company distributed a £12 million dividend, its first in six years.
Interesting Policies
- Employee Trading Restrictions: Employees are not allowed to trade personal accounts. This policy stems from Peter Cruddas’ belief in avoiding conflicts of interest.
- Hedging Practices: CMC has evolved its approach to hedging client trades, adopting a more active policy to manage risk effectively.
Acquisitions
In 2007, CMC acquired Digital Look, a financial information portal founded by Mark Pritchard and Andy Yates. Digital Look provides tools, data, and research for private investors and traders.
Recent Developments
CMC Markets has continued to invest in technology, launching new platforms and expanding its institutional services. The company is now publicly listed on the London Stock Exchange (ticker: CMCX), providing additional transparency into its operations.
As of recent financial reports, the company manages substantial client funds and continues to expand its market share globally.
