Trading platform CMC sees higher profit on market volatility

Volatile markets boosted first-half profits at CMC Markets (CMCX.L) and the British-based trading platform said it expected the turbulence to continue amid high inflation, a weak pound and uncertainty over interest rates.

Stock market volatility as measured by the Cboe Volatility Index (.VIX) – known as “Wall Street’s fear gauge” – hit a two-month high in September, and volatility in sterling last week surged to its highest since the 2016 Brexit referendum after the British government’s fiscal plan alarmed investors.

A jump in interest rates across the developed world has also unnerved investors, sending them scurrying to the safety of the U.S. dollar.

CMC chief financial officer Euan Marshall said on Thursday the current market volatility was proving more prolonged than during the Brexit vote, and noted a particular pick up in foreign exchange trading in August and September.

However, he said the company was not seeing evidence of retail investors pulling out of assets.

CMC, which makes about 56% of its net trading revenue in the Asia Pacific and Canada and around 28% in Britain, said it expected half-yearly net operating income to come in at 153 million pounds ($173 million), compared with 127 million pounds a year earlier.

Its shares were up 5.8% to 236 pence at 0935 GMT.

The company said it had recently seen a slight shift in trading trends towards foreign exchange and indexes, after a focus on cryptocurrency contracts for difference and equities during the pandemic.

($1 = 0.8821 pounds)