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Strategy framework

Our strategic objectives

During 2019 changes to the industry and market conditions have led to strategic initiatives being revisited. This has resulted in a focus on three core initiatives which the Group believe will continue to unlock future value and continue to support diversification through the use of our technology.

During 2019 significant progress was made against the existing five strategic initiatives:

Established Markets

Initiative and priorities

  • Continue to grow premium client base.
  • Increase proportion of revenue generated from premium clients.

2019 progress

Due to regulatory changes, the internal classification of premium clients has become less relevant. However, the focus on client service to acquire and retain clients has been evidenced through independent surveys:

  • UK: first for overall client satisfaction1
  • Australia: highest client satisfaction in 13 out of 15 service elements2

Moving forward

Given our market position and scale of our client base, the UK, Australia and Germany continue to be a focus for growth.

Geographic expansion

Initiative and priorities

  • Establish Middle East office.
  • Continue to look for new market opportunities.

2019 progress

  • Middle East office. approval in principle received from local regulator. This will be an institutional presence only.

Moving forward

Given the ability to either expand geographically through institutional relationships or through having a digital marketing presence, going forward there is less of a focus on expanding our physical presence in other regions.

Maintain a competitive and compliant product offering

Initiative and priorities

  • Changes to platform to ensure regulatory compliance in UK and Europe.
  • Equities direct market access (“DMA”) for institutional clients.
  • Launch of MT4/5.

2019 progress

  • July 2018: release of changes of platform functionality to ensure regulatory compliance in UK and Europe.
  • H1 2019: Equities DMA released.
  • Q3 2019: MT4 released.

Moving forward

All major product releases required for achieving growth in our established markets and institutional offering have been completed. Future focus will be on smaller, fast-to-market additions to the platform such as baskets.

Digital initiatives

Initiative and priorities

  • Continued investment in our data science capabilities to generate improvements across the end-to-end client journey.
  • Enhancement of our onboarding and retention processes to improve the client experience across all touch points with CMC.
  • Investment in brand positioning for professional and premium clients.

2019 progress

  • Continued to build out our marketing machine, which has driven increased efficiency of our on boarding.
  • Developed personalisation capability in our communication framework to aid on-boarding and retention.
  • Launched our “CMC Pro” proposition to provide professionals additional benefits of trading with CMC.
  • Invested in premium content publication for prospects and our clients called “Opto”.

Moving forward

The optimisation of our client journey from onboarding to retention continues to be essential to the growth and sustainability of the business.

Institutional offering

Initiative and priorities

  • ANZ Bank stockbroking white label implementation.
  • Growth in the institutional business backed by Prime FX and Equities DMA offering.

2019 progress

  • Delivery of ANZ Bank white label partnership on time and on budget.
  • The value of trades through the institutional business remained broadly the same as prior year despite weak market conditions. This however did mean revenue reduced by 33% to £20.9 million.

Moving forward

The institutional business continues to be an area that helps the Group to diversify and the channel also provides differentiation from many competitors.

Business enablers

The Group has six business enablers supporting the delivery of its objectives

Client service

Our ambition is to deliver an unparalleled experience to all of our clients, offering competitive pricing, products and trading capabilities that they expect.

CMC Markets continues to place the utmost importance on client service and the continuous delivery of fair outcomes to our clients through our behaviour, image, product innovation and internal culture.

2019 progress

We have continued to develop the Next Generation trading platform to respond to our clients’ needs as well as changing regulatory requirements.

Winning 34 awards globally last year including Highest Overall Client Satisfaction from UK Investment Trends and Best Online Trading Platform for the Shares Awards provides reassurance that we are delivering a service that offers clients exactly what they want.

Competitive product offering

CMC Markets continually invests significant resources in developing the Next Generation trading platform to ensure we stay at the forefront of the industry by constantly delivering the latest innovations. We monitor industry trends and engage extensively with our clients through numerous feedback mechanisms to ensure we regularly add new trading tools, additional products and new ways to trade.

2019 progress

A number of platform upgrades have been released throughout the year along with the release of a full digital 100 offering, Knock-Outs in Germany and a new account type in France.

This continual investment into enhancing our Next Generation technology on both web and mobile to deliver a competitive product offering is a driver on our continuing industry recognition.

  • - Best Online Trading Platform, Shares Awards 2016
  • - Best Forex Trading Platform, UK Forex Awards 2016
  • - Best Mobile/Tablet Application, Online Personal Wealth Awards 2016
  • - Best Platform Features and Best Mobile Phone/Tablet Platform, Investment Trends 2017 UK Leverage Trading Report

Technology and operational excellence

Technology and operations have always been key to the success of CMC Markets and this has won the business recognition as the leader in our industry for innovation and service. Our aim is to provide our clients with the ability to take ownership of their personal financial investments. Our platform has been built to provide complete control and flexibility.

2019 progress

We have continued to invest in infrastructure and technology to ensure the platform has the capacity to cope with increased demand as the business grows, including capital expenditure of £3.5m on new data storage hardware and software.

Protection from cyber-attacks continues to be a key area for the Group with a continual focus on protection for the business, our clients and platform.

Our investment in technology and operational processes allows us to expand with ease in the future, providing scalability, combined with exceptional dependability and speed, while driving down marginal costs as active clients and trading volumes grow.

Trading risk management

Part of CMC Markets’ success is our global trading risk management capability, dealing with high volumes of sophisticated multi-asset retail flow benefiting from a significant proportion of natural aggregation. Our strong capital and liquidity balances allow us to retain an element of net client portfolio risk, transferring the remaining risk through hedging to our external counterparties. This delivers a highly automated transactional based risk management strategy, allowing the business to deliver consistent and sustainable returns irrespective of underlying client performance and driving long term client engagement.

Risk appetite is controlled via strong governance and real time controls and oversight, within tightly defined risk parameters approved by the Board.

2019 progress

Continuing enhancements to our trading tools during the year have further improved our highly automated transactional based risk management strategy. The annual trends of lower revenue variability and a lower percentage of loss days have continued.

The risk management framework ensures net exposures are managed within asset class level notional based limits. The risk limits along with our regulatory requirement, broker margins and FX net open position levels are all computed and displayed real-time in the dealer dashboards.

Financial strength

We aim to maintain our secure capital and liquidity structure, ensuring that it is appropriate for the future growth and success of the business. This includes a long-term level of capital to withstand the demands of financial fluctuations in the markets and access to a healthy level of surplus liquid resources in line with the size of our business and the growth opportunities which exist.

2019 progress

The Group monitors its capital position on a real time basis. The Group’s capital position has increased compared with the prior year. (See Financial Review, page 45). The Group’s total available liquidity position has improved again during the year (see Financial Review, page 47) and the available credit facility demonstrates the robust liquidity profile of the Group. The facility provides additional capacity to support the Group’s strategy of maintaining excess liquidity to fund both growth and client trading peaks.

Our people

CMC Markets is committed to recruiting, developing, retaining and motivating exceptional people who are talented, innovative and focussed on delivering excellence.

The Group operates and encourages a collaborative environment, through knowledge sharing and ideas generation with a focus on quality and delivery.

2019 progress

Our people are central to our business and we aim to ensure that we attract and retain the best talent available; through competitive remuneration and a challenging and rewarding work environment. Our commitment to our people is described in more depth in Corporate Social Responsibility.

1 Investment Trends 2018 UK Leverage Trading Report (May 2018).

2 Investment Trends 2018 Australia Leverage Trading Report (December 2018).

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