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Strategy framework

Our strategic objectives

The Group has five strategic objectives underpinning medium term revenue growth for the business.

Increase the client base in established markets

Opportunity

The established markets of the UK, Australia and Germany generate a significant part of the Group’s revenue, and given the size of the markets, they also offer the greatest absolute growth opportunities. This means that we continue to focus on developing brand and product awareness with the aim of becoming the choice provider to new clients in these regions and provide the premium proposition required to attract clients from competitors.

Progress

  • Strong growth in the UK, net revenue increased by 30% and active clients were up 12%.
  • Maintained number one market position in Germany.
  • Now number one to high value clients in Australia.

Expand into new markets and grow developing regions

Opportunity

New regions and developing regions offer an opportunity for revenue growth with marginal additional cost given the scalability of the business. Markets where CMC currently operate but have a small market share have received a focus on expansion opportunities, and new regions where CMC has no presence but the potential client base exists are regularly reviewed and offices are being considered where appropriate.

Progress

  • Opening of Poland and Austria offices.
  • 70% growth in the value of client trades in France.
  • A number of other markets currently under review.

Maintain a strong pipeline of new products and developments

Opportunity

Diversifying the product offering to attract existing clients to trade more with the Group and broaden the appeal to a wider potential client base.

Progress

  • The release of Countdowns in July 2015 has been a success and the release of a wider binaries offering in April 2016 means a more complete offering for our clients.
  • Other products are currently under development, with a strong pipeline to be delivered in the coming financial year.

Implement digital solutions to improve efficiencies across the client journey

Opportunity

It is recognised that digital and mobile channels present opportunities for the Group to attract new clients and retain existing clients more efficiently by adopting a highly digital approach to the client journey.

Progress

  • Investment in the digital marketing team throughout the year.
  • Focus on driving demand through online and mobile acquisition channel activity.
  • Focus on conversions through new websites and onboarding improvements.
  • Focus on retention and reactivation through sophisticated eCRM.

Establish the business as a key player in the institutional sector

Opportunity

Strong opportunity to offer our award winning platform to other institutions, through white label (branded) and grey label (unbranded) propositions.

Progress

  • Full Next Generation institutional offering now available and new team established.
  • Existing partners successfully migrating to the Next Generation platform and new partners onboarded.
  • Strong pipeline of opportunities.
  • Capabilities also developed enabling institutions to electronically connect to CMC platform (API connectivity).

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 our clients 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.

Progress

We have continued to develop the Next Generation trading platform to respond to our clients’ needs. Increased recruitment onto our Sales Trading desk has enabled the business to manage and support our top-tier client base and to encourage acquisition of other high value traders from our competitors. Winning 21 awards globally last year including Highest Overall Client Satisfaction from UK Investment Trends combined with the Best Spread Betting platform from the ADVFN International Financial Awards gives clear confirmati on that we are delivering a service that offers clients exactly what they want. For the sixth consecutive year, our Australian stockbroking business has been awarded the CANSTAR national award for ‘Outstanding Value Online Share Trading’.

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.

Progress

During the year we added over 6,500 new instruments, bringing our total instrument offering over 10,000 global products, all of which can be traded both online via a desktop and on the go via our range of advanced mobile apps. New usability features, including module linking and inbuilt search functionality have also made a significant impact on how clients navigate the trading platform features. The introduction of GSLOs (Guaranteed Stop Loss Orders) has proved to be a popular new Risk Management tool. In addition to all these improvements we launched brand new products in the form of Countdowns and binaries. Our continual investment into enhancing the Next Generation technology on both web and mobile has been one of the driving forces behind another year of industry recognition. Last year CMC Markets won the prestigious UK Financial Services Provider of the Year from Shares Awards. This is the fourth time we have won this award in the last five years and our third in succession. We were also honoured to win the Best Mobile/Tablet App and Best CFD Provider at the same awards.

Technology and operational excellence

Technology and operations has always been a 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.

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 continues to grow. The rising general threat from cyber-attacks and breaches has led to an increase in spend in this area with a number of new contracts and initiatives this year to ensure CMC has the right technology in place to protect its business, 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 volumes grow.

Trading risk management

Part of the success of CMC Markets 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.

Progress

Enhancements to our trading tools during the year have further improved the returns of our highly automated transactional based risk management strategy. This has helped deliver improved daily average revenue, lower revenue variability and a lower percentage of loss days than the prior year. 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.

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 x). The Group’s liquidity position has improved during the year (see Financial Review, page x) 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 determined to deliver on our promise to our clients. The flat management structure and cross-departmental collaborative environment encourage knowledge sharing, ideas generation and rapid delivery.

Progress

Our people are core to everything that we do and we continue to ensure that we attract and retain the best talent available; our continuing commitment to our people is described in more depth in Corporate Social Responsibility.

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