Institutional Leader - November

30 Nov 2020, 16:05

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Welcome to the final newsletter of 2020, a year which it’s fair to assume will be etched into all of our memories for a long time to come. The reality is that many businesses, industries and individuals have struggled, but with amplified market volatility and a resurgent interest in day trading, our sphere of finance has been well positioned to thrive. As a result, at CMC Markets we have been growing our client relationships, posted a strong first-half financial performance, and were admitted into the FTSE-250. Whether the current version of normal is only temporary or becomes something more lasting, the events of this year have made it clear that to succeed, businesses must be agile. We look forward to working with you in 2021 and beyond, regardless of the challenges we face next.

Corporate update

In October, the business released its first half pre-close trading update. The Group continued to build on the momentum gained in 2020, resulting in a strong trading performance across all areas of the business. Following the results in H1 2021, the Board is confident that net operating income will be towards the upper end of the current range of consensus. The news helped lock in recent gains for the share price and separately, we are delighted to announce that CMC Markets was admitted into the FTSE-250 index from the start of trade on September 21st.

Market insights & trends

By the time this newsletter is published, voting in the US Presidential election will be well and truly underway and there’s no escaping the fact that this is set to be a ballot like no other. Given the way markets fluctuated on the back of news that Donald Trump was being admitted – then discharged – from hospital at the start of October, volatility is likely to be exaggerated until the result is announced - and accepted by all concerned.

At a more granular level, the lower volatility that had returned in the summer began to abate in September. Our quants desk noted in particular that the NASDAQ saw one-month annualised volatility rise above the 12-month average. Silver displayed a similar pattern, whilst cryptocurrency NEO saw its popularity surge amongst traders, again with volatility being a key driver here.

Recent publications

In September, Group Head of Institutional, Richard Elston spoke to e-Forex Magazine on the subject of whether having direct access to classic Tier One liquidity was truly the Holy Grail for brokers. Whilst that may have been the case a number of years ago, the reality is the market has changed fundamentally with non-bank participants offering solutions that legacy players can no longer accommodate. Read the full article here.

Also in September, our Deputy CEO, David Fineberg was interviewed by FX Markets Magazine on the nuanced subject of market impact. There’s a real risk that some industry challengers aren’t giving this topic the credence it deserves, making it harder for counterparties to get trades filled in the manner they expect. Click here to read the full article.

October saw CMC Markets Institutional featured as the product provider of the month in eForex Magazine. This provides insight on a wide range of subjects including the latest technology developments and how these influenced the industry’s ability to respond to the liquidity crisis which emerged in the early days of the COVID-19 pandemic.

In history…

November 21st 1995 was the first time the Dow Jones 30 recorded a closing price above 5,000. Although at the time of writing the index is now sits at around five and a half times that level, those who reinvested dividends would be sitting on an almost 10-fold return. On the same day, gold traded at around $385/oz.

Regulation watch

On October 6th, the FCA announced that it was banning the sale of cryptocurrency related derivatives to retail clients ‘by firms acting in, or from, the UK’. The ban comes into effect on January 6th 2021. This only represents a very small part of our product schedule, but institutional clients who access our crypto liquidity remain unaffected by the move.

Events

CMC Markets Institutional co-sponsored Profit & Loss Latin America in mid-October. P&L events have been well regarded by many in the industry for finding a format that works well in a remote format.

Late October saw CMC Markets Institutional sponsor one of the Bloomberg Invest Talks series: A conversation with Henry Kravis. The Co-Chairman and Co-CEO of KKR discussed a range of key issues set to impact US and global markets in the coming months.

On November 12th & 13th, CMC Markets will be sponsoring TradeTech FX, Europe’s biggest Buy Side FX Conference. The event should have been held in Amsterdam but owing to the ongoing COVID pandemic, will now take the form of a virtual conference. Registration is free here and we will also be launching our white paper on the subject of ‘Does retail flow matter in the financial world?’.

November 18th sees the annual Finance Magnates London Summit migrate online. CMC will again be supporting the event and the team will be managing a virtual event booth during the day. Registration is here and if you’re attending, please visit our stand by searching for the 'CMC Markets Institutional' booth in the virtual lobby.

We have also been nominated for a series of awards at the summit, including Best Retail CFD Broker, Best White Label Solution and Best Multi-Asset Trading Platform. Voting for all members of the industry is now available here.

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