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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 offer the premium proposition required to attract clients from competitors.

Progress

  • Although marketing expenditure increased for the year, the impact of the higher spend was lower than anticipated with active and new client numbers broadly flat in established markets
  • Increase in primary market share in the UK
  • Maintained number one market position in Germany
  • Number one provider to high value clients in Australia

Priorities for 2017/18

  • Develop platform further to maintain regulatory compliance in the UK and Germany
  • Continue to focus on excellent client service
  • Continue to attract high value business

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

  • Strong performance from our Polish office in its first full year
  • Continuing improvements in the performance of the French office
  • China education entity incorporated

Priorities for 2017/18

  • Open Shanghai office during the first half of 2017/18
  • Continue to invest in Polish office
  • Continue to investigate opportunities in new regions

Maintain a strong product offering

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.
Ensuring that the product offering is at all times compliant with regulatory change.

Progress

  • Full digital 100 offering released in April 2016
  • Knock-Outs launched in October 2016 in Germany
  • New account type launched in France in response to regulatory change

Priorities for 2017/18

  • Release HTML5 platform to enable better flexibility in the future
  • Deliver platform changes to facilitate ongoing regulatory compliance in our regions of operation

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

  • Strong focus on mobile marketing efforts
  • Continuing improvements to websites and client journey
  • Initiatives have yet to feed through to improving cost per acquisition

Priorities for 2017/18

  • Focus on acquisition of experienced clients
  • Improve the Group’s marketing capabilities through enhanced data analytics
  • Develop and refine the client journey, including accommodating regulatory change

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 as well as the API offering (electronic connectivity to the CMC Markets platform for institutions).

Progress

  • First full year of the institutional team
  • 82% growth in the value of client trades derived from institutional business and 38% growth in net revenue
  • Continued development of API offering
  • Signed stockbroking agreement with ANZ Bank

Priorities for 2017/18

  • Release FX Direct Market Access
  • Develop the Australian stockbroking offering in readiness to migrate ANZ Bank clients

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.

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.

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.

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.

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.

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.

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.

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