(Adds IG Group comment, updates shares)
By Noor Zainab Hussain
Dec 14 Spreadbetting group CMC Markets Plc
said on Wednesday it was considering future options for
its business after Britain's finance watchdog proposed
tightening regulation of the 3.5 billion pound ($4.4 billion)
industry where most retail investors lose money.
The Financial Conduct Authority said last week it had found
evidence of poor conduct across the market over the past six
years and proposed changes, including a cap on use of leverage
in betting in some cases.
Sky News reported on Tuesday that CMC could move its
headquarters and its London-based contracts-for-difference (CFD)
operations to Germany, where proposed new rules on spreadbetting
are less draconian. (bit.ly/2hJZN1o)
CMC was set up nearly three decades ago by Peter Cruddas,
its current chief executive who is also one of the City of
London's most prominent supporters of Britain's exit from the
"CMC will consider all options open to the business to
ensure that shareholder value is delivered whilst continuing to
offer the highest levels of customer protection," the company
said in an emailed statement to Reuters.
"Until CMC has finished discussions with the UK and German
regulators as part of the consultation process the board is not
in a position to make any comment on the outcome of its review,"
CFDs allow investors to bet on both the direction of a share
price, currency or other financial product and the extent of the
change in price.
The industry is regulated by European Union rules which have
no caps on leverage. That means investors can take out bets that
are far larger than their initial outlay, offering greater
potential returns but also running the risk of huge losses.
France has already moved to ban digital advertising of CFDs
and the Netherlands is considering a similar measure. Belgium
has banned CFD trading, Cyprus has issued a warning to retail
currency brokers and Germany has also announced new rules to
CMC, which listed on the London stock market in February,
has said that it welcomed a more balanced approach by German
CMC's rivals include IG Group Plc, Plus500
Denmark's Saxo Bank and FXCM Inc.
Sky News also reported that IG Group's Chief Executive Peter
Hetherington was in Germany on Tuesday to talk with BaFin about
"The UK has been IG's home market since the company was
established in 1974, and we have absolutely no intention to
change this," IG's Head of Investor Relations Kieran McKinney
Shares in CMC, IG and Plus500 all dropped more than 30
percent on Dec. 6, after the UK watchdog's announcement.
CMC's shares rose more than 3 percent early on Wednesday in
reaction to Sky's report. By 1249 GMT they were up 1.6 percent
at 96.5 pence.
($1 = 0.7899 pounds)
(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Jane
Merriman and Susan Fenton)