NCM Investment Secures FCA Approval in UK
NCM Investment, a financial brokerage headquartered in Kuwait, has recently gained authorization from the UK's Financial Conduct Authority (FCA), operating under the name NCM Financial UK Ltd. This authorization marks a significant milestone for the firm, enabling it to expand its services into the UK market while adhering to FCA's stringent regulations on financial operations and consumer protection.
Key Details:
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FCA Authorization: With the FCA's approval, NCM Financial UK Ltd is now permitted to engage in various financial activities, including trading in FX, commodities, precious metals, CFDs, and more. Clients in the UK are also covered by the Financial Services Compensation Scheme (FSCS), providing an additional layer of financial security.
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Consumer Protection: Customers who experience issues with NCM Financial UK's services can file complaints with the Financial Ombudsman Service, ensuring consumer protection and accountability.
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Global Expansion: NCM Investment continues to grow its international presence with operations in Jordan, Turkey, Malaysia, and the UAE, aiming to offer comprehensive financial services to a broader audience.
FCA's Recent Actions:
In the first quarter of 2024, the FCA mandated the modification or withdrawal of 2,211 financial promotions, primarily targeting the retail investment and lending sectors, which accounted for 85% of interventions. The authority also reported 5,722 cases of potential unauthorized activities and issued 597 alerts, 11% of which were related to clone scams, where fraudsters impersonate legitimate firms.
Concerns Over Trading Apps:
The FCA is scrutinizing trading apps, raising concerns that digital engagement practices (DEPs) may encourage excessive risk-taking among investors. A study using an experimental trading app revealed that features like push notifications and prize draws increased trading frequency and risk-taking by 11% and 12%, respectively. This impact was particularly pronounced among individuals with low financial literacy, women, and those aged 18-34. The FCA emphasizes the need for trading apps to design services that promote informed investment decisions under the Consumer Duty guidelines.
Conclusion:
NCM Investment's FCA authorization underscores the firm's commitment to meeting regulatory standards and expanding its global footprint. Meanwhile, the FCA remains vigilant in ensuring that financial services operate transparently and responsibly, especially in the rapidly evolving digital trading landscape.
The Australian Securities and Investment Commission (ASIC) has banned Pedro Eduardo Sasso, the sole director of Maxi EFX Global AU, trading as EuropeFX, from serving as a director or controlling a financial services entity for five years. The decision highlights serious governance concerns within the company's operations.
ASIC Ban Details
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Regulatory Action: ASIC's decision to ban Sasso was finalized on May 6, following the Administrative Appeals Tribunal's (AAT) rejection of his appeal on May 8. Sasso's request for a stay and confidentiality orders was also denied by the AAT, solidifying the ban.
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Background: Sasso's tenure as a director at EuropeFX began on March 28, 2018, and ended on September 20, 2018. Since April 30, 2019, he has served as the company's sole director. EuropeFX, as a corporate authorized representative (CAR), provided retail clients access to over-the-counter (OTC) derivatives, such as contracts for differences (CFDs), issued by Union Standard International Group (USG).
USG's Closure
Union Standard International Group (USG), an Australian financial services licensee, was a key provider for retail FX and CFDs trading until it entered voluntary administration in 2020. The company's Australian Financial Services (AFS) license was subsequently suspended and canceled, leading to its liquidation.
ASIC's Concerns
ASIC determined that Sasso failed to exercise adequate oversight of EuropeFX's operations and neglected to implement measures to address operational issues. He did not supervise offshore activities effectively, leaving significant gaps in the company's management structure.
- Regulatory Statement: “ASIC found that it has reason to believe Mr. Sasso is not competent to act as an officer of a financial services business nor a fit and proper person in this respect and should be banned from performing this function for a period of five years,” stated the regulatory announcement.
EuropeFX's Global Impact
The repercussions of this decision are not limited to Australia. EuropeFX's Cyprus unit also renounced its license at the end of 2021, reflecting broader challenges facing the company.
CMC Markets, a publicly traded online trading platform (LSE: CMCX), announced today that its first-quarter performance for fiscal year 2025 (FY25) aligns with management expectations. The company is on track to achieve its projected net operating income of £320–360 million for the full year.
CMC Markets Projects £360M Revenue Potential
In its latest trading update, CMC Markets reported steady progress in its institutional and business-to-business (B2B) strategy, highlighting the recent partnership with fintech giant Revolut. The initial onboarding of Revolut clients is underway, with some clients already actively trading on the platform.
The company emphasized its focus on cost efficiency and profit margin expansion, particularly in institutional and B2B segments. Management reaffirmed its guidance for FY25, projecting net operating income between £320–360 million on a cost base of approximately £225 million, excluding variable remuneration and non-recurring charges.
Further details on the Revolut partnership and its performance will be provided during the half-year results announcement in November. The H1 2025 pre-close trading update is scheduled for October 9, 2024.
Revolut Partnership Enhances Institutional Strategy
CMC Connect, the institutional arm of the UK-based broker, announced its collaboration with Revolut in mid-June. This partnership involves integrating multiple APIs to enable fintech customers to access CMC's trading platforms seamlessly through the neo-banking app. The strategic move aims to enhance user experience and broaden market access.
Sustaining Strong Performance
The latest trading update follows CMC Markets' report of its highest net operating income since the onset of the COVID-19 pandemic for the fiscal year ending March 31, 2024. The company reported a 52% increase in adjusted pre-tax profits, driven by client trading activities and strategic diversification initiatives. Net operating income rose 15% to £332.8 million, with trading net revenue up 11% at £259.1 million. This strong performance was evident across both retail and institutional segments, with the latter contributing increasingly to total net revenue.
CMC Markets CEO, Peter Cruddas, stated, “Over the past year, a recovery in client trading, combined with our diversification strategy through B2B technology and an institutional-first approach, has delivered strong growth and opened up many opportunities for the company around the world.”
However, investing net revenue saw a 10% decline to £34.0 million, largely due to the depreciation of the Australian dollar.
Leadership Changes
Susanne Chishti announced her decision to step down as a Non-Executive Director at CMC after over two years in the role. According to a June statement, she will continue until the end of the Annual General Meeting scheduled for today, July 25, 2024.
Financial Performance and Share Buyback
IG Group Holdings (LON: IGG) reported a significant decline in its financial performance for the fiscal year 2024, ending on May 31. The pre-tax profit dropped by 11% year-over-year to £400.8 million, while the adjusted figure decreased by 7% to £456.3 million. After accounting for taxes, net profit fell by 15% to £307.7 million, with the adjusted figure declining by 12% to £350.3 million.
In response to the challenging financial landscape, IG Group has expanded its share buyback program, allocating an additional £150 million, expected to be completed by January 31, 2025.
CEO Breon Corcoran stated, “I’ve identified areas requiring change. We have lots of work to do to take IG to the next level and address the challenges we face.”
Revenue Decline and Market Dynamics
The London-based company's total annual revenue stood at £987.3 million, marking a 3% decrease compared to the previous year. The broker's annual net trading revenue fell by 10% to £844.9 million due to reduced trading activities and less volatile markets. The total active clients on the platform dropped to 346,200 from 358,300, although the company added 69,900 new traders, a 4% decrease.
However, like many companies in the financial sector, IG Group benefited from rising interest rates, with net interest income soaring by 76.2% to £142.4 million, compared to £80.8 million the previous year.
Tastytrade's Strong Performance
On a positive note, IG Group's US unit, tastytrade, reported a 23% increase in revenue, reaching a record $251.8 million (£200.6 million). Trading revenue for tastytrade rose by 10% to $160.1 million, while interest income grew by 53% to $91.7 million.
Maintaining Guidance and Future Outlook
Despite the decline in profits, IG Group maintained its guidance for the fiscal year, with adjusted profits before tax margin within the mid-to-high 40s range at 46.2%, slightly down from the previous year’s 48%. Basic earnings per share were 79.4 pence, a 9% decrease from the previous year, while the adjusted figure fell by 5% to 90.3 pence. The company will distribute a dividend of 46.2 pence per share, higher than the 45.2 pence dividend in FY23.
Corcoran emphasized, “We operate in a competitive industry landscape that is changing rapidly. We must move at pace to get closer to our customers, give them the products they want more quickly, enhance efficiency, and add scale to win. My initial priorities are to increase client centricity, accelerate product velocity, and develop our culture to increase ownership and accountability.”
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