Alongside the Brexit concerns, the FCA's plans of regulatory changes to CFDs has intensified the pressure on UK Forex brokers. The CEO of CMC Markets has visited BaFin to discuss matters that were undisclosed. Will CMC Markets UK headquarters relocate to Germany?
17 December, AtoZForex – The UK-based brokerage CMC Markets is considering to shift its London headquarters if the Financial Conduct Authority (FCA) starts restructuring its regulatory framework. The idea of moving also came following BaFin's announcement not to impose limitations on leverage.
Advocates of Brexit have been urging the UK regulator to take a lighter approach towards the financial sector. However, last week the FCA undermined the idea that it could ease its regulatory requirements. Following FCA's CFDs leverage cut announcement, companies including CMC Markets, IG Group, Plus500, lost more than £1 billion of their market capitalization.
Will CMC Markets UK Headquarters relocate to Germany?
The executive board of CMC Markets led by its CEO Peter Cruddas has been deciding on some job cuts. Moreover, the top executives were seriously considering CMC Markets UK Headquarters relocation. If the brokerage leaves the City it would imply the loss of around 300 jobs. According to insiders, the potential place for shifting CMC Markets' headquarters is Germany.
CMC Markets will decide whether to undertake this step and move away from London in March. This is the period when FCA’s consultation should end. We reached out to CMC Markets in order to get additional insights on the case. The spokesperson from the firm told us the following:
"CMC notes the recent media coverage regarding the FCA consultation and the potential movement of CMC’s operations away from London. The Board of 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.
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."
BaFin's decision on limiting leverage
The announcement regarding the shift to Germany came after the German financial regulator BaFin reported its plans not to limit leverage offered to retail clients. Instead of limiting leverage, BaFin decided to concentrate on negative balance protection. It mentioned that providers not offering negative balance protection will not be able to provide their services in the country.
Some sources have shared that IG Group CEO Peter Hetherington visited Germany to talk with BaFin about the forthcoming regulatory changes. IG has also informed clients that it would need to strengthen trading accounts to keep the same access to the market under new changes proposed by the FCA.
In addition, the US-based FXCM has communicated to its clients that they support the UK regulator’s views on bonuses and profitability reporting. But the proposed changes to leverage will influence a lot of clients. Clients trading with UK brokers can share their views with the FCA until the 7th of March.
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