CMC Markets shuns churn and burn to focus on a new breed of clients.
Financial spread betting has been surging in recent years, but there were fears that new EU regulations might put a stop to that. The rules have certainly changed the game, but spread betting firms are finding ways to adapt.
That was the message from Peter Cruddas, boss of CMC Markets as he discussed how the new rules were changing their business model. The days of ‘churn and burn’ in which spread betting companies focused on new customers to maintain growth, he said, were coming to an end.
Instead they would be focusing more on high value and more experienced investors.
They call it Project Tuna – a programme focused on what they describe as the ‘tastiest fish’ in the sea. It will target wealthier investors who understand the risks they are taking and are willing to invest larger amounts.
The new EU regulations initially came into force because thousands of investors were using structures they didn’t fully understand and, in some cases, gambling money they couldn’t afford to lose.
Project Tuna is CMS’s attempt to widen its scope to focus on more lucrative customers and it appears to be working. The number of active customers is falling but average spend is rising.
They are also focusing on another untapped market – female traders. More and more women are getting involved with investments and online spread betting is one of their favourite targets.
They are launching an informal female traders network for customers at every level from beginners to more experienced professionals. A series of informal events will attract new customers and further widen their pool of potential customers.
As so often, new regulations see companies adapt and move their approach forwards. Business models are changing and firms are becoming more proactive in the way they approach their customers.
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Tom Cropper is a financial journalist with work which has appeared in titles such as the Guardian, Euromoney and many others.