Leading UK online broker CMC Markets Plc (LON:CMCX) has announced a new stockbroking partnership with Australia and New Zealand Banking Group Ltd (ANZ). The transaction will result in CMC becoming the second-largest stockbroker in Australia by both number of clients and trades executed.
The move by CMC Markets highlights recent moves by leading Forex, CFD and Spreadbetting brokers to diversify their customer and revenue base, both from a product perspective (stocks, ETFs, bonds…), as well as geographically. CMC has been active building its presence down under, recently adding Andrew Wood as Business Development Manager in its Sydney office.
The Australia and New Zealand Banking Group Limited, commonly called ANZ, is the fourth largest bank by market capitalisation in Australia, after the Commonwealth Bank, Westpac Banking Corporation and National Australia Bank.
Highlights of the transaction:
- Following a transition period, CMC will service over 500,000 ANZ retail stockbroking clients under the ANZ Share Investing brand.
- CMC will provide leading technology, customer service and execution via an ANZ-branded stockbroking platform.
- Gross revenue received from CMC’s stockbroking business is projected to increase by approximately A$40m.
- Leverages the scalability of CMC’s existing best-in-class stockbroking technology, providing ANZ retail stockbroking clients with access to leading technology, customer service and execution via an ANZ-branded stockbroking platform, which includes full integration with ANZ’s wider product offering.
- Long term agreement with high-quality Australian institution, which includes a commitment by CMC to work with ANZ to bring new and innovative features to ANZ retail stockbroking clients.
Peter Cruddas, CMC Markets
Peter Cruddas, Chief Executive Officer of CMC Markets said,
I am delighted to announce a significant transaction for the CMC Group which will result in our Australian stockbroking business becoming the clear number two online broker in Australia. ANZ is a high-quality partner with whom we have an excellent relationship and this transaction demonstrates their confidence in CMC’s technology capability, the quality of our people and our commitment to Australia. I particularly look forward to welcoming ANZ staff as part of the CMC team in due course.
The transaction is not subject to any regulatory or shareholder approval.
Overview of ANZSI
The ANZ Share Investing (“ANZSI”) stockbroking business is the second-largest in Australia and has over 500,000 clients with deep and longstanding relationships with approximately 110 intermediaries and partnerships with three major financial institutions.
Transaction overview
CMC has signed an agreement with ANZ to service the entire ANZSI client base by September 2018 following a transition period, with ANZSI clients contracting with CMC. CMC will provide these clients with leading technology, customer service and execution via an ANZ-branded stockbroking platform. CMC will charge ANZ a fixed price per trade executed. CMC has also committed to work with ANZ to bring new and innovative features to ANZ retail stockbroking clients, to ensure that these clients, together with CMC’s other clients, are provided with a market-leading offering.
This is an important transaction for CMC and represents an opportunity to expand its presence in Australia. The increase in volume anticipated from the transaction means that staff numbers are expected to increase in Sydney with the majority of these roles being filled by existing ANZSI staff. Due to the scalability of CMC’s platform, the forecast cost increase will be significantly lower than the revenue increase from the additional trading volume.
During the transition period, CMC will work with ANZ to provide full integration of the platform with ANZ’s wider product offering, including margin lending, internet banking and integrated Grow app in order to maintain a seamless client experience. As CMC continues to invest, evolve and enhance its platform we look forward to offering our existing clients a market-leading options solution and the ability to trade in international equities.
The complete announcement of the partnership can be seen here.