2019 Best Online Brokers Awards
CMC Markets won an award in the following category:
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
CMC Markets is a well established and highly regarded UK Forex broker, founded in 1989. It’s listed on the London Stock Exchange, adding a layer of transparency to one of the largest CFD providers in the world. Clients can trade CFDs or place spread bets on a massive product catalog that features 300+ currency pairs and 200+ index/commodity markets. A comprehensive bond listing and five cryptocurrencies fill out the product roster, providing an overwhelming number of potential trading opportunities.
The broker offers average to competitive spreads that widen with larger trade and bet sizes. Those additional charges aren’t disclosed on the web site, making it harder for prospective clients to estimate bottom line costs. An impressive active trader rebate program is limited to professional clients, which requires a large account size and prior financial industry experience. In addition, new clients must choose between CFD and spread bet accounts, unlike many rivals who offer a single unified account.
Dedicated sites for professionals and institutions highlight their commitment to higher skill and commitment levels, but it would be nice to see higher level perks, including rebates and the free API interface, offered to retail accounts. Even so, all account holders gain access to guaranteed stop losses, free bank wire withdrawals and other advanced features, lifting the broker into the top tier in several review categories.
Huge product catalog.
Sophisticated order types.
High US index CFD spreads.
Limited security features.
No copy/social trading platform.
CMC Markets is regulated through the Financial Conduct Authority (FCA) under registration number 173730. They provide standard GBP 50,000 coverage through the Financial Services Compensation Scheme (FSCS) but no layers of private insurance, which is an omission, given their large industry footprint. Client funds are segregated from company funds and held in a number of UK and European banks. Negative Balance Protection is now mandated under ESMA rules that went into effect in 2018. The broker’s dealing desk acts as counterparty on all CFD trades and spread bets but pricing is automated through the platforms, reducing conflict of interest potential. Software security is standard but inadequate, with no two tier authentication process.
The proprietary Next Generation trading platform for web, tablet and mobile will please technically oriented clients wanting to upgrade from MetaTrader 4, which is also offered. It features advanced charting with 80+ indicators/overlays, 12 chart types and 35 drawing tools, highly customizable watchlists, client sentiment and a streaming Reuters feed. Charts can be popped out to build and optimize complex desktop layouts. Clients who want to study long-term trends will find price histories going back 20 years on major instruments. The platform also provides price projection and pattern recognition tools as well as a built in connection to the client-based trader’s forum.
Clients can choose between Next Generation and MetaTrader 4 for iOS and Android when picking a mobile platform. The homegrown app outshines MT4 in nearly all aspects but includes fewer features than the web version. For example, the number of technical indicators has been pared down to 40+ while charts have been optimized for mobile devices. Clients can build complex orders and generate customized alerts through push notification or email. The apps provide fingerprint ID entry, but this useful feature isn’t part of a two-tier authentication process.
CMC Markets shines in this category, with extensive research and analysis from in-house analysts and third party materials that include Morningstar quantitative equity research reports. Many resources can be accessed directly through the website while news sources can be filtered by region and asset class. However, it was tough to find many topics due to the lack of a dedicated search function or well-organized archive. The site also features a standard economic calendar.
Research and news integration between the web site and trading platforms is limited to poor, with many resources forcing the client to exit the platform and go a web page. For example, the highly useful CMC TV service provides regular video market commentary via platform link to YouTube but, inexplicably, is not listed, linked or streaming at the web site’s news and research section.
An extensive trader’s library will get lower-skilled clients up to speed quickly but technical and fundamental tutorials are beginner level and lacking in advanced instruction. A large share of educational resources is devoted solely to platform and software instruction, rather than trading strategy or execution. A healthy roster of online webinars, offered through a partnership with Trade With Precision, fills the need for advanced topics but there’s no archive of prior programs. Overall, educational resources are impressive but poorly organized, with no single listing or search function, making it harder to find less popular topics.
Next Generation provides a sophisticated order interface but no back testing or VPS capacity, forcing some account holders to use MetaTrader 4, which is inferior to the homegrown platform in other ways. CMC Markets offers no direct VPS service. The active trader rebate programs are available only to professional clients. The same holds true for an API interface that permits the use of more sophisticated trading platforms that support algo and automatic trading routines.
Client positioning data embedded within their proprietary software is an excellent feature but the lack of social or copy trading capacity limits its usefulness.
CMC Markets offers clients one of the largest product catalogs available, with 300+ currency pairs and 200+ index/commodity markets. They also offer more than 50 bond instruments, opening all sorts of new opportunities, especially with longer term portfolio management.
Cryptocurrency CFD trading and spread betting is seamless, requiring no special interface or exchange, but relatively high average spreads could reduce client interest.
Live accounts can be opened with no deposit, allowing new clients to test drive broker and software features not available on the demo platforms. Of course, accounts need to be funded to open and close positions. Free withdrawal through wire transfer is a welcome feature, uncommon among UK and European rivals. The premium for guaranteed stop loss execution is reasonable, given the account saving risk management it provides in volatile market conditions.
Commissions and Fees
Disclosure notes indicate that larger positions incur wider spreads but details are platform based, obscuring transparency. Clients must choose between Next Generation CFD and spread betting accounts that carry similar but not identical costs. For example, CFD shares carry a $10 minimum commission while spread bets have no commissions. Minimum spreads on major forex pairs look identical but the fine print reveals minor holding cost variations that could impact bottom lines. Legal disclosures also admit the two platforms can display different spreads for identical instruments. Margin and overnight holding costs are average to competitive. MetaTrader 4 is offered as an add-on or standalone account option but is limited to CFDs and has no share capacity.
A much higher than average five point SP500 spread for CFD and spread bets stood out like a sore thumb on the index cost disclosures. That spread is charged through all hours of the trading day, including local time in the USA, making it an unaffordable instrument for most account holders. In contrast, the Nasdaq 100 spread at one point and Dow 30 spread at 1.6 points are close to industry standard.
Contact options cover all the bases, with email for clients and prospective clients, 24/5 local phone support and comprehensive FAQ and support libraries. Chat waiting times averaged 30 to 40 seconds during several contact attempts. The broker also runs 13 satellite offices on 4 continents to support licensed operations in other venues. Twitter and Facebook accounts were filled with up-to-date comments and active client interactions.
What You Need to Know
CMC Markets offers an excellent fit for new and low-skilled traders, with free live accounts, useful educational resources and average-to-competitive spreads. It’s harder to recommend the broker for mid and higher level accounts without professional designation because they can’t access active trader rebates or the API interface. Conversely, professionals and institutions will find broadly attractive feature sets that make the service a perfect fit, except for the high price to trade SP500, CFDs and spread bets.
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