Tory peer Peter Cruddas is considering whether to split his online trading business in two.
In what would be the biggest shake-up since its founding in 1989, CMC Markets is considering whether to divide its online investment group into a retail-focused trading platform and a leveraged operation, offering customers the riskier spread betting services that made his fortune.
The company makes most of its money from the leveraged financial betting business.
Peer: Online trading platform CMC Markets, founded by Tory peer Peter Cruddas (pictured), is considering whether to split into a retail-focused trading platform and a leveraged operation
However, City grandee Cruddas has been manoeuvring in recent months to expand the retail arm, which tends to carry less risk from market volatility and regulators.
CMC unveiled plans in June to set up a wealth platform, which will allow customers to manage ISAs as well as self-invested personal pensions.
Such a business would place CMC in direct competition with its listed rivals AJ Bell and Hargreaves Lansdown.
The company also struck a deal in September to take over 500,000 investing clients from Australian banking giant ANZ with combined assets worth around £25billion.
CMC’s board said on Monday that it was in the ‘very early stages’ of an ‘exploratory review’ around whether to divide the business.
The review is expected to begin before the end of this year and be completed by next June.
The admission followed press speculation regarding a possible split over the weekend. The shares were up 6.4 per cent, or 16.5p, to 275.5p following the news.
A division could be lucrative for Cruddas, 68, who aside from being CMC’s chief executive is its largest shareholder with a stake of just over 56 per cent. His wife, Fiona, owns a 3.1per cent stake in the group.
CMC saw its business boom during lockdown as small-time investors stuck at home decided to plough their money into the volatile markets.
However, the company warned in early September that the flurry of trading activity had slowed down as Covid lockdown restrictions eased, and as a result, its full-year revenues would fall short of expectations.
Since the warning, CMC Markets’s shares have lost around 34 per cent of their value, wiping over £240million off Cruddas’s personal fortune.
The billionaire baron, who also formerly served as co-treasurer of the Conservative Party, attracted controversy last year when he was elevated to the House of Lords by Boris Johnson despite objections by an independent commission due to his involvement in a ‘cash for access’ scandal in 2012 involving then prime minister David Cameron.
