ESMA Restrictions Drag Down ICM Capital’s 2019 Revenue

ICM Capital, a spot FX and CFDs market maker, has published its annual financials ending on December 31, 2019, showing a significant loss in its revenue and ended up in losses.

The revenue of the company for the mentioned period dropped to £2.56 million from the previous year’s £7.2 million, a year-on-year decline of 64 percent.

Despite a gross profit of £1.73 million from the businesses and another £3.02 million in income from ‘other’ sources, the company ended up in a net loss of £383,404 due to the hefty administrative expenses of £5.25 million. However, the administrative costs went down from the previous year’s £7.19 million.

ESMA Restrictions Are Harsh for Brokers

The brokerage operator highlighted the European Securities and Markets Authority (ESMA) restrictions imposed on the trading businesses in 2018 as one of the key reasons behind the slump of its business.

“[The ESMA] a set of restrictions on contract for differences (CFDs) offering in March 2018,” ICM stated. “As a result, the Company’s retail business was negatively impacted. The ESMA restrictions have been confirmed as permanent and retail businesses remain lower as a result.”

The fresh rules of the European regulator include restrictions on marketing and the distribution of CFDs to retail investors. Other brokers were also hit by these restrictions.

As a result of this, ICM Capital is now shifting its focus more towards onboarding institutional clients. Additionally, the company revealed that it will launch new products this year to provide share dealing services.

Furthermore, the FCA-regulated company discussed the implications of Brexit on its business and is not expecting any significant impact from that as its operations are concentrated in the United Kingdom, the Middle East, and Asia.