CMC Markets Review

  • Minimum Deposit: $0
  • Products: Forex, Shares, Indices, Commodities, Cryptocurrencies

    77% of retail CFD accounts lose money

    CMC Markets is a UK-based global CFD and forex broker, regulated by multiple top-tier authorities including the UK FCA. CMC Markets has low forex fees, and there is no charge for most deposit and withdrawals options. The web and mobile trading platforms are well-designed, highly customizable and rich with features such as an advanced order panel. Research and educational tools are also wide-ranging and sophisticated. On the downside, stock CFD fees are high. The product portfolio covers only CFDs (forex, indices, commodities, shares, ETFs, bonds, crypto – except for UK clients). Customer service, while helpful, is available only 24/5 (from Sunday nights through to Friday night).

    Pros

    • Extensive range of offerings
    • Regulated by FCA (U.K.)
    • Emphasis on education & customer service
    • Research amenities are industry leading
    • Offers protection for client accounts
    Cons

    • Does not accept U.S. clients
    • Differences between Next Generation and MT4
    • High CFD spreads for certain indices
    • No back-testing or automated trading capabilities

      CMC Markets main highlights

      Country of regulationUK, Australia, Canada, New Zealand, Singapore, Germany
      Trading fees classAverage
      Inactivity fee chargedYes
      Withdrawal fee amount$0
      Minimum deposit$0
      Time to open an account1-3 days
      Deposit with bank cardAvailable
      With electronic walletAvailable
      Number of base currencies10
      Demo account providedYes
      Products offeredCFDs (forex, indices, commodities, shares, ETFs, bonds, crypto – except for UK clients)

      Pros Explained

      • CMC Markets offers clients one of the largest product catalogs available in the online forex brokerage community. As advertised on its website, clients can trade up to 10,000 instruments, which opens up many new opportunities, especially with longer-term portfolio managers.
      • CMC Markets is regulated by the Financial Conduct Authority (FCA #173730) which is one of the main regulatory agencies in the UK and is highly regarded globally for being strict in ensuring that market practices are fair for both individuals and businesses. Simply put, being regulated by a reputable government-backed agency goes a long way towards establishing the credibility of a firm. Traders accept the risk that is inherent in markets but they would also like the peace of mind knowing that their funds are not subject to risks outside of the ones that they are taking, such as counter-party risk. Additionally, segregated client funds are held in a number of U.K. and European banks so as to disperse risk further.
      • CMC Markets places an emphasis on customer service, which includes 24/5 telephone support with access to live brokers and a chat service. This, coupled with their educational offerings, buoyed them in the rankings. Being able to readily contact a broker is crucial for anyone engaged in the arena of online trading.
      • CMC Markets’ dedication to providing clients with top notch research is to be commended. It is comparable with the best that the online forex brokerage arena has to offer.
      • CMC Markets offers “negative balance protection” which has become a fairly important feature that most online brokers are offering these days. The catalyst was most likely the SNB event of January 15, 2015 that roiled the markets, especially the highly leveraged retail FX market. Additionally, CMC also offers guaranteed stop losses.

      Cons Explained

      • CMC Markets does not accept U.S. clients due to regulatory constraints, which precludes it from truly being considered a global broker. This would be a red flag were it not for the fact that the company is regulated by the FCA which, along with U.S. regulatory agencies (NFA, CFTC), is widely considered to be the preeminent regulatory body.
      • Differences exist between CMC Markets’ “Next Generation” platform and its MT4 platform in terms of spreads, commissions, and product offerings. Essentially, CMC’s web-based platform is the company’s de facto flagship offering and has far more functionality than does its MT4 white-label. This would not be as big of an issue were it not for the fact that MT4 is its only downloadable offering.
      • CMC Markets charges a much higher-than-average S&P ­500 spread (5 points) for CFDs and spread bets, which stood out on the index cost disclosures.
      • CMC’s Next Generation is not equipped with back-testing or automated trading capabilities, leaving MT4 as the only alternative for algorithmic traders.

      Fees

      Most of the trading costs at CMC Markets are charged through the spread which is competitive within the industry. The spread is also the way that CMC makes money, specifically through customer trades that “cross” the bid / ask spread. Guaranteed stop losses (GSLO) are available only on Next Generation at an added premium that is charged to your account. This cost is refunded In the event that the GSLO is not triggered. There is a commission charge that comes into play when one is trading individual shares and ETFs. This may be charged to your account directly upon order execution or added to the either side of the spread, depending on whether it’s classified as a CFD or spread betting account.

      Disclosure notes indicate that larger positions incur wider spreads but details are platform ­based, obscuring transparency. Advertised minimum spreads on widely traded major FX pairs range between 0.7 pips (EUR/USD, USD/JPY, AUD/USD) to 0.9 (GBP/USD) to 1.0 (USD/CHF), 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.

      A much higher-than-average five­-point S&P ­500 spread for CFDs 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 U.S., making it an unappealing trading instrument for most account holders. In contrast, the Nasdaq spread at 1.0 ­point and DJIA spread at 1.6­ points are closer to industry standard.

      CMC does not have a minimum deposit requirement for customers wishing to open a live account, but logic dictates that this amount will be subject to the margin requirements of the smallest trade size that the customer wishes to place. Clients with high account balances are eligible for premium services, such as higher trading leverage, a personal account manager, perks (rebates and rewards), priority access to new products, and segregated accounts.

      Aside from an inactivity fee of £10 (or its equivalent in the account’s base currency) per month for each live account with no trading activity in 12 months, and a market data fee for certain CFD shares, CMC does not charge any other non-trading-related fees.

      Trade Experience

      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. However, navigation is not as intuitive as some other platforms, which may be a function of all the features that are packed into this interface. Cryptocurrency CFD trading and spread betting is seamless, requiring no special interface or exchange, but relatively high average spreads could reduce client interest.

      The platform features advanced charting with 115 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.

      Next Generation has three basic order types with the option of attaching “take profit” and/or “stop loss” orders to them. Additionally, the trader can set an initial stop loss at the time of execution for market orders and then amend it to a guaranteed stop loss after execution. For pending orders, the trader can choose both guaranteed and/or trailing options when filling out the order ticket prior to execution.

      • Market – The simplest order where a trader signals that their trade request should be executed at the prevailing market rate.
      • Limit – A pending order where the entry is at a predetermined point below or above the prevailing market rate depending on whether it’s a buy or sell. The trader also has the option of selecting the expiration time of this order.
      • Stop – A pending order where the entry is at a predetermined point above or below the prevailing market rate depending on whether it’s a buy or sell. The trader also has the option of selecting the expiration time of this order.

      Markets and products

      CMC Markets offers clients one of the largest product catalogs available in the online forex brokerage community. As advertised on the company website, clients can trade up to 10,000 instruments, which opens up many new opportunities, especially with longer-­term portfolio managers. These include:

      • 330+ FX pairs
      • 90+ Indices
      • 12 Cryptocurrencies
      • 9000+ Shares and ETFs
      • 110+ Commodities
      • 50+ Treasuries

      Spreads are competitively low and all financial instruments, with the exception of individual shares, have specified margin percentages. CMC’s margin rates on shares “start from 20% on U.K. and U.S. shares. Different margin rates apply for large position sizes on shares, depending on which tier the position size falls under.”

      Education 

      CMC’s educational tools rank in the top-tier of what’s offered by competitors. An extensive trader’s library will get lower­-skilled clients up to speed quickly, though the 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, which is quite useful given Next Generation’s abundance of features.

      Introductory guides to trading the wide array of products offered are also available along with a section comprised of videos devoted to trading strategies. 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 previous programs.

      Overall, educational resources are impressive but the lack of a search function makes it harder to find less popular topics and leaves one with the impression that this section is poorly organized. The glossary is adequate.

      Security

      CMC Markets is regulated through the Financial Conduct Authority (FCA) under registration number 173730. The broker also takes steps to ensure client funds are not co-mingled with corporate funds, in accordance with the U.K. FCA’s client money rules. This ensures that client assets are protected in the unlikely event that CMC becomes insolvent by holding those funds in segregated accounts at regulated banks. Furthermore, these segregated funds are held in a number of U.K. and European banks so as to disperse risk further.

      Clients also have additional asset protection through the Financial Services Compensation Scheme (FSCS), up to £85,000, but no layers of private insurance, which is an omission, given CMC’s large industry footprint. Negative balance protection is now mandated under ESMA rules that went into effect in 2018. The broker’s dealing desk acts as the initial counter-party on all CFD trades and spread bets but pricing is automated through the platforms, reducing conflict of interest potential.

      CMC’s software security is aligned with the best that the industry has to offer. In addition to two-factor and bio-metric authentication, there is a timer that will log the user out of the mobile application if it is not being used.

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