CMC’s segregated client money rose 65% while income on client funds fell

CMC Markets reported its strongest net operating income outside the exceptional pandemic year, but one of the most revealing movements sat below the headline growth. Segregated client money reached £1.149 billion at 31 March 2026, up from £694.9 million a year earlier. Income on client funds nevertheless fell from £24.0 million to £23.1 million. FXBrokers.ai calculates that the closing balance increased 65.4% while the associated income line declined 3.7%.[1][2]

The two figures appear contradictory only if a year-end balance is mistaken for the amount held throughout the year, and if every pound is assumed to earn the same rate for the broker. Neither assumption is justified. Client money arrives and leaves during the period. It sits in different currencies and arrangements. Market rates change. Some yield may be passed to customers. The £454.2 million increase therefore cannot be multiplied by a single public interest rate to estimate CMC’s earnings.[1]

The divergence is still consequential. Income on client funds was equal to 5.9% of CMC’s £392.6 million net operating income and 22.8% of its £101.3 million pre-tax profit. The line was not the dominant source of revenue, but it was large enough to move group profitability materially. Understanding why it failed to rise with the closing balance is therefore not an accounting curiosity; it is part of understanding the broker’s earnings sensitivity.[1][2]

The closing-balance ratio gives the wrong answer

Dividing £23.1 million of annual income by the £1.149 billion closing client-money balance produces 2.0%. Performing the same calculation for the prior year produces 3.4%. Those ratios might be described casually as yields, but they are not valid yields. The numerator covers a full year. The denominator is the amount present at one moment on the final day. If much of the balance growth occurred late in the year, the money had little time to contribute to the annual income line.[1]

The distortion can run in either direction. A broker could hold very high balances for most of the year and experience withdrawals just before year end, making income look unusually large relative to closing money. Or it could receive a surge of deposits in March, making income look unusually small. Only average daily—or at least average periodic—balances would align the stock of client money with the income earned during the same interval. CMC does not disclose that denominator in the annual report.[1]

Currency adds another layer. Sterling, US dollar, euro and Australian dollar balances can face different market rates and different customer terms. The gross yield available on short-duration placements can also change during the year. A single closing sterling total, translated from multiple currencies, cannot reveal the weighted rate actually earned. Nor can it show how much CMC credited back to customers or incurred in bank and operational costs.[1]

Client money is an obligation, not free corporate funding

Segregated client money should not be described as cash owned by CMC. It is held under safeguarding arrangements for clients and is presented separately from the company’s own funds. The economic opportunity arises because permitted placements can generate income while the broker fulfils the rules and contractual terms governing that money. The legal restrictions are not a footnote to the revenue model; they define which balances can be placed where and how they must be reconciled and returned.[1]

That is why the £1.149 billion cannot be treated as available capital for acquisitions, dividends or ordinary operating expenditure. CMC’s own liquidity and financial investments are separate. The annual report also discusses treasury management of corporate resources, including interest on own funds and other treasury-related income. Combining client money with corporate cash would merge assets held for different owners and purposes.[1][2]

The group reported £18.8 million of interest income on its own funds in addition to £23.1 million of income on client funds. Keeping those lines distinct matters. Own-fund income reflects returns on CMC’s capital and liquidity. Client-fund income arises from balances connected to customer safeguarding and account activity. The market-rate exposure may overlap, but the legal source, available uses and customer consequences differ.[1]

The annual income statement reveals a broader mix

CMC recorded £376.8 million of revenue, £18.8 million of interest on own funds and £23.1 million of income on client funds, producing £418.7 million of total revenue before introducing-partner commissions, betting levies and a small interest expense. Net operating income was £392.6 million and pre-tax profit £101.3 million. The client-fund line was therefore one contributor within a diversified mix of trading, investing, partnership and treasury activity.[1][2]

That mix reduces dependence on any one source, but it can also obscure offsets. Trading and investing activity may rise while retained interest falls. A larger customer base can increase balances while competitive pricing returns more of the gross yield to customers. A higher closing balance may also reflect timing around settlement or market events rather than permanently deeper customer cash. Aggregate net operating income can grow even when the cash component weakens.[1][2]

CMC’s reported group performance confirms that this is possible: net operating income rose 15% and pre-tax profit 20% despite the £0.9 million decline in income on client funds. Other businesses more than compensated. That does not make the interest decline irrelevant. It shows why the line must be analysed separately rather than inferred from group revenue or customer assets.[1][2]

Three mechanisms could explain the divergence

The first mechanism is timing. The year-end increase may not represent a comparable rise in average balances. The second is rate: benchmark yields declined in important currencies during parts of the period. The third is sharing: brokers can credit more interest to customers, reducing the amount retained. Product and geographic mix, bank pricing, deposit tenors and hedging can also matter. The public accounts do not allocate the £0.9 million decrease among those drivers.[1]

An analyst should resist choosing the most commercially convenient explanation. Claiming that CMC’s retained spread collapsed would require average balance and gross-versus-customer-rate data. Claiming that the increase arrived entirely at year end would require a balance series. The records support a stronger but narrower finding: the economic return retained from client cash did not move in proportion to the closing safeguarded balance, and the missing variables are material.[1]

The distinction also prevents a false customer inference. Lower broker income on client funds does not necessarily mean customers received more. It could reflect lower market yields, timing or a different currency mix. Conversely, higher broker income would not automatically mean customers were treated worse; balances or rates might have risen. Customer outcomes must be tested against the terms and rates applicable to the relevant entity and product.[1]

Why the result matters beyond CMC

Broker cash economics became unusually visible during the high-rate period. Businesses that once treated interest as incidental developed meaningful revenue from uninvested cash and margin collateral. As rates normalise, customer balances and retained yield can separate sharply. CMC’s 2026 figures are a documented example: a much larger closing pool did not prevent income from declining. Models that assume interest grows automatically with assets will overstate resilience.[1][2]

The same lesson applies to comparisons among brokers. One company may report gross interest and a separate customer expense; another may report a net line. One may include balances at clearing brokers; another may disclose only segregated bank accounts. A closing-balance-to-income ratio can look precise while comparing different populations and periods. Before ranking brokers by cash yield, the accounting perimeter and average-balance methodology must be reconciled.[1]

A sensitivity range shows why the missing denominator matters

An illustration demonstrates the uncertainty. If the average client-money balance during FY2026 had been £800 million, the £23.1 million income line would equal 2.9% of that average. At £1.0 billion, it would equal 2.3%; at £1.15 billion, 2.0%. None of those is asserted as CMC’s realised yield, because the income may already reflect customer payments and the balances span currencies and placements. The exercise shows that a plausible change in the unseen average produces a materially different apparent return.[1]

The same sensitivity applies to the prior year. Using the £694.9 million closing balance as if it were the annual average creates a 3.4% ratio. If the average was higher or lower, the ratio changes. The apparent fall from 3.4% to 2.0% may therefore combine genuine rate compression with two denominator errors. It is evidence that the relationship changed, not a precise measurement of how many basis points CMC retained.[1]

Financial reporting could make the line auditable from outside

The accounts are audited, but the public cannot independently reproduce the client-fund return because the necessary operating data are not presented together. A note showing quarterly average safeguarded balances by major currency, gross interest received and customer interest credited would allow readers to reconcile the income. It would also distinguish growth caused by late-period deposits from a durable increase in the cash franchise.[1]

Such disclosure would not require revealing individual customer information or bank-level commercial terms. Aggregated averages and pass-through totals would be enough to test the central economics. As brokers increasingly market interest on uninvested cash, the same data become relevant to customers as well as shareholders: they show whether a larger balance base is producing value for the provider, the customer, or both.[1][2]

The regulatory and operational questions

A larger client-money pool increases the operational importance of reconciliation, bank diversification, access and incident response. It also raises concentration questions: where the money is placed, under which currencies and with which counterparties. The annual income figure says little about those controls. Strong interest earnings cannot substitute for safeguarding, and low interest earnings do not establish weak safeguarding. They are separate dimensions of the same balance.[1]

For management, the growing pool creates both responsibility and optionality. Better cash products can attract and retain customers; competitive interest can reduce broker margin but deepen the franchise. Treasury optimisation can improve returns within permitted constraints. The strategic choice is not simply to maximise the current-period spread. It is to decide how much value to retain, how much to pass through and how much operational complexity to accept.[1][2]

What to watch next

The most informative future disclosure would pair income on client funds with average balances, gross yield, customer pass-through and currency mix. Even a quarterly average would improve interpretation. Investors should also watch whether the £1.149 billion closing balance persists, whether policy-rate reductions continue, and whether CMC changes customer interest propositions as competition intensifies. Without those data, the closing balance remains a scale indicator rather than an earnings forecast.[1]

FXBrokers.ai’s finding is therefore not that CMC earned too little or too much from client money. It is that the most obvious calculation gives a misleading answer. Segregated balances rose by £454.2 million, yet income fell by £0.9 million. That divergence proves that the missing variables—timing, rates, currency, placement and pass-through—were collectively powerful enough to overwhelm the movement in the year-end total. Any serious model of broker cash economics must include them.[1][2]

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