1. Name the only bank with the confidence to admit, on the record, that it pre-empted its clients’ orders?
     1 UBS;
2. Who was the highest profile individual loser to get plucked and stuffed by Turkey?
     2 Eliezer Fishman;
3. Name the bank that is still, apparently, sulking after I labelled it as “transparently stupid”.
     3 HSBC;
4. Who made the now infamous claim that the dealing room of the future would contain just a computer, a man and a dog?
     4 Chris Skinner;
5. Which airline sold me a seat better suited to Heather Mills than Mr Angry?
     5 Virgin Atlantic;
6. “If the management couldn’t see what was going on, they must have had shit for brains.” Which bank is this perceptive and very experienced trader referring to?
     6 National Australia Bank;
7. What was the first job of the man apparently behind the revolutionary new trading platform, YoursMineShag? 
     7 Worked on the Ford production line in Dagenham; 
8. Who promised to sort out Ruby Wax at this year’s Euromoney FX poll dinner, and where does he work?
     8 ‘Lord’ Peter Lewis, HSBC;
9. How many global FX heads has Merrill Lynch actually had in the last decade?
     9 7?
10. Who is the FX market’s highest climbing participant (probably)? 
     10 Peloton Partner’s Dave Tait, who has climbed Mount Everest.

Money for nothing and no IPOs for free

Rumours abound about the much-publicised on/off (IPO) of CMC Markets. The company was originally established in 1989 as an FX outfit dedicated to delivering a new level of service to the then neglected retail sector. There is no doubt that CMC has largely fulfilled its original aims. It has a long history of innovation and claims it was the first company to have made real-time FX prices available to trade over the internet, something now taken for granted. The company now provides various services across asset classes to clients around the world.

CMC, which used to trade in the UK under the brand name of Deal4Free until it rebranded after complaints to the country’s Advertising Standards Authority, was scheduled to IPO in May 2006. However, this was pulled after a brief downturn in the broader market.

“I get asked about the IPO all the time. We pulled it last year because of the state of the market,” says CMC’s founder and chief executive Peter Cruddas. He adds that the decision not to IPO was taken just one hour before it was due to go ahead.

Cruddas, who owns or controls 95% of CMC, had been looking for a capitalization for the company of between £630 million to £760 million. Many felt that this was extremely rich. For instance, the then chief executive of CMC’s publicly quoted rival IG Group Nat Le Roux stated in January 2006, when discussing the barriers preventing consolidation in the UK spread betting industry, that CMC had: “what I regard as unduly aggressive views about their own valuation.”

However, looking at the two companies’ published results, Cruddas’ view of CMC’s valuation may not be too far fetched. IG Group reported net income of around £36 million for the year to May 2006; it currently has a market capitalisation of around £970 million. The company is trading on a prospective P/E ratio of around 22. CMC’s normalised profit before tax for the year to March 2006 came in at £37.6 million.

Cruddas admits that the market seemed unwilling to value CMC on projected earnings, which he feels was a mistake. The company has invested heavily around the world for future growth, opening new offices, employing more staff and maintaining and upgrading its trading platforms. Cruddas also paid himself an exceptional bonus of £5.3 million, all of which obviously affected the net profit for 2006. Since the IPO was pulled, Cruddas says CMC has exceeded growth forecasts by 30% to 40% in terms of number of clients, turnover and revenue increase.

However, given CMC’s stated intention to float in 2006 and the fact that the market is trading at or close to five-year highs, it is perhaps no surprise that tongues are wagging about why the IPO has not occurred. Various rumours are doing the rounds, some of which have originated from within the company. Cruddas seems genuinely upset by this, arguing that the company’s staff is very well looked after. One of the rumours is that CMC’s staff has been told that the IPO is now on hold for at least two years.

As a result, existing share options have allegedly been cancelled. Cruddas says this is not strictly true. “Share options have not been cancelled; they have expired because we did not float within the last year. A new scheme is being put together for the remainder of staff that do not currently have shares in the company; but this is more due to accounting and (Inland) Revenue considerations than anything else.” He says the company will look to issue new options before it eventually floats.

Cruddas says that although Deutsche Bank, one of CMC’s bookrunners, advised the company to review the situation at the end of the summer and possibly go ahead with the IPO in 2006, it has decided to wait. “We could have floated by the end of the calendar year because the market had improved, but it would have been a bit of a rush. The problem with IPOs is that they take up a lot of the directors’ time and, to an extent, take them away from running the business. We have decided we don’t want to do that in 2007. It’s not a commercial decision and I’ve told the staff.”

He concludes: “There are two main reasons I wanted to float after 17 years of running a private company. The first is that I wanted to reward and lock in important staff, and the second was that as a company, we’re expanding rapidly. We felt that we might have needed the profile of a public company to facilitate this, but I wasn’t prepared to give away shares too cheaply.”