CMC Markets has experienced a meteoric rise in fortunes over the past two years. And as head of legal, Dominic Bacon has to work hard to keep things on track. Tom Phillips reports
What do you do if you have the ear of the richest man in the City? Well, if you are Dominic Bacon then you work. Very hard.
Bacon is group director of legal at CMC Markets, a company as versatile and canny as its billionaire owner and founder, East Ender Peter Cruddas, who, after launching CMC in 1989, has risen to the top of the Sunday Times Rich List with a 2008 fortune estimated to be worth £1.2bn.
“Both as a legal department and personally we’re busier now than we’ve ever been before,” says Bacon, stepping out of a two-day meeting to discuss his part in the CMC success story.
Looking after the company’s legal fortunes is no straightforward matter. CMC Markets is weaving its way through the world of complex contracts for difference, financial spread betting and foreign exchange.
Offering ‘institutional trading’ to the retail market, CMC Markets allows its users to access and trade online using 4,000 financial instruments in 100 countries.
Some 130,000 trades are now made daily using the company’s platform, making CMC one of the largest companies of its type in the world. Clues to its founder’s wealth can be seen in the accounts, which feature graphs that look like a Gulfstream private jet taking off.
Since Bacon’s arrival from Gulf International Bank UK in 2007, CMC has seen its revenue increase by 66 per cent and its profit by 42 per cent. The company has also been expanding internationally, launching five offices during Bacon’s short tenure, opening up complex derivative products to some 15 regulators around the world. Add to this the purchase (the first of its kind) of a 10 per cent stake in the business by Goldman Sachs in 2008 that saw 50 Goldman lawyers working overtime to Bacon’s three, and it is easy to understand why he has been clocking up the extra hours.
Given the task of building a global legal function, Bacon started by recruiting more senior lawyers and now has ten lawyers working out of the company’s London HQ.
“I thought the added value wasn’t in knocking out confidentiality agreements but on new countries and products,” Bacon explains.
Having built the team he wanted, Bacon then set about changing the way the lawyers operate with the rest of the business so that only they can instruct external law firms, assigning lawyers to specific businesses and demanding monthly reports from the team.
So far, so busy. Then the credit crunch hit.
“The Lord Turner Report and the Walker Review have increased the focus on the derivatives markets,” he explains. “The introduction of restrictions on short-selling means we have to balance the UK rules with those in the US, then those in Spain and so on… none of them are matched. As a business we have to be closer to the people who make the regulations from now on.”
Bacon has made a “policy decision” to actively comment on changes to legislation and advocates the ”education” of regulators on the more complex aspects of the world in which companies such as CMC operate.
“There has clearly been a degree of standardisation in the regulators’ approach but every country has put their own slant on the legislation. We have to make certain that we stay on top of the local nuances.”
Being 90 per cent-owned by one shareholder has its benefits in this changing environment, as Bacon discovered when the Financial Services Authority’s short-selling restrictions were issued in September last year. A number of the company’s competitors closed their platforms while the ramifications of the rules were discussed, but CMC Markets could call on executive chairman Cruddas and swiftly do its analysis with the number-one shareholder’s input and blessing.
“Peter understands the business better than anybody and so can take quick decisions,” says Bacon. “The legal team is an integral part of the decision-making process because of my position on the senior executive team and access to the chief executive and chief financial officer, and because we’re ready to make decisions when people ask us for our views.”
With the traditional financial system in turmoil, companies such as CMC Markets are becoming a focus for troubled investors providing them with unlikely but ample opportunities.
“Who would have thought ten years ago that people would be more comfortable giving us their money rather than high-street banks?” asks Bacon. “It’s a challenge to find the best opportunities out there because there are so many.”
Meaning more expansion for CMC and more midnight oil for Bacon, but plenty of riches to go with it.
Name: Dominic Bacon
Organisation: CMC Markets UK
Industry: Financial services
Position: Group director of legal
Reporting to: Chief executive Jim Pettigrew
Company turnover: £180m
Number of employees: 900
Legal capacity: 20
Main external law firms: Baker & McKenzie, Berwin Leighton Paisner, Burges Salmon, CMS Cameron McKenna, DLA Piper, Mallesons (Sydney), Reed Smith, Skadden Arps Slate Meagher & Flom, Slaughter and May
Legal spend: £2.5m
Dominic Bacon’s CV
1983-86: University of Wales
1986-87: College of Law, Guildford
1987-89: Articles Clerk, Birketts
1989-92: Solicitor, Theodore Goddard
1992-98: Group legal adviser, Standard Chartered Bank, London
1998-2000: General counsel, The Americas, Standard Chartered Bank, Miami
2001-02: Senior group legal adviser, Standard Chartered Bank, London
2002-07: Head of legal and compliance, Gulf International Bank
2007-present: Group director of legal, CMC Markets