UPDATE 2-CMC Markets chief says worst is over after profit plunges 90%

* FY profit before tax drops 89%

* Low volatility, regulatory curbs hurt results

* CEO sees return to “good normalised profits” soon

* Shares reverse course to trade up (Adds CEO comments, share move, background)

June 6 (Reuters) - Online trading platform CMC Markets posted its weakest annual results in a decade and slashed its dividend on Thursday, but its top boss sought to reassure investors by saying that the worst of the regulatory clampdown on the sector was over.

The company’s shares, which have lost half of their value in the past 12 months, were up 1 percent on the FTSE small-cap index as Chief Executive Peter Cruddas said he expects to see a return to “good normalised profits” in the next year or so.

They had fallen more than 10 percent immediately after the results announcement.

CMC and its rivals - Plus500 Ltd and IG Group - have struggled as regulators tightened rules on products that allowed anyone with a bank card to make highly-leveraged bets on financial markets via apps and online platforms.

“I think the shock is over now, clients are getting used to the new leverages,” Cruddas told Reuters.

“We have just come through the worst part of regulatory changes... (the results are) a reflection of that very short window of where we have had the regulatory changes.”

The company’s profit before tax for the year ended 12 months slumped nearly 90 percent to 6.3 million pounds ($7.98 million).

It proposed a final dividend of 0.68 pence per share, bringing the full-year dividend to 2.03 pence, versus the 8.93 pence a share it paid out last year.

“We had expected no final dividend payment, but sufficient capital is available (as at year end),” Peel Hunt analysts said.

As of March 31, CMC Markets’ total capital ratio stood at 17.4%, compared to 31.1% in the year-earlier period.

Outgoing Chief Financial Officer Grant Foley said changes to the way its clients managed their positions in response to new European securities guidelines had sparked a shift in its business practices to carry a greater share of market risk.

Volatility has also remained subdued as investors keep to the sidelines awaiting clarity on the ongoing U.S.-China trade war, as well as protracted Brexit negotiations.

$1 = 0.7890 pounds Reporting by Muvija M in Bengaluru; Editing by Chris Peters, Saumyadeb Chakrabarty and Jan Harvey