IG Group says no adverse impact from regulations thus far, but strikes cautionary note about future

Maria Nikolova

None of the recently announced regulatory changes have adversely impacted the business to date, says IG. However, future effect of regulations on the business is hard to predict.

LSE earnings strong ahead of merger and ‘Brexit’

Electronic trading major IG Group Holdings plc (LON:IGG) has thus far seen no negative impact on its business due to the growing amount of new rules concerning the retail leveraged trading industry. The statement was made in a filing with the London Stock Exchange today.

The company added, however, that “although none of the recently announced regulatory changes have adversely impacted the business to date, as previously noted, the nature and timing of potential regulatory changes in the UK and some other key markets for the Group remain uncertain.”

It is therefore difficult to predict what impact, if any, regulatory change may have on the Group this financial year and beyond, IG said.

Shedding some light on performance indicators for the quarter to August 31, 2017, IG said its client numbers in the UK were down in the period compared to the same three months in 2016. But the drop was not attributed to any regulatory changes. In fact, the company said the decline was expected, as the equivalent period in 2016 was particularly strong for new client inflows due to the short-term trading opportunities created by the EU referendum in June 2016.

In June this year, the UK Financial Conduct Authority (FCA) delayed the implementation of the new conduct rules for UK firms that offer CFDs to retail customers. The regulator attributed the delay on the fact that the European Securities and Markets Authority (ESMA) is considering product intervention measures under Article 40 of the Markets in Financial Instruments Regulation (MiFIR). ESMA’s product intervention powers can only come into effect from January 3, 2018 at the earliest.

In July this year, IG outlined a number of key areas where regulators are expressing concern and suggesting the need for remedies. These areas include marketing, bonus offers, etc. IG has not objected to any of the proposals.

With regard to the changes in Germany, where financial supervisory authority BaFin has introduced new rules for the marketing and offering of CFDs to retail clients, IG Group has noted that it is supportive of the measures outlined by BaFin. The company is set to have no compliance issues with regards to the restrictions on CFDs with additional payments obligation, given that it already actively markets its Limited Risk Account in Germany. This type of account is compliant with the new rules and also provides additional ‘by position’ protection.

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