EU measures hurt IG Group quarterlies

20 September 2018

Investment services provider IG Group has posted a 5% drop in revenue to £128.9m (£145.6m/$170.7m) for the first quarter of the fiscal year after the volume of trading by retail clients slumped in August following the introduction of new regulations by the European Securities and Markets Authority (ESMA).

The company also cited lower levels of market volatility and highlighted that the corresponding three-month period of the previous year had been a record quarter.

For leveraged over-the-counter products, client numbers fell by 10% in the UK and 13% in Europe, the Middle East and Africa.

Client numbers also fell by 12% in the US, although a sharp 54% rise in group investment customers steered the overall figures to a 3% rise across the group on a year-on-year basis.

However, revenue-per-client improved by 6% in the UK and by 3% across the Asia-Pacific region, but fell by 2% for EMEA clients.

Last month, ESMA, the European Union’s securities regulator, renewed a ban on the sale of binary options to retail customers.

“The volume of trading by clients categorised as retail clients in the UK and EU was, as expected, significantly lower in August than in July following the implementation of the ESMA measures,” the company said.

“It is not possible to draw firm conclusions from a one-month period as it will take time for retail clients to adapt to the new rules and change their trading behaviour.

“The group's performance in the month of August has not changed the company's previously stated view that the impact of the ESMA measures on historic revenue would have been a reduction of approximately 10%.”

ESMA adopted the final product intervention measures this summer.

In July, IG Group chief executive Peter Hetherington said that the company was in a strong position to mitigate the adverse impact of regulatory changes in the coming year after a 32% rise in operating profit headlined record annual results.