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IG Group sees 10% revenue drop from new margin trading regulations

Published: 09:34 23 May 2018 BST

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3,800 clients now classified as professionals

Spread better IG Group Holdings PLC (LON:IGG) has confirmed revenue will drop sharply as new client protection rules come into place.

European regulator ESMA has proposed leverage caps of 30 times on foreign exchange, but just two times on cryptocurrency spreads.

READ: IG Group shares retreat as European regulator clamps down on CFDs

IG said net trading revenue for the year to end May is expected to be around £565mln (£491mln), with operating costs flat at £254mln and bonuses rising to £36mln (24mln).

Turnover in the year just ended would have been 10% lower under the new rules, IG said.

These changes apply to retail clients only with professional customers exempt.

Since November, IG said it had received around 15,000 applications from clients wanting to be categorised as professional of which 3,800 had been granted. 

Professionals contributed over 35% of UK and EU leveraged revenue in the last three months.

IG expects this proportion to rise to 50% when the ESMA measures come into effect. 

Elsewhere, IG said the macro trends for its business would continue to drive growth.

A US-based foreign exchange business is scheduled to go live by the first half of 2019, with a European MTF (multilateral trading facility) expected to be onstream by 2020.

IG said it is also keen to acquire licences in emerging markets.

Shares rose 2% to 902p.

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