Spread betting firm IG Group Holdings PLC (LON:IGG) has said it does not believe new French restrictions on the marketing of contract-for-difference products will hurt its business.
IG Group noted that from the end of 2016 the French regulatory authority, the AMF, adopted rules that will ban all electronic marketing involving foreign exchange and binary option trading products.
The company said there are new restrictions relating to accounts over limited loss positions and their ability to enter negative balance.
But IG said the restrictions "have no impact on the current client base" and noted the accounts it offerings to new clients in France have limited loss-by-position and "no negative balance" guarantees.
READ: Spread bettors hit by regulation …
The French restrictions come as part of a wave of stricter regulation on contract-for-difference products in Europe, including Germany and the UK.
In December the UK's Financial Conduct Authority laid out a proposed tightening of measures on such products including standardised risk warnings and disclosure of profit-loss ratios on accounts, in a move which badly hit the shares of London-listed firms including IG.
IG said: "Overall, the company does not believe these restrictions will have a material negative impact on its business in France in the short term and could ultimately enhance the company's future competitive position in the country.”
By mid morning, IG shares were off earlier highs but still up 0.5p at 531.5p on the reassuring statement.
Numis downgrades ...
The stock came off its best, however, after analysts at Numis Securities trimmed their rating for IG to ‘add’ from ‘buy’, while maintaining their share price target at 590p.
But the Numis analysts remained upbeat about the spread betting firm’s prospects.
In a note to clients, they said: “As the CFD industry matures and regulation is introduced to restrict the activities of the less scrupulous providers we believe IG's market position should improve.
“We see this enhancing the quality of the group's income and believe its best in class practice will ensure that it is less negatively impacted from regulatory change.
“We expect the number of providers to shrink as many of IG's smaller competitors are already struggling to break even.”
However, analysts at Liberum were less optimistic and kept their rating for IG 'under review'.
In a note to clients, they said: “While the current client base is not affected, we do point out however that the cost of acquisition should increase considerably in the medium to long term.
The analysts added: “We note that the FCA's proposed changes to the marketing of CFDs and binaries remain the biggest risk to IG, and therefore in the absence of further clarity on the regulatory changes facing the industry, we maintain our U/R stance on the company.”
Shares in fellow-listed spread bettor CMC Markets Plc (LON:CMC) also held firm but eased off highs, up almost 3%, or 3.4p at 124.2p, having been the most hit recently by the regulatory clampdown.
-- Adds further broker comment, updates share price --