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IG Group quarterly revenues dip on lower volatility in financial markets

A regulatory clamp down on the sale of so-called contracts for difference led to significantly lower trading volumes by clients in the UK and the EU in August
Revenue declines in the UK and EMEA divisions offset growth in Asia Pacific

IG Group Holdings PLC (LON:IGG) reported a 5% drop in first-quarter revenue as the spreadbetting firm experienced lower levels of volatility in financial markets than last year.

Revenue fell to £128.9mln in the three months to August 31 from a record of £135.2mln a year ago even as the number of clients rose by 3% to 129,000.

READ: IG Group says crypto interest waning as it cautions over customer protection changes

The company said the heightened level of volatility in financial markets that boosted last year’s results had not continued into the new fiscal year.

Revenue fell in the UK and the European, Middle East and Africa divisions by 8% and 12%, respectively, offsetting 7% growth in Asia Pacific.

New measures by the European Securities and Markets Authority (ESMA) to clamp down on the sale of so-called contracts for difference led to a significantly lower volume of trading by retail clients in the UK and the European Union in August.

IG told investors that it was not “possible to draw conclusions” from a one-month period as it would take time for retail clients time 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%,” the group added.

The German subsidiary IG setup ahead of Brexit, has received a licence in principle, subject to conditions from the regulator to offer financial services to EU clients.

The firm said this “provides certainty that IG will continue to be able to offer its regulated financial products in all EU member states following the UK's planned exit” from the bloc.

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