IG Group is the first brokerage company which is reporting financials in the aftermath of the ESMA’s new regulations. The company published an interim report via the London Stock Exchange on Thursday. The release underlines some key performance indicators (KPIs) for the retail brokerage.
Revenues declined five percent year-on-year in the quarter that ended on August 31, 2018. The company booked £128.9 million ($169.4 million) as the numbers from the EU and the UK have impacted the top line materially.
After only one month of new ESMA regulations, the firm’s UK and EMEA performance declined by eight and 12 percent respectively to £53.9 and £34.4 million. The figures have been impacted by the declining number of clients of IG Group.
In a minor offset to the figures above, IG Group also reported an increase in revenues from its APAC operations, where it booked a seven percent gain to £35.5 million.
Client Numbers in the UK and EU
The number of clients of IG Group in the UK and the EMEA region has declined. From over 39,200 in Q1 2018, the figures dropped to 34,000 in the UK, which represents a 13 percent drop. Across the EMEA region, the total number of clients declined by ten percent to 27,200.
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The APAC region which was insulated from tightening regulatory requirements, the figures increased. The retail brokerage posted an increase of five percent to 26,300 clients.
On the bright side, revenues per client have increased by 6 percent in the UK and by three percent in the APAC region. The metric declined across the EMEA area by two percent.
Reclassification to Professional in the UK and the EU
According to IG’s interim report, over 50 percent of revenues for the company in the first quarter was sourced from elected professional clients. The figure has been in line with the firm’s expectations.
The brokerage also highlighted that trading volumes in August have been significantly lower following ESMA’s new regulatory measures. The outlook for the company has remained unchanged after the impact during the first month of low leverage trading.
IG Group previously stated that the impact of the ESMA measures on historic revenue would net to a reduction of about ten percent.
The brokerage also highlighted some Brexit-related steps it had taken. The German subsidiary of IG Group acquired a license in principle from BaFin. This step will permit the firm to offer financial services to EU clients.