IG Group, a UK-based online trading firm, has reported an increase of 29 percent in pre-tax profit for H1, FY18, amounting to £136.2 million (roughly $190 million). Net trading revenue during this period increased 10 percent to £268.4 million, while operating expenses (excluding variable remuneration), dropped 7 percent to £117.6 million. Moreover, the Diluted EPS showed a climb of 30 percent to 29.3 pence, with an interim dividend of 9.69 pence per share.
Peter Hetherington, Chief Executive of IG Group, commented on the newly released figures: “The Company delivered record revenue and record profit before tax during the first half of FY18, and continued to make good strategic and operational progress. The Group is taking action to mitigate the potential financial impact of regulatory change, and to position the business so that it will continue to deliver for all of its stakeholders under a more restrictive regulatory environment.”
Next Stop: Germany?
As IG Group continues to prepare for various changes in the upcoming year, the company has announced its intentions to open a subsidiary in Germany in the near future. The decision to enter Germany is directly attributed to the Brexit vote, and the company is preparing for its future course, prior to its implementation.
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Many banks and other financial institutions have already left the UK for alternative markets. Several industry leaders have similarly looked to Germany as their choice, following the Brexit decision. Goldman Sachs, Morgan Stanley, and Citi have already chosen Frankfurt as their new EU headquarters. Additionally, JP Morgan has eyed Paris to replace its UK offices.
IG Group has stated its plans to launch new products and services to retail investors, as well as to expand operations to new markets, in an effort to increase its client base. The company has also indicated that it is taking action to adjust to changes in the regulatory framework, which will undoubtedly impact the company’s operations. Over the past few years, regulators have tightened restrictions, in an effort to ensure the protection of the interests of retail and institutional investors alike.
IG Adjusts to Regulation Changes
Earlier this month, the FCA displayed concerns over the lack of adherence to regulatory confinements from various brokerages. In a letter assessing its analysis of 19 CFD trading firms, the FCA concluded that 76 percent of clients lost funds between July 2015 and June 2016. Moreover, the UK regulatory watchdog expressed concern regarding the methodology which these companies’ IBs were employing when communicating with clients, which does not comply with the regulations in place within the UK.
In response to the FCA findings and corresponding letter, IG issued a statement to address its stance in alliance with the regulator: “IG does not offer advisory or discretionary services for CFD products and has terminated its very small number of relationships with distributors who offer our CFD product on a discretionary or advisory basis to retail clients within the UK and EU.”