Following a push from major brokerages including Invast, IG group, one of the biggest FX and stock brokers in the world, has announced that it has signed up for the FX Global Code of Conduct. The initiative is aiming to promote a robust, open and fair FX marketplace and was publicized earlier this year.
The FX Global Code of Conduct is a list of principles of good conduct and was created by the Global FX Committee. The body is comprised of central banks and private sector participants from 16 countries and is led by Deputy Governor of the Reserve Bank of Australia, Guy Debelle.
In its statement, IG Group highlights that it has gone beyond the code. The publicly listed brokerage published the full disclosure statements which contain details on some of its internal operations and the company’s business model.
Commenting on the matter, the CEO of IG Group, Peter Hetherington, said: “This disclosure illustrates how the fundamentals of our business model promote a culture of putting our clients first. We are pleased to be supporting this global initiative. At IG we are proud of our track record of compliance and our focus of fair client outcomes.”
“We try to do what is right, not just what is possible under the rules. I welcome any initiative aimed at improving the understanding of, and the trust in, our product, and which promotes greater transparency in the financial sector for the benefit of the end consumer and all market participants,” he elaborated.
Insights into IG Compliace
IG Group published a supplementary document which contains information about how the brokerage is adhering to the FX Global Code of Conduct. IG lists its hedging counterparts, and makes it clear that client funds are not involved in this operation. Profitability of the client is not impacted by whether the company hedges a position out or not.
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The company’s assets total £1.8 billion ($2.35 billion) with a capital ratio averaging around 27.7 percent over the last 3 years which shows that the company is well capitalized.
The firm is taking on average market risk exposure of between 0% to 1% of the notional exposure traded by its clients. The small amount of market risk IG Group takes is to facilitate automatic client execution, and to improve the ‘likelihood of execution’ of clients’ orders the brokerage explains in the supplementary document.
IG also shows some strong client affinity and loyalty as clients who have been with it for over 5 years constitute 40% of its total client funds. These clients are likely to be high net worth individuals who try and choose the best brokers around and tend to stick with one for longer periods.
The full text of the document can be found below:
Click on the image below for the Global Code of Conduct: