IG Predicts Shrinking Revenues in 2019 as a Result of New ESMA Regulation

The online trading firm also announced changes to its board and predicted trading revenue for 2018

It’s been a busy day for the IG Group (IG), an online trading firm, as the firm announced changes to its board and released a statement detailing its financial activity for the final quarter of the fiscal year 2018. IG also laid out its predictions for company activity in the first half of the 2019 fiscal year with the company’s 2018 fiscal year ending on May 31st.

New directors

IG will see two new additions to its board beginning on June 1st of this year. Bridget Messer and Jon Noble will become executive directors for IG as the firm enters into its 2019 fiscal year.

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Messer joined IG in 2005 as Legal Counsel and worked in a number of roles, including Head of Compliance and Company Secretary, until 2015. Since then she has remained in her current role as Chief Commercial Officer.

The other appointee, Noble, has been at the company for almost twenty years. He joined as a university graduate in 2000 and rose through the ranks to become Dealing and Operations Director in 2010. In 2012 he was appointed to lead the company’s IT strategy as Chief Information Officer and he has stayed in that position since.

IG’s chairman, Andy Green, discussed the decision to appoint the two new members of the board, saying: “Following an extensive process, we are very pleased to welcome both Bridget and Jon to the Board. The IG knowledge and skills brought by Bridget and Jon to the Board will complement the considerable experience of Board members and help give a wider perspective to Board discussions.”

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Revenue up

Alongside stated changes to its board, IG released an update regarding its financial activity for the past year and some predictions for the next one. The trading company added that their statements were not to be construed as profit forecasts.

According to today’s statement, the firm looks set to finish the year with increased year on year revenues. The firm predicts it will finish the year with £565 million ($754.50 million) in trading revenue – up 15 percent on last year’s £491 million ($655.68 million).

Given that there was not a comparable increase in operational costs, this should mean that the firm is going to finish the year with increased profits. The firm had £253 million-worth ($337.86 million) of operational expenses in 2017. This year that figure did not change dramatically as expenses costs increased to £254 million ($339.19).

Feeling the regulatory squeeze in 2019

More interestingly for the industry at large are IG’s predictions for the coming year. The firm estimated that 2019 will see a decrease in year on year revenue as it feels the bite from the European Securities and Markets Authority’s product intervention measures.

The new rules, which IG predicts will come into effect in the first half of their 2019 fiscal year, prohibit the sale of binary options to retail investors. They will also place restrictions on contracts for differences (CFDs). Retail investors will, amongst other things, have limits on leveraged opening positions and negative balance protections when trading in CFDs.

IG estimated that, were the rules applied retrospectively, it would have seen a 10 percent reduction in trading revenue. Despite the gloomy prospects that IG has posited for next year, the firm did note that it expects to return to growth after the end of the 2019 fiscal year.

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