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

Cryptocurrency trading accounted for 7% of total revenues, but IG said interest tailed off sharply toward the end of the year
IG had a record year but said the current 12-month period will be tougher

Spread better IG Group PLC (LON:IGG) raised its dividend by a third even though it again warned regulatory changes introduced by the European Union would mean lower revenues in the year ahead.

Changes proposed by ESMA, Europe’s securities authority, come into force from August with retail clients facing restrictions on what instruments they can trade.

READ:  IG Group sees 10% revenue drop from new margin trading regulations

One of the biggest clampdowns is on cryptocurrency trading, where leverage or the multiple of an original investment is just two times compared to 30 times for major foreign currencies.

Bitcoin and crytocurrency fever helped IG post record revenues and underlying profits in the year to May.

Net trading revenue rose 16% to £569mln while pre-tax profits jumped 31% to £281mln.

Cryptocurrency trading accounted for 7% of total revenues, but IG said interest tailed off sharply toward the end of the year.

Going forward, IG repeated it expects the rule changes to knock revenues, which would have been 10% lower in the year just ended under the new regulations.

Even so, the dividend was raised to 43.2p and IG expects to be able to maintain this level of payout going forward.

Peter Hetherington, chief executive, added IG would look to develop new products to boost revenues from retail customers in future.

 “As ESMA's product intervention measures are focused on the CFD industry, they risk creating an unlevel playing field by giving an advantage to other forms of leveraged trading products which are offered to retail clients.”

IG has also applied for a licence in Germany to be the regional hub for is EU business in the event of a hard Brexit.

Shares rose 2p to 867p.


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