IG Group Britain’s largest spread betting firm is set to unveil better than expected revenues for the year to May, brushing off a quiet patch just six months after £1.1bn was wiped off the FTSE 250 company’s value.
Shares in IG Group rose 5.5pc on Wednesday after the business said revenues for its financial year would rise 7pc versus a year ago, with fourth quarter numbers also up despite a “quiet” period in financial markets.
The forecast – which comes ahead of its results statement in July – will come as welcome news to the group, given that only six months ago its shares tumbled almost 40pc after the City watchdog outlined a string of new rules around spread betting products.
Concerned that ordinary investors were losing huge chunks of money because they didn’t understand what they were getting into, the Financial Conduct Authority said in December that it wanted to control the way firms can offer spread betting – a way of betting on which way a financial instrument will move – to retail consumers.
The UK is not alone in wanting to protect inexperienced traders, with regulators across Europe looking to clamp down on the industry in a move which has rocked the market.
However extra regulation could give larger firms such as IG a competitive boost, with Numis analysts on Wednesday warning that they expect “the number of providers to shrink as many of IG’s smaller competitors are already struggling to break even”.
Earlier this month, for example, IG welcomed the outcome of Germany’s Federal Financial Supervisory Authority (BaFin) probe into the market – months after its shares were hit by news of the intervention.
The FCA is expected to publish the full details of its consultation into spread betting this summer whether its good or bad who knows. Traders and clients alike are waiting for what comes next.