IG Group struggles to keep up pace in first quarter
IG Group found it hard to match up to the speedy start seen last summer, with the online trading provider's revenues down 5% in the first quarter of its current financial year.
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IG said heightened level of volatility in financial markets and client activity it enjoyed in the previous trading period "have not continued into FY19", while the three-month period to 31 August included one month under new restrictive European Securities and Markets Authority rules on leverage.
"The volume of trading by clients categorised as retail clients in the UK and EU was, as expected, significantly lower in August than in July following the implementation of the ESMA measures," the FTSE 250-listed group said.
"It is not possible to draw firm conclusions from a one month period as it will take time for retail clients to adapt to the new rules and change their trading behaviour. The group's performance in the month of August has not changed the company's previously stated view that the impact of the ESMA measures on historic revenue would have been a reduction of approximately 10%."
Client numbers were down in the UK, EMEA and US, though a 54% rise in its stockbroking services meant group overall client numbers rose 3% to 129,000.
But group turnover fell 4.6% to £128.9m as UK leveraged trading revenues fell 8% to £53.9m, EMEA leveraged trading fell 12% to £34.4m, which was only partially offset by a 7% rise in Asia Pacific to £35.5m, a 14% gain in the US to £3.9m.
Despite the rise in stock broking client numbers this has so far only resulted in revenues of £1.2m, even though it was up 37%.
Over 50% of revenue was generated by UK and EU clients who were categorised as professional under ESMA rules, in line with its previously stated expectations.
Shares in IG tumbled 7% to below 800p in early trading, before coming back to 816.5p by 0830 BST.
With current consensus revenue for the full year of £538m, broker Peel Hunt agreed that it was "not possible to draw firm conclusions as it will take time for retail clients to adapt and change trading behaviour".