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IG Group’s CEO has hailed his company’s record breaking year, but warned of choppy waters ahead.
It has been a bumper 12 months for Forex CFD broker IG Group as a big rise in profits took them to their best ever performance. However, the arrival of new restrictive regulations could spoil the party for the coming year.
The headline figure for these financial results is the 32% rise in profits to £281.1 million. Operating expenses for the spread betting broker increased by only 1%, while net trading revenues increased by 16% to £569million.
All in all, as Chief Executive Peter Hetherington explained, the company has put in itself in a great position for the coming year.
“It has been an excellent year for IG Group financially and we are well positioned to mitigate the impact of regulatory change,” he explained.
That regulatory change, however, is a significant cloud on the horizon. ESMA’s announcement, earlier in the year, that it would place restrictions on the marketing and sale to retail clients, sent a ripple of anxiety through the sector. While the extent to which the rules will impact trading is still unclear, IG have predicted it could make life tougher.
Operating expenses, said Hetherington, were likely to rise and revenues may decline, at least in the short term. However, he remains in a bullish mood suggesting growth could return in 2019 as the regulatory market becomes less uncertain. The bulk of the rise in operating expenses, he predicted, would come from new technology and innovation to help them adapt their business model to the evolving marketplace.
Overall, though, the mood is positive. Hetherington pointed to the prospect of greater clarity coming from the FCA as it promises a consultation about to what extent the ESMA restrictions should be applied here. So, while the regulatory climate does create some challenges in the short term, IG are confident that they can adapt their business models and maintain their strong performance into the future.
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Tom Cropper is a financial journalist with work which has appeared in titles such as the Guardian, Euromoney and many others.