Shares in trading platform IG Group Holdings Plc slid after its revenue dropped 4.7 percent over the last three months, hit by a dip in market volatility and a regulatory clampdown on high-risk betting on financial markets. Already facing Brexit uncertainties, IG and other London-based online trading firms have been under scrutiny as global regulators tighten rules on products which allowed anyone with a bank card to make highly-leveraged bets on financial markets on their apps and online platforms.
The company reported a drop of 13 percent in the number of British clients, and a 10 percent fall in Europe, Middle East and Africa. The European Union's securities watchdog, ESMA, last month renewed a ban on the sale of 'binary' options to retail customers and IG showed the volume of trading by retail clients in Britain and the EU fell significantly in August.
Analysts were disappointed by the progress the company has made in recategorising customers as educated professionals who are allowed more freedom to trade. "There certainly was an increase in applications for people to elect to be a professional in the immediate run-up to the rules becoming effective and we continue to see a steady stream of applications," Chief Executive Officer Peter Hetherington told a call.
Thousands of retail investors had little protection in place and lost large sums in the surge in the Swiss franc four years ago, generating a swathe of legal claims. Revenue at IG fell to 128.9 million pounds ($169.5 million) for the three months ended August 31, from 135.2 million pounds in the year-earlier period.
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