Spreadbetting firm IG Group has responded to the City watchdog's proposed new rules for contract for difference (CFD) products, which have knocked 30 per cent off its share price at pixel time.
The Financial Conduct Authority (FCA) wants to impose tighter rules on CFDs sold to customers, including spread bets. Shares in IG, CMC Markets and Plus500 have all tumbled on the news this morning.
"IG firmly believes in robust and proportionate regulatory oversight of the CFD sector in the UK and Europe," the company said.
The group added that it "recognises that there are shortcomings in the approach to the marketing of CFDs and binaries by certain firms, often operating from outside the UK", and said it has operated and will continue to operate to the highest standards in the industry. IG added that its initial view is that "certain of the FCA proposals could enhance client outcomes".
The company also noted that the FCA’s proposals "do not appear to directly apply to firms operating from outside the UK offering CFDs and binaries to clients in the UK on a cross-border services passport from another EU member state".
IG said it will carefully consider the implications of the FCA Consultation Paper and the courses of action open to it, and will respond in accordance with the timeline provided of 7 March 2017.
Plus500 issued an update to the market, noting the movement in its share price following the publication of the FCA's announcement. The group said it "believes that the topics covered in the note will have a material operational and financial impact on the UK regulated subsidiary which represents approximately 20 per cent of the group's revenues".
CMC said it has consistently focused on "higher-value experienced premium clients" who understand the markets and products they are trading. Furthermore, the group said, an integral part of CMC's "client first" proposition over the last five years is ongoing client education about markets, products and associated risks. The firm said its business model and ongoing strategy is focused on generating revenue from client trading costs and therefore it believes in establishing long-term client relationships.
CMC said it "recognises that in its consultation paper the FCA is endeavouring to ensure that any regulation is delivered in a balanced fashion and looks forward to working closely with the FCA over the coming months".