"We expect to be a winner": IG Group share price leaps as boss says regulator crackdown will work in firm's favour

 
Oliver Gill
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Institutional traders David Lindahl (L)
The Financial Conduct Authority shocked UK spreadbetting firms when it announced proposed changes last December (Source: Getty)

A regulatory crackdown on spreadbetters was today wholeheartedly welcomed by the chief executive of IG Group.

Peter Hetherington told City A.M. IG will be one of a handful of “winners” from rule changes set to be implemented at the start of next year.

IG’s shares popped over 13 per cent today after its annual results beat market expectations.

“We support everything the regulator is trying to do and agree with the majority of their proposals,” he said.

We expect to be a winner from any regulatory crackdown, because that’s what history suggests will happen.

European intervention

At the end of last month the Financial Conduct Authority (FCA) passed responsibility for implementing industry reforms to the European Securities and Markets Authority (Esma).

Plans include capping the amount of risk that can be taken and banning marketing inducements for new players. Esma said it will reveal details of its Europe-wide “intervention” in January 2018.

Read more: Kicking the can down the road: FCA delays decision on spreadbetting reforms

Hetherington cited the example of the US, where regulator actions have effectively reduced the number of spreadbetting firms operating in the country from 40 to three. By clamping down, he said, watchdogs “clobbered firms that didn’t abide by the rules”.

He said: “The industry has got smaller. The leisure end of the sector has been effectively wiped out. The compliant firms have got significantly big. The fact that the industry has got smaller is simply that the people who shouldn’t have been in the industry in the first place, no longer are.”

Last month Peter Cruddas, the chief executive of IG’s largest rival CMC Markets, said:

“We totally agree with what the regulator is trying to do. Inexperienced clients need protection.

“We think it gives us a competitive advantage because we do not target the low end of the market.”

Read more: CMC boss says a Jeremy Corbyn win would plunge markets into turmoil

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