IG gains from rough market

EXTREME shocks to financial markets this summer boosted revenues at spread-betting business IG Group by more than a quarter to £99.8m, it said yesterday.

IG said its clients leapt at the opportunity to trade derivatives between June and August as markets endured record levels of volatility.

“These are ideal market conditions for our clients, who react to short term movements in the market,” IG Group chief executive Tim Howkins told City A.M.

Deepening fears over the future of indebted Eurozone states such as Greece, Spain and Italy, wrangling over the US debt ceiling and worries over Europe’s banking sector put markets on a rollercoaster ride since June.

The uncertainty prompted panic selling that caused the FTSE 100 to plunge from almost 6,000 points in May to below the 5,000 mark in August.

IG’s like-for-like revenues jumped 30 per cent in the quarter as demand for trades soared. Both revenues and client activity hit new records in August, IG said.

But Howkins said clients quickly adjusted to the market unpredictability, making it unlikely trading levels would stay that high even if markets remained restless.

“It is fair to say clients get used to higher levels of volatility,” he said. “There was a burst of activity in early August but it is a bit lower now and if we saw continued levels of volatility clients would just get used to it.”

He said market moves had caused a surge in new account openings, brought infrequent or sporadic traders back into the market and even saw customers switch from IG’s rivals over the quarter.

That grew IG’s active client base by a fifth, with each new customer producing eight per cent more revenue.

UK revenues rose 22 per cent to £51.8m in the quarter compared with the same period in 2010.

Its fastest-growing division markets were in its rest of world division, made up of Singapore, the US and South Africa.

Revenues there soared 79 per cent year-on-year to £7.2m as the countries were in winter season and so clients were not taking holidays as they were in Europe.