IG Group, the London-listed world leader in derivatives trading, has reported its Q3 financials for fiscal 2019 that ended on February 28th. The latest Q3 figures indicate large scale impact of ESMA’s new regulation on revenue and low volatility has impacted the overall business of the retail broker.
During the third quarter, the revenues declined by almost 12 per cent to £108 million, with the most impact coming in from the UK and EU region, where income decline has 15 per cent to £56.9 million. The revenue from the APAC region also witnesses a double-digit decline of 11 per cent quarter-on-quarter to £35 million. The only increase in revenue has been reported from EMEA region, that is outside ESMA jurisdiction, where the group posted a 6 per cent increase in revenue to £11.3 million.
During the quarter, the total number of active clients with IG Group rose slightly by 1 per cent to 125,600 compared to the previous quarter. Clients in the UK and EU region also increased by 1 per cent to 51,800. The total number of new customers signed up during the quarter increased to 7,742 from 7,553, maintaining stable client growth.
Low volatility across global financial market during the quarter took a heavy toll on the company’s profitability, and a shift to professional clients also didn’t help much with the segment, reporting a decline of 20 per cent. During the quarter, only 14 per cent of 1425 applications for professional clients got approved by the broker. The professional clients’ segment accounted for the major part of the revenue from the EU and the UK region at £37.1 million, whereas retail clients contributed £19.8 million to the revenue.
The year-to-date revenue for IG Group declines by a good 27 per cent from the ESMA region with 39 per cent from EU and 22 per cent from the UK region to £202.4 million from £278.4 million a year ago. The EMEA ex EU and APAC recorded an increase of 22 and 7 per cent respectively.
Following the release of the result, IG shares tumbled, breaking below the 500 pence per share. The 52 weeks high for the stock in 920 pence, reached in August last year before the new ESMA regulation kicked in.