IG Group Reports Record Trading Revenue in Q3 Aided by Growth in Cryptocurrency Trading - The Industry Spread

Karthik Subramanian

Karthik Subramanian has been a professional trader and fund manager over the last 18 years. He is basically a software developer who made the transition to financial domain around 18 years back as the attractiveness of the financial markets proved too much for him. He lives in Chennai in India along with his wife and son. He began his career as a software developer in 1999 and then gradually moved into the financial industry as he began trading stocks in his pastime. He then moved into the financial markets full time and then shifted his focus to the FX markets due to the liquid nature of these markets. Since then, he has been trading FX diligently and his favourite pair are the EURUSD and EURJPY. Over the last couple of years, he has found blockchain to be of high interest and considering his background in software and finance, he has since assembled a team of highly talented developers who have since worked on a variety of projects like crypto exchanges and blockchain architecturing. Now, he balances his time between trading and commenting on both the FX and crypto markets. He has worked with many publications including FX Street and Finance Magnates, which has helped him gain experience and also recognition across the industry. He loves to write and this passion has helped him to reach out across the FX and crypto industry. Right now, he works on his pet projects in the FX and crypto industry and spends his time writing and managing his blockchain team and helping it to reach higher.

IG Group Reports Record Trading Revenue in Q3 Aided by Growth in Cryptocurrency Trading

March 24, 2018

IG GroupIG Group Holdings Plc., the British online brokerage company has published its Q3 financial earnings ending on 28th Feb 2018. The company has reported a robust increase in trading revenue aided by the boom in cryptocurrency trading.

The group has reported 30 percent growth in trading revenue GBP 152.9 million ($216.7 million) compared to the same period last year at GBP 117.4 million, including OTC leveraged revenue which has increased by 31 percent to £147.5m. The latest figure is also higher by 13 percent when compared to the previous quarter. Of the total revenue of the group, 11 percent is contributed by cryptocurrency, marking the record quarter for the group. The rise in the prices of Bitcoin in the last month of 2017, has resulted in customers flocking to cryptocurrencies. At one point during the quarter, IG Group was one of the biggest holder BTC futures contracts to offset the exposure to client positions.

Other key performance indicators of the group during quarters are:

  • The average revenue per client increased 12 percent during the quarter while revenue from CFD products during the quarter has increased 25 percent, year-on-year, to £1,482
  • The active number of clients during the quarter rose 4 percent to 99,500, while company added 12,500 new OTC leveraged customers.
  • The total number of clients increased 16%, with this total amounting to 138.5 million
  • The trading revenue of the group for the Year-to-date are up by 16 percent at £421.3 million compared to last year.

Geographical Performance

The company main market region, UK has generated £69.2m in revenue, an increase of 35 percent than last year, while revenue from Europe, Middle-East and Africa recorded a growth of 25 percent to £41.9m.

The revenue from Asia-Pacific region increased 29 percent to £36.4m and US contributed £4.3m, an increase of 9 percent year-on-year.

The road ahead for the online trading and brokerage industry will be tough as the new strict ESMA rules will get enforced. The ESMA is proposing a sharp cut in the number of retail customers that are allowed to borrow to raise their bets on cryptocurrencies, as well as considering to ban on cryptocurrency derivatives. Also, because of Bitcoin prices are touching the lower base for quite some time, clients activities on Bitcoin have gone down causing a significant drop in overall trading revenues.

IG Group issued a statement saying:

“Revenue growth has been strong across all regions and products; the 16% growth in OTC leveraged revenue compared with prior year reflects higher revenue per client, driven by an increase in client trading activity, combined with higher hedging efficiency.”

“The business has delivered a strong performance in each of the first three quarters of the financial year. It remains difficult, however, to predict the level of revenue in the last quarter of the year, which depends on the level of trading opportunities available to our clients and on the company’s hedging efficiency.”

“Following its call for evidence in the early part of the year, it is expected that ESMA will soon publish measures to restrict the marketing, distribution or sale to retail clients of CFDs. IG continues to believe that any financial impact from the implementation of such measures is unlikely to be significant in FY18.”

“The company has made good progress with the actions being taken to mitigate the potential financial impact of regulatory change, and to position the business so that it will continue to deliver for all its stakeholders under a more restrictive regulatory environment.”

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