Markets

IG Group Reports Sizeable Decrease in Crypto Trading

The online brokerage IG group has published its results for the third quarter of fiscal 2018 that ended on the 28th of February. The company generated record revenue, up 30% from the same period the year before. Net trading revenue rose to £152.9M in the quarter, compared to £117.4M a year earlier.

The main reason for such growth was cryptocurrency trading which accounted for 11% of the revenue in the period, up from just 1% the year prior. However, according to IG, crypto trading has “slowed markedly” since the end of January amid falling digital currency prices. The recent decline in the bitcoin value has substantially decreased traders willingness to take risks and the number of active CFD clients decreased by 1% since the turn of the year, the company reported.

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The global regulators have also started cracking down on the sector, which is another likely suspect when it comes to looking for causes of the decrease. As well as imposing a potential ban on crypto-derivatives, the European Securities and Markets Authority (ESMA) is also discussing proposals to severely lower the leverage traders use to enhance their bets.

IG stated that it “continues to believe that any financial impact from the implementation of such measures is unlikely to be significant in 2018“. However, for the financial years coming after 2018, the situation is still very much unclear.

It seems that IG Group is under the impression that the upcoming regulations are a matter of when not if. According to the official statement released by the group on Thursday, “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.”

Last month, the company even set up a website where its users could protest against the ESMA plans of a regulatory clampdown on CFD trading. A final decision, which is said to be designed in order to protect amateur traders, is expected shortly.

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