IG Group Holdings Plc (lon:igg)
IG Group Punished By Regulation That Doesn't Affect Them?


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Title: IG Group Punished By Regulation That Doesn't Affect Them?
Company: IGG - IG Group Holdings Plc
Share Price Then: 555p
Author: Ian Smith
Date: Mon 03 Jul 2017
Comments: IG Group are a share trading platform that also offers spread betting, commodity trading and CFDs.

Their share price had drifted up to about 950p, dropped back to about 833p when in Dec 2016 the FCA issued guidelines limiting the amout of leverage that could be offered.

These new limits were 25:1 for new customers and 50:1 for experienced ones, as these limits were way above those offered by IGG there should have been little impact yet the share price tumbled to 485p in one day.

The FCA were getting concerned that most retail users of CFDs were losing money by using Leverage (a posh word for trading on credit) and these guidlines could be a warning for the future.

However the new leverage levels were still very high suggesting that the basic principle is acceptable. Sensible users of leverage often pay funding fees to keep positions open so there was really nothing of concern.

As IG Group have about 1,400 employees in 15 countries and a revenue of about £450m they are one of the big players in the market. With results for the fourth quarter suggesting a small growth on the 2016 profits which were about £207m and a good dividend record why not?
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