IG Group halts its Sprint product

FINANCIAL SPREAD BETTING GROUP GETS OUT IN FRONT OF THE U.K. REGULATOR
 
IG Group halts its Sprint product action for new clients…
 
The looming clampdown on contracts-for-difference spread betting announced late last year by the UK Financial Conduct Authority has spurred one of the major operators in the sector, FTSE-listed IG Group, to withdraw its Sprint binary options product from new clients in an attempt to get ahead of the regulator's proposed new industry restrictions.
 
It could be an expensive decision – the product generates around GBP 15 million a year for the company as punters make leveraged bets on market changes over anything from an hour to a minute in duration.
 
The decision to can Sprints for new clients was announced in IG's interim report this week, which showcased a positive set of H2-2016 performance numbers that included pre-tax profit up 7 percent at GBP 105.2 million, and net revenue up 14 percent at GBP 245 million.
 
However, it has to be remembered that the reporting period (to end-November) was just before the FCA's announcement that it was about to crackdown on the sector, where CFD punters were sustaining 82 percent losses, suggesting they did not really understand the risks involved.
 
The prospect of FCA restrictions created a furore in the market with share prices in leading sector firms like IG plummeting as much as a third, knocking billions off the market capitalization of the companies so impacted.
 
Putting a positive spin on its Sprint decision, IG Group explained that the product no longer suits its strategic move towards more sophisticated trading and investing.  However, the company is hedging its bets by keeping the product open to existing clients, with whom it is clearly popular.
 
In a later interview with the Telegraph newspaper, IG Group director Kieran McKinney acknowledged that Sprint will likely be among the products targeted by the FCA clampdown, and that his company is getting out ahead of the regulator's restraints.