IG Group launches UK derivatives platform
IG Group has launched a platform in the UK providing US-listed options and futures trading, City PM can reveal.
Killing time in the pandemic, meme stocks and crypto have all introduced a new generation to the world of derivatives trading, adding to a raft of experienced traders.
Tastytrade, which was bought by IG Group in 2021, will expand into the UK this summer, allowing retail investors to trade derivatives and stocks across over 7,000 underlying holdings.
JJ Kinahan, CEO of IG North America and president of Tastytrade, told City PM that the growth of meme stocks like Gamestop had led retail investors to become “interested in the markets in a way they never had before”.
“They’re still continuing to trade, maybe not at the pace they did then, but the interest stays there, and for many people, that’s going to be a 30 or 40-year adventure,” he said.
The new platform will offer the ability to buy shares in Gamestop, along with options and futures, and while Tastytrade’s US platform allows access to spot bitcoin ETFs, the UK platform will not due to the Financial Conduct Authority’s restrictions on crypto investment.
“We’re working through to get our crypto also in the US, you’re going to start see us advertise it significantly more starting in a couple weeks,” said Kinahan.
“The one thing about crypto and the first time Gamestop went up is in both instances, it seemed a little bit of the ‘we’re going to get the man’. I don’t see that as much in either anymore.”
“So now, because of that, I think that’s allowing people to broaden their investment interests, because they don’t necessarily have to see it as some sort of revolutionary movement.”
IG Group is listed in the UK, so Kinahan said the country was a natural first expansion for the platform, and said while it had further ambitions of expansion, had not selected its next target.
The trading provider is known for its CFD platform, but Kinahan said the new product launch would not clash with IG Group’s existing business, but instead compliment it.
Tastytrade also focuses on education, and the chief exec said the UK investor was currently where the US investor was in 2006, due to the lack of financial education around derivative products.
“That’s why we’re starting with IG Group clients who have had more experience, and there are also different levels of approval for options,” he explained.
However, derivatives are still complicated financial instruments, and Kinahan stressed that “one of the things we see retail traders do too often, unfortunately, is try and be big quickly, hit a home run.”
“The thing we constantly talk about is trading small, start with the smallest number possible,” he said.
“Can people abuse the product? Yes, but we make it as hard as we possibly can for them to do so.”
The most popular products on the US platform are US megacap companies like Nvidia and Apple, as their high stock price has left investors less able to buy single shares, instead going to options with “significantly less capital”.
“The primary futures our clients trade are related to the S&P 500 and the Nasdaq. Then you’ll see crude oil, when crude bounces around, and gold,” added Kinahan.