IG’s revenue jumps 29 per cent as market volatility peaks
Trading platform IG’s revenue in the third quarter jumped 29 per cent as market volatility, brought on by the outbreak of coronavirus, increased trading.
The figures
IG’s revenue in the third quarter was 29 per cent higher than in the same period last year, at £139.8m.
The trading platform served 101,700 OTC leveraged active clients in the quarter, an increase of 21 per cent. Average OTC leveraged revenue per client is nine per cent higher than the previous year, at £1,330.
Year to date net trading revenue is up nine per cent at £389.7m, with revenue in the grouo’s core markets up three per cent. Revenue from the group’s portfolio of significant opportunities is 51 per cent higher.
Why it’s interesting
IG said the jump in revenue represents its strongest revenue quarter since the implementation of the Esma product intervention measures in August 2018. It is the third highest quarterly revenue in the group’s history, exceeded only by the last two quarters of 2018.
A jump in active clients and increase in client trading peaked in the last week of February as market volatility took hold amid the outbreak of coronavirus outbreak.
IG’s client execution benefit is generally higher in more volatile market conditions.
Further volatility is anticipated as dramatic market falls continued into March. Revenue in the first 12 trading days of the fourth quarter is estimated to be around £52m.
Global indices have plummeted into the red in recent weeks, despite promises of large stimulus packages by governments.
IG said it had implemented a “comprehensive business continuity plan” in response to coronavirus, rolling out working from home plans.
Chief executive June Felix pointed to IG’s business model for the revenue growth. IG earns earns money through client transactions and not through clients winning and losing money, which Felix said ensures client loyalty.
What IG said
“These are extraordinary times. This sustained level of volatility and revenue is unprecedented, and it is not possible to determine how long it will persist or how clients will continue to respond.”
“In addition, the actions of governments and regulators are not predictable, and the group may face circumstances and events it has not previously anticipated. It therefore remains difficult to predict accurately the level of revenue in the final quarter of this financial year.”