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IG Group

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IG Group Holdings plc
FormerlyIG Group Holdings Limited (2003–2005)
Company typePublic limited company
IndustryFinancial services
Founded1974
HeadquartersLondon, England, United Kingdom
Key people
Services
  • OTC
  • EDT
  • Stock trading
RevenueDecrease £987.3 million (2024 FY)[1]
Decrease £369.2 million (2024 FY)[1]
Decrease £307.7 million (2024 FY)[1]
Number of employees
2570[1] (2024)
Subsidiaries
  • DailyFX
  • tastytrade
  • tastylive
  • Spectrum Markets
  • Raydius
  • BrightPool
Websitewww.iggroup.com

IG Group Holdings plc, trading as IG Group, is a United Kingdom-based online trading provider, offering access to spread betting and CFD trading, which allows traders to bet on the direction of equities, bonds and currencies without owning the underlying assets.

Established in 1974 by Stuart Wheeler, the company is headquartered in London and operates in Europe and the USA. As of 2024, it had a market value of £3.4 billion and offered trading in 19,000 investment markets. IG is regulated by the Financial Conduct Authority (FCA). It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.

History

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Early years (1974–2000)

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IG Group, originally founded as IG Index (Investors Gold Index), was founded in 1974 by British financier Stuart Wheeler with an initial investment of £30,000 from six friends.[2][3][4][5] It became the first company to offer spread betting,[6] allowing investors to speculate on gold prices rather than buying physical gold, which was restricted by UK exchange controls at the time.[7]

In 1993, IG Group expanded into spread betting on sports events, and in 1996, it started offering foreign exchange trading.[3]

Market expansion and IPO (2000–2010)

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In July 2000, IG Group was formed as the parent company of IG Index, and its shares were listed on the London Stock Exchange, making it the first company of its kind to go public.[8][9] Sports betting surged with the rise of the internet, bringing the company more than £10 million in revenue in the second half of 2001, nearly triple its earnings from the first half of 2000.[10]

IG Group entered the Australian market in 2002, marking its first international expansion.[11] In 2003, founder Stuart Wheeler sold his 23.68% stake in the company, netting £90 million.[3][2] He was joined by some other major shareholders, so a total number of shares to be sold reached 30%.[9] A management buyout backed by CVC Capital Partners valued the company at £143 million.[12] In April 2005, IG Group returned to the stock market with a valuation of £1.3 billion, and CVC sold off £58 million worth of shares.[13]

The company continued its global expansion, entering the United States market in 2007 with the £2.9 million purchase of HedgeStreet, an online derivatives trading platform,[14] later rebranded as Nadex.[15] In September 2008, IG Group acquired FXOnline, a Japanese trading firm, for £112 million.[16]

Challenges and diversification (2011–2020)

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In 2011, IG Group reported a net loss of £25.5 million, largely due to regulatory changes in Japan that restricted leverage to 10 times, significantly lower than the 100 times or more the company previously offered. The company also shut down its sports betting service, extrabet, due to declining revenues, incurring £5.3 million in closure costs.[17]

In September 2014, IG Group launched an online stockbroking platform, offering access to 4,500 stocks.[18] In September 2016, it acquired the financial news and research portal DailyFX from FXCM for $40 million.[19] However, the same year, IG Group's shares fell 38% following the Financial Conduct Authority's (FCA) announcement of new industry regulations, wiping £1 billion off the company's market value.[20][21] In response, IG withdrew its binary options product in early 2017.[21]

In 2017, IG partnered with BlackRock to launch the IG Smart Portfolio, marking the company's entry into wealth management.[22] In 2019, IG launched a new U.S. subsidiary, IG US, which offers foreign exchange trading[23] (in June 2024, IG US rebranded to tastyfx[24]).

In 2020, IG Group launched its environmental, social, and governance (ESG) strategy, "Brighter Future." As part of this initiative, the company established a £2 million fund to support education and development programs for young people, particularly in response to the impact of the COVID-19 pandemic.[25][26][27]

Recent developments (2021–present)

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In January 2021, IG Group acquired Chicago-based online brokerage Tastytrade for $1 billion, enhancing its offerings for retail investors. The company, founded in 2011 by Tom Sosnoff, included the brokerage arm tastyworks, which was rebranded as tastytrade in 2023.[28][29][30]

In March 2022, IG Group brokered a deal to sell the North American Derivatives Exchange (Nadex) and a 39% stake in the Small Exchange to Foris DAX Markets Inc, which trades as Crypto.com, for $216 million.[31][32]

In the first half of the 2024 fiscal year, IG Group reported a 32% drop in after-tax profits compared to the previous year.[33] By the end of the 2024 fiscal year, pre-tax profits had fallen by 11%, annual revenue had dropped by 10%, and the number of active clients had decreased from 358,000 to 346,200.[34] In response, the company announced plans to cut 10% of its workforce[35] and launched a £150 million share buyback program, starting with a £75 million tranche in August 2024.[36][37]

Markets

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IG Group is headquartered in London,[38][39][40][41][42] and operates in multiple regions, including the United States, European Union, Australia, Singapore, South Africa, Switzerland, Japan, and Dubai. The company manages 18 sales offices worldwide, providing clients with access to 19,000 financial markets.[43][44][11] IG Group is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.[45] As of October 2024, the company's market value is £3.4 billion.[46]

IG Group offers a range of leveraged and investment products, varying by region due to differing national regulations.[47] In EU, the company provides turbo warrants,[47] while in the United States, through its acquisition of tastytrade, it offers options, futures, and cryptocurrency trading tailored to individual investors.[48][49][39]

Management

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Tim Howkins, who served as Chief Financial Officer before becoming CEO in October 2006, led the company for nine years before retiring in 2015.[50] Peter Hetherington succeeded him as CEO in October 2015, having initially joined IG Group as a graduate trainee in 1994. Hetherington stepped down in September 2018.[51]

In October 2018, IG Group appointed June Felix as CEO.[52] Felix had previously served as a non-executive director for three years before joining the board.[53] Due to health issues, Felix resigned in December 2023, and Breon Corcoran was appointed as the new CEO.[54]

Controversy

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Violations of customers' rights and system shortages

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IG Group has faced criticism in the media regarding its handling of customer losses. Natalia Chumak, a partner at litigation City firm Signature Litigation, noted that customers trading with IG Group can incur unlimited losses, while the company does not always make this risk clear. She also pointed out that IG Group may avoid certain risks but benefits from any gains.[55]

In March 2021, FinanceFeeds and Financial Magnates reported frequent outages of IG Group's trading system during periods of high trade volume.[56][57] These outages left clients unable to manage their positions, resulting in financial losses. FinanceFeeds also reported that during a significant outage in January 2021, IG Group did not provide adequate customer support, although it responded promptly to media inquiries to address public concerns.[58]

In April 2024, another system failure led to funds being mistakenly withdrawn from the accounts of over 50 customers. The issue remained unresolved for more than a week until it gained media attention. In contrast, the company has been reported to correct over-credited funds in client accounts on the same day.[59][60]

Controversial political donations

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IG Group's founder, Stuart Wheeler, was actively involved in politics and made several notable donations. His financial contributions, particularly to the Brexit campaign, earned him a nickname of a "a leading disrupter in British politics".[3][2][61]

Lawsuits

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In 2010, IG Index, IG Group's spread betting firm, faced a £21 million (€25 million) lawsuit filed by three former clients of the defunct Scottish trading firm Echelon Wealth Management.[62][63] The clients believed that their funds had been ring-fenced in segregated IG deposit accounts. However, following Echelon’s collapse, IG used these funds to cover other Echelon clients' losses.[64] The claim was dismissed in 2020.[65]

In January 2015, more than 370 clients incurred significant losses following a failure of IG's trading platform during a volatile market event. On 15 January, the Swiss National Bank (SNB) unexpectedly removed its minimum exchange rate for the Swiss franc, causing a 30% drop in EUR/CHF. IG delayed its response by 10 minutes, attempting to hedge its own exposure while competitors acted immediately to protect their clients. Additionally, technical issues on the platform required manual execution of stop-loss orders, further amplifying client losses.[55][66][67][68] Some affected clients were left with substantial debts, with one teacher on a £18,000 salary losing £280,000. Despite these incidents, IG maintained that it had fulfilled its contractual obligations.[67][69][70] In June 2015, the Financial Ombudsman Service ordered IG to compensate affected customers £1 million.[71][68]

As of October 2024, IG Group faces two lawsuits in Australia, alleging misleading and unconscionable conduct. In May 2023, Piper Alderman filed a class-action lawsuit against IG Markets, accusing the company of promoting Contracts for Difference (CFDs) to inexperienced traders without proper safeguards.[72] A second class action was filed in August 2023 against IG Markets Limited and IG Australia Pty Ltd, alleging that from May 2017 to August 2023, IG misled retail investors by promoting high-risk financial products, such as CFDs and binary options, which were deemed unsuitable and harmful by the Australian Securities and Investments Commission (ASIC). The legal action is being funded by Woodsford.[73][74]

Sponsorship

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During its history, IG Group signed some notable sponsorship deals:

  • The company sponsored Getafe CF football club in the 2010–2011 Spanish season.[75]
  • In November 2010, IG Markets signed a sponsorship deal to support Team Sky professional cycling team in 2011.[76]
  • In December 2010, IG Markets announced sponsorship of two stages of Santos Tour Down Under cycling race in 2011.[77]
  • In October 2013, IG signed a sponsorship deal with Harlequin rugby team for the next three years.[78] In September 2014, the deal was updated to make IG one of three major sponsors for the team.[79]
  • In May 2015, IG Group became a partner of Melbourne Football Club for 2015 and 2016.[80]
  • In May 2021, IG Group became a partner of England Cricket Club for 2021 and 2022.[81]
  • In February 2024, IG Group entered into a 10-year naming rights agreement for an upcoming sports and entertainment arena in Nagoya, Japan.[82][83]

See also

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References

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  1. ^ a b c d "IG GROUP HOLDINGS PLC - ANNUAL REPORT 2024" (PDF). IG Group. 13 August 2024. Retrieved 26 October 2024.
  2. ^ a b c Lewis, Jane (2 August 2020). "Stuart Wheeler : the granddaddy of spread-betting". Money Week. Retrieved 24 October 2024.
  3. ^ a b c d "Wheeler to sell IG Group stake". BBC UK. 20 January 2003. Retrieved 24 October 2024.
  4. ^ "Spread bets firm IG Index holds £110m market slip". The Daily Telegraph. 10 June 2000. Retrieved 26 October 2023.
  5. ^ Ben Martin (25 April 2020). "IG puts on spread for staff with bumper bonus round". Retrieved 14 June 2022.
  6. ^ Zainab Hussain, Noor; Radhika, Rukmangadhan (21 September 2017). "IG Group's first quarter revenue jumps on expanded client base". Reuters. Retrieved 25 October 2023.
  7. ^ Koilparambil, Aby Jose; Shabong, Yadarisa (15 March 2023). "UK's IG Group revenue drops in quiet Dec-Feb quarter". Reuters. Retrieved 25 October 2023.
  8. ^ Hyland, Anne (6 July 2000). "Rival bookmakers bet on IG price". The Guardian. ISSN 0261-3077. Retrieved 26 October 2023.
  9. ^ a b Basar, Shanny; Townsend, Piers (20 January 2003). "IG Group ready for bids as Wheeler sells stake". Financial News. Retrieved 24 October 2024.
  10. ^ O’Hara, Mary (10 June 2000). "Chance for IG punters to cash in". The Guardian. Retrieved 25 October 2024.
  11. ^ a b "IG chief predicts end of market tranquillity". The Telegraph. 24 November 2014. Retrieved 9 November 2023.
  12. ^ Dewson, Andrew (28 April 2005). "IG Group floats with a half-penny premium". Financial News. Retrieved 14 November 2023.
  13. ^ "UPDATE 1-CVC sells $90 mln stake in IG Group". Reuters. 11 May 2010. Retrieved 25 October 2024.
  14. ^ Turner, Lorraine; Hoskins, Paul (24 September 2008). "UPDATE 2-British spread-better IG buys Japan's FXOnline". Reuters. Retrieved 14 November 2023.
  15. ^ "HedgeStreet Changes its Name to the North American Derivatives Exchange, Inc. (Nadex) | Nadex". Retrieved 14 November 2023.
  16. ^ Tucker, Sundeep (24 September 2008). "IG Group buys Japanese trader". Financial Times. Retrieved 10 November 2023.
  17. ^ David Altaner (19 July 2011). "IG Logs Full-Year Loss After Taking Japan-Unit Charges". Bloomberg. Retrieved 25 October 2024.
  18. ^ "IG launches online stockbroking platform". The Daily Telegraph. 15 September 2014. Retrieved 25 October 2024.
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  25. ^ "IG Group and Teach First Launch £2M Education Fund Due to Covid-19 Crisis". 24 April 2020. Retrieved 1 June 2022.
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  41. ^ "FCA IG Markets Limited". Financial Conduct Authority. Retrieved 9 July 2019.
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  43. ^ "IG Group Holdings PLC". Financial Times. Retrieved 16 October 2024.
  44. ^ "Where we operate". IG Group. Retrieved 20 February 2024.
  45. ^ "FTSE 250 - Indicative Index Weight Data as at Closing on 31 December 2014". FTSE. 31 December 2014. Archived from the original (PDF) on 24 February 2019. Retrieved 10 May 2015.
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  47. ^ a b Ben Martin (25 April 2020). "IG Group boss is betting that global expansion can be its game-changer". Retrieved 21 February 2024.
  48. ^ Oladipupo, Solomon (30 August 2023). "IG Group's American Arm Joins FIA, Expands Its Global Trading Network". Finance Magnates. Retrieved 21 February 2024.
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  50. ^ "IG Group chief exec Tim Howkins to quit group and retire in October". 21 July 2015. Retrieved 7 June 2022.
  51. ^ Maria Nikolova (27 September 2018). "Peter Hetherington to Step down as CEO of IG Group". Retrieved 7 June 2022.
  52. ^ "IG Group appoints ex-Citi and IBM executive as first female CEO". Reuters. 30 October 2018. Retrieved 31 October 2018.
  53. ^ Hannah Finch (25 February 2022). "The 18 women leading top firms in the FTSE 350 in 2022". Retrieved 7 June 2022.
  54. ^ "City trading house IG Group picks ex-Betfair boss Corcoran as new CEO". The Evening Standard. 8 December 2023. Retrieved 25 October 2024.
  55. ^ a b Khalique, Farah (6 July 2015). "Spread-betting poster-child IG in the line of fire post-SNB". Euromoney. Retrieved 25 October 2024.
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  57. ^ Celeste (22 May 2020). "IG Group Experiences Further Platform Issues". Finance Magnates. Retrieved 3 March 2020.
  58. ^ FinanceFeeds (29 January 2021). "IG Group platform crashes yet again, with traders being left out in the cold". FinanceFeeds. Retrieved 3 March 2021.
  59. ^ "PRESS: IG Group faces criticism after clients hit by refunding errors". Morning Star. 26 April 2024. Retrieved 25 October 2024.
  60. ^ Hickey, Sally (26 April 2024). "IG Group clients hit by refund errors". Financial Times. Retrieved 25 October 2024.
  61. ^ Kimberley, David (30 September 2019). ""I Gamble Because I'm Good at It," Says IG Founder in New Book". Finance Magnates. Retrieved 25 October 2024.
  62. ^ Clark, Nick (24 November 2010). "Echelon clients bring lawsuit against IG". Independent. Retrieved 25 October 2024.
  63. ^ Wilson, Harry (24 November 2010). "IG Index hit with £21.4m lawsuit by clients of defunct broker Echelon Wealth Management". The Telegraph. Retrieved 24 October 2024.
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  65. ^ "IG Group says court dismisses 2010 claim against IG Markets". Reuters. 27 March 2013. Retrieved 25 October 2024.
  66. ^ Khalique, Farah (7 July 2015). "Spread-betting poster-child IG in the line of fire post-SNB". Euromoney. Retrieved 25 October 2024.
  67. ^ a b Szalay, Eva (19 March 2015). "IG under fire from clients with huge negative balances". FX Markets. Retrieved 25 October 2024.
  68. ^ a b Lynch, Russel (20 January 2015). "IG Group vows to learn as it loses £30 million from Swiss franc surge". Standard Co UK. Retrieved 25 October 2024.
  69. ^ Moore, James (22 July 2015). "Letting customers rack up losses is bad for business". The Independent. Retrieved 25 October 2024.
  70. ^ "How could a teacher on £18,000pa lose £280,000 spread betting?". Independent.co.uk. 18 March 2015. Retrieved 25 October 2024.
  71. ^ Morris, Stephen (7 October 2015). "IG Group Repays $1.5 Million to Clients Over Swiss Franc Turmoil". Bloomberg. Retrieved 25 October 2024.
  72. ^ Shome, Arnab (8 February 2024). "CFDs on Trial: IC Markets Faces Class-Action Lawsuit in Australia". Finance Markets. Retrieved 25 October 2024.
  73. ^ "Class action filed against IG Markets in relation to offering of risky financial products". Woodford. 15 August 2023. Retrieved 25 October 2024.
  74. ^ Bragg, Jon (17 August 2023). "IG Markets faces another class action over 'highly risky' financial products". Lawyers Weekly. Retrieved 25 October 2024.
  75. ^ "IG Markets, patrocinador del Getafe CF SAD". Rankia.com (in Spanish). 23 August 2010. Retrieved 10 May 2015.
  76. ^ Kröner, Hedwig (18 November 2010). "Sky announces new co-sponsor". Cyclingnews.com. Retrieved 10 May 2015.
  77. ^ Noble, Kelly (10 December 2010). "IG Markets Sponsors Two Stages of Santos Tour Down Under". Glam Adelaide. Retrieved 10 May 2015.
  78. ^ Dormio, Nunquam (16 October 2013). "Quins sign new sponsorship deal". RugbyNetwork.com. Retrieved 10 May 2015.
  79. ^ "Harlequins announces IG as Principal Partner". Quins.co.uk. 4 September 2014. Retrieved 10 May 2015.
  80. ^ Nikolova, Maria (5 May 2015). "IG partners with Melbourne Football Club". LeapRate. Retrieved 10 May 2015.
  81. ^ Performance Specification for Mens and Boys Knitted and Woven Beachwear and Sports Shirt Fabrics, ASTM International, doi:10.1520/d4154, retrieved 8 September 2022
  82. ^ Kirui, Jared (8 February 2024). "IG Group, Aichi Arena Corp, and AEG Ink Naming Rights Deal for Sports Arena in Japan". Finance Magnates. Retrieved 18 October 2024.
  83. ^ Barnes, Mike (8 February 2024). "AEG Seals Naming-Rights Deal for New Arena in Japan". The Hollywood Reporter. Retrieved 25 October 2024.
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