IG Group Records Increase in Revenue due to Volatility of Market
The IG Group, a spread betting company, recently stated that its revenue has increased by a quarter in the 6 months leading to November. The reason cited for this is the volatility in equity markets. The past few months have seen an unrest, which has helped the company. It drove people to increase their betting activities. When the market is volatile, gamblers generally try to make the best of it by betting a lot.
Activity Levels High Across the Board
Two factors related to betting activity helped the group increase its turnover from £156.7 million to £195.6 million in twelve months. One was an increase in the number of clients who were active on IG’s sites and the other was a rise in the average revenue gained from each bettor. IG’s chief executive, Tom Hawkins, stated that the group is experiencing a phase when the activity levels are high across the board.
August saw a rise in volatility, which resulted in an increase in the betting activity in the industry. IG Group too benefited from it. However, the unexpected volume of August was not retained in the three months that followed. Hawkins mentioned that currently, the intraday move is 1.5%. This has now become the standard. Client activity tends to drop once they get used to the percentage.
MF Global’s Collapse Creates Opportunity for IG
IG Group has made investments in marketing and IT, which has helped push its performance to a new level. Hawkins stated that this can help drive growth in the long-term. An opportunity cropped up when MF Global, a rival of IG that provided CFDs in the markets in Singapore and Australia, collapsed two months ago. Account openings have helped IG significantly, as has reactivation by former clients of MF Global. The group expects the advantage it has gained in the months following the incident, to continue.
With MF Global’s collapse, regulators are quite likely to scrutinize other spread betting companies. If this is the case, and it causes trouble for IG’s rivals, the group will benefit. Both regulators and clients are keen on the right segregation of the latter’s money. This is one of IG’s area of competitive strength.