IG Group Holdings plc Response to FCA and ESMA announcements (5929J)
29 June 2017 - 8:42PM
UK Regulatory
TIDMIGG
RNS Number : 5929J
IG Group Holdings plc
29 June 2017
29 June 2017
IG GROUP HOLDINGS PLC
Response to FCA and ESMA announcements
IG Group Holdings plc (IG, the Group, the Company), a global
leader in online trading, notes the Financial Conduct Authority
(FCA) announcements today on CP 16/40 and on its findings from its
review of appropriateness assessments for the sale of CFDs. The
Company also notes that the European Securities and Markets
Authority (ESMA) has today released a general statement on product
intervention concerning CFDs and other speculative products.
The FCA has decided to delay making final conduct rules until
ESMA has determined whether to use the product intervention powers
that will be available to it under MiFIR. The Company supports
FCA's decision to delay, in order to achieve harmonisation across
Europe for the regulation of CFDs and ensure that any measures are
informed by clear and robust data analysis. ESMA has indicated it
is considering a range of product intervention measures such as
leverage restrictions, guaranteed limits on client losses and/or
restrictions on the marketing and distribution of these products.
The Company has been engaging with ESMA, FCA, several European
National Competent Authorities (NCA), and other European bodies
such as the European Commission and Parliament, regarding potential
measures for improving consumer outcomes for CFDs.
IG has delivered a sustainable business for over 40 years. Key
to achieving this has been IG's strategy of differentiation within
the industry through its adherence to the highest regulatory
standards and its focus on good outcomes for clients. The Company
is therefore fully supportive of FCA and ESMA in their intentions
to improve consumer outcomes across the industry and believes that
consumers will benefit from the measures currently being discussed
and from harmonisation of regulation. The Company also acknowledges
the commercial benefit of having all participants in the industry
operating on a level playing field.
In their announcements this morning, both FCA and ESMA have
referenced recent ESMA Q&As on good practices within the CFD
industry. The Company agrees with FCA and ESMA that there are some
people trading CFDs for whom the product is not suitable. IG
believes the practices outlined by FCA and ESMA are essential to
enable good consumer outcomes and has already adopted the Q&A
recommendations. For example, on appropriateness (i.e. the
assessment that firms must make to determine whether they are
onboarding clients with a sufficient level of knowledge and
experience to understand the risks of CFDs), the Company has
enhanced its assessment process over the past year to:
- Test the knowledge of applicants who have limited experience trading derivatives;
- Require applicants to give detailed information regarding their trading history;
- Reject applicants for whom CFDs are not appropriate;
- Reject applicants who do not have sufficient wealth to trade CFDs;
- Require appropriate clients with limited experience to use
Limited Risk Accounts. Limited Risk Accounts have already been
endorsed at NCA level, including by the German and French
regulators.
This is consistent with the direction outlined by FCA today, and
with ESMA's Q&A on appropriateness. We would welcome this
standard becoming the required standard within the European
industry.
The Company also notes FCA's comment that data suggests that
lower leverage produces better outcomes for clients. The Company
already sets leverage at responsible levels that do not cause poor
outcomes. The Company will continue to engage with FCA and ESMA to
achieve the right balance.
IG has a great track record of innovation and flexibility, and
has technology and skills it can deploy to make the most of
regulatory change. In the Company's experience, when tighter
regulation has been applied appropriately, client outcomes have
improved, the industry has become more sustainable, and compliant
providers have benefitted over the longer term.
For further information, please contact:
IG Group
Kieran McKinney
Head of Investor Relations and Corporate Affairs 020 7573 0026 investors@iggroup.com
Liz Scorer
Investor Relations 020 7573 0727 investors@iggroup.com
FTI Consulting
Neil Doyle / Ed Berry 020 3727 1141/1046
IG empowers informed, decisive, adventurous people to access
opportunities in over 15,000 financial markets. With a strong focus
on innovation and technology, the company puts client needs at the
heart of everything it does.
IG's vision is to be a global leader in retail trading and
investments. Established in 1974 as the world's first financial
spread betting firm, it continued leading the way by launching the
world's first online and iPhone trading services.
IG is now an award-winning, multi-platform trading company, the
world's No.1 provider of CFDs* and a global leader in forex. It
provides leveraged services with the option of limited-risk
guarantees, and offers an execution-only share dealing service in
the UK, Australia, Germany, France, Ireland, Austria and the
Netherlands. IG has recently launched a range of affordable, fully
managed investment portfolios, to provide a comprehensive offering
to investors and active traders.
It is a member of the FTSE 250, with offices across Europe,
including a Swiss bank, Africa, Asia-Pacific, the Middle East and
the US, where it offers on-exchange limited risk derivatives via
the Nadex brand.
*Based on revenue excluding FX (from published financial
statements, October 2016).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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