Broker IG pulls some of its riskier products after GameStop frenzy
22/02/2021 16:17
Feb 22 (Reuters) - London-listed trading platform IG IGG.L
said on Monday it would withdraw a number of its riskier
equities products after a frenzy of stock market bets by small
U.S. investors earlier this year triggered huge swings in some
share prices.
In response to a story by the Financial Times, IG said it
would be withdrawing less than 8% of the 12,000 leveraged
equities products it offers.
Leveraged products allow traders to increase their exposure
to the market with a relatively small capital investment.
Big bets by individual investors, particularly in the shares
of U.S. retailer GameStop GME.N , have triggered massive price
swings in some stocks around the world, leading some people to
make hefty profits but leaving others facing large losses.
Along with rivals CMC CMCX.L and Plus500 PLUSP.L , IG had
a rough couple of years before the COVID-19 pandemic as tighter
regulations on certain leveraged products - including so-called
contracts for difference - hit profits.
But the global health crisis drove a sharp rise in business,
as more people in lockdown started to trade. IG last month
announced a $1 billion deal to buy U.S. rival tastytrade after a
strong 2020.
IG also said on Monday it had reached its limit for the
amount of cryptocurrency it holds as a business and that it was
no longer accepting new cryptocurrency buy orders from clients.
A recent rally in bitcoin BTC=BTSP , the most popular
cryptocurrency, has been fuelled by signs it is gaining
acceptance among mainstream companies, from Tesla TSLA.O and
Mastercard MA.N to BNY Mellon BK.N . urn:newsml:reuters.com:*:nL1N2KP0P4
Last month, Britain's Financial Conduct Authority warned
investing in cryptoassets generally involved taking very high
risks and consumers should be prepared to lose all their money
if they do invest in them. urn:newsml:reuters.com:*:nRSK2130La
The Financial Times reported earlier that IG had withdrawn
certain types of trading in companies including insurer Hiscox
HSX.L , malls operator Hammerson HMSO.L and clothing brand
Superdry SDRY.L .
"These equities represent a very small part of our overall
offering and clients will still be able to trade these equities
through our share dealing offering. We have been in contact with
clients who hold relevant positions," the company said.
"IG has experienced a sustained period of exceptional demand
for the products we provide. This has been reflected across the
market," it added.
(Reporting by Muvija M and Shubham Kalia in Bengaluru. Editing
by John O'Donnell and Mark Potter)
((Muvija.M@thomsonreuters.com; within UK: +44 20 7542 1810,
outside UK: +91 80 61822698; Twitter: https://twitter.com/muvija_m;))