OTC Markets Group (OTCM): Tell us about IG Group.
Kieran McKinney: IG is a company with over 40 years of trading history. The Company was founded in 1974 and is headquartered in the City of London. IG now has a presence in 17 countries across the globe, with 1,500 staff and over 185,000 clients worldwide. IG exists to empower informed, decisive, adventurous people to access opportunities in over 15,000 financial markets. IG’s vision is to be a global leader in retail trading and investments. With a strong focus on innovation and technology, we put client needs at the heart of everything we do.
As a financial technology firm, IG is regulated in the UK by the FCA, using this licence to sell across the EU, and a further eight financial regulators worldwide, including the CFTC in the US.
IG is the world’s No. 1 provider of CFDs and a global leader in retail forex*. With a clean global regulatory record, we take our market leading position very seriously, priding ourselves in offering our products in a responsible way to only those for whom they are appropriate.
OTCM: What were recent major accomplishments for the company?
Mr. McKinney: IG has for many years been a clear leader in OTC leveraged retail trading. In recent times, the Company has expanded its offering beyond the core leveraged trading products, through the launch of execution-only share dealing and IG Smart Portfolios - a discretionary managed, risk based investment, using ETF asset allocation models based on BlackRock’s iShares. Both of these products complement IG’s core product and are designed to build longer lasting, deeper relationships with our existing client base.
During this time IG has also opened a fully licensed Swiss bank, which is performing ahead of expectations, launched an office in Dubai and built out significant operational support centres in Poland and India, focussing on technology delivery and cost effectiveness.
In late 2016 IG acquired dailyfx.com, a forex focussed news and education site with a reach of over 1.2million visitors per month. This site has a very large US following and supports our client base across the globe, including our US binary options exchange, Nadex, which offers limited risk derivative products.
IG is focussed on innovation and has a number of world firsts in its locker, a few examples being:
- 1st online dealing platform for spreadbetting (1998)
- 1st iOS mobile trading App (2008)
- 1st online forex and CFD broker to offer bitcoin trading (2013)
- 1st trading app for Apple Watch (2015)
OTCM: How does IG Group differentiate itself from its competitors and what is your growth strategy?
Mr. McKinney: Differentiation has been achieved through our focus on the needs of the client, putting fair client outcomes at the core of our corporate culture. We have also continuously invested significant resources in technology enhancements, product development, risk management tools and client education. IG has developed an excellent reputation for integrity.
We aim to build long lasting relationships with our clients and, as a result, increase the value and longevity of every relationship.
IG offers great depth in products and markets; for example we were the first CFD provider to offer trading on bitcoin in 2013 and we continually look to increase the range of markets we offer where there is the opportunity for us to offset the residual risk. With over 185,000 clients, new markets can quickly build to scale and profitability. Clients trades also create a natural hedge through the internal netting procedure, and so reduce the need to hedge externally with brokers.
IG has significant brand strength in most of the countries in which it operates, built over many years through its commitment to treating customers fairly. IG offers best execution guarantees and is currently unique in only charging clients for guaranteed stops if they are actually used. Such brand integrity takes many years to build and we believe this offers us a competitive advantage in our local markets, as word of mouth and personal recommendation is an important means of new client acquisition.
IG has grown considerably over recent years and our strategy for growth from here is multi-faceted:
- The global market for self-directed trading and investment continues to expand – this is assisted by new financial freedoms, technological advancement and a greater level of financial confidence – often promoted by information from the internet or social media. IG expects to take at least its fair share of this market growth, and potentially a greater portion as regulatory burdens make it increasingly difficult for sub-scale providers
- Product expansion has played an important role in IG’s growth story. We recently launched our share dealing and investments services and are rolling this out in more jurisdictions.
- We are continuing to explore additional geographic expansion opportunities, following successful recent launches in Dubai and Switzerland
- We are seeking to launch a multi-lateral trading facility in Europe, which will offer current and new clients the opportunity to trade our products on-exchange
OTCM: IG Group began trading on OTCQX in the U.S. in 2014. Can you talk about why you chose to join OTCQX and how this has impacted your U.S. investor relations strategy?
Mr. McKinney: The US has always been an important investor market for IG, with over 25% of our ordinary stock held by investors where the capital originates in the US. We joined OTCQX in order to round out our offering for US investors. We wish to provide US investors with the best access to IG shares. Having launched our ADR programme in association with Citi, as our depositary bank, we wanted to ensure we had the greatest transparency possible in the US and provide a real-time pricing and trading mechanism in our ADR. We are pleased with the progress we’ve made to date.
OTCM: What else do you want U.S. investors to know about IG Group?
Mr. McKinney: IG is a well-capitalised firm with over £700m of liquid assets and almost £200m of available liquidity at the end of our last financial year, 31st May 2017. The company generated £184m of net own funds from operations in FY17. IG held £340m in regulatory capital requirements at the end of the year and has additional debt facilities of £160m in place to cover any potential spikes in requirements. IG has a policy of paying out 70% of earnings as an ordinary dividend and it has no immediate plans to change this.
*Based on revenue excluding FX (from published financial statements, October 2016)
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