IG Group the UK’s biggest financial spread betting company released update over the AMF crackdown Forex, binary options and CFD trading in France. ForexSQ.com experts say the IG Markets argued the new AMF rules on CFDs, Forex and binary options dosent impact on the broker’s activity.
IG Group updates over AMF CFDs crackdown in France
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UK’s top financial spread betting company has sought to reassure investors it can weather a crackdown on contracts for difference in France, the latest country to impose strict new rules on the controversial derivatives.
The IG Group told investors that it did not expect a “material impact” on its French business in the short term following the introduction of tighter restrictions on CFDs by the Autorité des Marchés Financiers (AMF), the country’s financial regulator.
The broker argued that the new rules “could ultimately enhance the company’s future position in the country” as it operates at “the highest standards in the industry”.
Regulators across Europe, including UK’s Financial Conduct Authority (FCA), are tightening restrictions on CFDs, products akin to spread bets that allow punters to wager on price movements in underlying stocks, currencies and commodities.
At the end of last year, France introduced a new law that limits the scale of losses that customers can suffer to the margin they post on trades, as well as prohibiting the marketing of currency and binary options products.
CFDs worry regulators because traders of the derivatives can take hits many times larger than their original stakes, as they can use leverage to ramp up the size of their bet.
However, IG Markets company, which is led by Peter Hetherington, argues that because it offers customers accounts that restrict the scale of their losses, it should not be hurt by the new AMF rules.
“The key marketing restrictions do not impact the accounts that IG now offers to new clients in France, because IG’s accounts provide a limited loss-by-position guarantee as required, and therefore also a guarantee of no negative balance,” the company said.
The CFD industry is under threat after countries such as the UK, Germany and Cyprus announced clampdowns in recent weeks.
In United Kingdom, where the number of CFD firms has almost doubled to 97 since 2010, the FCA is worried that inexperienced traders are being lured into making bets they do not fully understand.
IG Group Share Price Decreased
IG Group has a market share of about 40pc in the United Kingdom, but is much less reliant on France. Analysts at “ForexSQ.com” estimated today that France only accounts for about 5pc of IG’s revenues, compared with 51pc for the UK. They warned investors that the “FCA’s intentions remain the biggest risk to IG”. IG Group share price dipped 0.1pc to 530.5p in morning trade. IG Group is one of the best CFD providers in the world.
