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Screenshot of a breaking news alert e-mail from Q2 2017
LeapRate Exclusive… Some of the world’s leading institutional investors continue to make big bets on a turnaround in shares of leading UK online brokers, which were hit hard late last year after the FCA proposed new strict rules governing Forex and CFD trading.
LeapRate has learned via regulatory filings that BlackRock, Inc. (NYSE:BLK) has increased its position in UK online broker IG Group Holdings plc (LON:IGG) to above 10%.
New York based BlackRock is the world’s largest asset manager, with more than $5 trillion in assets under management. IG Group is the UK’s largest online broker, offering Forex, CFDs and shares trading.
As noted above, shares of IG Group, as well as the shares of some of its key publicly traded competitors in the UK online brokerage market such as CMC Markets Plc (LON:CMCX) and Plus500 Ltd (LON:PLUS), were hit hard late last year after UK financial regulator The FCA proposed tightened rules for Forex and CFD trading – primarily a leverage cap of 50x for traders and a ban on bonus payments by brokers to clients.
While IG shares have recovered somewhat from the initial hit they took, they are still well (about 45%) below their 52 week high of £9.67. And that, despite IG recently reporting record revenues for its most recent financial quarter.
BlackRock is not alone among big-league investors in thinking that the stock market may have over-reacted in punishing online broker shares.
We recently reported that Morgan Stanley increased its position in #2 UK CFD broker Plus500 to 6.5%, while UK investment manager Odey Asset Management LLP, which has long had a significant stake in Plus500, increased its position to above 23%, also betting on a turnaround.
We also reported that Norwegian central bank Norges has taken a 3% position in CMC Markets.
Back to BlackRock and IG…. based on filings made with UK regulatory authorities, it appears as though BlackRock has acquired just over 5 million additional IG Group shares for more than £26 million over the past four weeks, since we reported in late February that BlackRock had built up a 9.2% position in IG.
Most of BlackRock’s current position in IG, or about 33.1 million shares, is held directly while another 4.8 million are held in the form of CFDs. BlackRock’s total current position in IG of more than 38.7 million shares is worth approximately £206 million (USD $257 million).
After BlackRock, the next biggest reported shareholding in IG is by Cantillon Capital Management LLC, a New York based hedge fund manager founded and run by William von Mueffling. Cantillon holds about 5% of IG, which it bought soon after the aforementioned December price crash.