IG Group to leverage U.S. beachhead with major reorg of U.S. unit

IG Group office

UK online trading leader IG Group Holdings plc (LON:IGG) is barely into its new fiscal year, and it is already making major shifts in its U.S. executive suite, as it rolls out its new strategy for leveraging its hard-won re-entry into the U.S. marketplace. The London-based giant in the spreadbetting and CFD trading arena, had once been a major player in the state-side scene, but had exited in 2011. When an ESMA regulatory clampdown threatened to curtail revenues, the firm applied for new licenses and finally opened an office in Chicago in January. Ian Peacock will now lead a newly formed division to expand IG’s revenue base going forward.

The IG Group is typically low-key when announcing internal corporate shakeups, but word had leaked out from unnamed sources to a few financial news outlets. Per reporting from FinanceFeeds, a senior FX industry executive in Chicago explained:

I have it on very good authority that CEO Tim McDermott was terminated from NADEX. As I understand it, Ian Peacock is now the head of IG Group USA. IG Group’s US division has now absorbed NADEX, the Futures Commission Merchant and it has also absorbed DailyFX.

Ian Peacock is a relatively new face within the staid management structure of the IG Group. He is a Sloan Fellow of London Business School and has had a “highly elevated career in institutional financial services”. He began his service at IG in 2015, as the firm’s head of the UK and Ireland, but was soon promoted to the position of Chief Client Officer. IG had already begun to re-apply for its NFA membership at the time, a sign that Peacock was already being groomed for his new mission in the States. This past June, he became the President of IG Group North America to seal the deal.

The IG Group was one of many non-U.S. brokerages that elected to exit the U.S. market in 2011, when new Dodd-Frank legislation overhauled the derivatives and trading industry. Major leverage cutbacks, which were to follow years later when ESMA followed suit, was one issue, bur new laws required that a minimum of $20 million in capital be resident in a U.S. domestic bank account for security purposes. Overseas firms had relied before on consolidated capital back at their respective head offices.

The decision to re-enter the U.S. market came later, when ESMA implemented new rules eliminating binary options and putting severe restrictions on the marketing and offering of Contracts-for-Difference (CFDs), instruments which the SEC still bans in the United States. IG, along with its rivals, Plus 500 and CMC Markets, has suffered declining revenues and operating profits for the last two years, as a result of harsh restrictions, but the actual declines have come in lower than analysts had predicted. Business strategies were updated to expand into the U.S. and Asian markets.

On May 22 of this year, June Felix, the CEO of the IG Group, who joined the company in October of 2018, said that:

The IG Group is targeting a 30% increase in revenue by fiscal 2022. That increase is based on targeted 3% to 5% growth annually in core markets over the medium term and a GBP100 million revenue boost from “significant opportunities” in Europe, Asia and the U.S.

According to a senior IG executive:

Ian Peacock was appointed President of IG’s US region in the summer. This includes having oversight of our three US businesses, those being Daily FX, that offers high quality news and analysis with 1.7 million unique global monthly visitors, NADEX, our binary options exchange, which serves a demand for retail focused options and IG US, our FX business that launched in Jan 2019.

It has been a long road of recovery for the IG Group and its rivals in The City, but it appears that these brokerage firms have turned a significant corner. IG recently reported first fiscal year quarter revenues as slightly ahead of benchmarks from a year ago. CMC Markets has also announced similar results. The future is also looking brighter, as several analysts, including Barclays, have recently upgraded the stock to a “Buy” or “Overweight”, and IG’s share price just hit a 52-week high at 670 pence.

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