IG Markets bins binary products for new investors
IG Markets has withdrawn a popular spreadbetting product that allows punters to speculate on a wide range of market movements, as regulators consider proposals to crack down on the sector.
Sprints binary products will no longer be available to new investors, the FTSE 250 firm said today, although they can still be used by current clients.
Read more: IG sees the positive in French watchdog push back
The product ban comes only weeks after more than £1bn was wiped off IG Markets' market cap as financial watchdogs sprung new plans on the spreadbetting sector.
The Financial Conduct Authority (FCA) revealed proposals in December to impose stricter rules on spreadbetting firms. Regulators are concerned that an increasing number of retail clients are using complex derivative instruments on offer by spreadbetting firms without fully understanding the risks associated with them.
Planned changes include introducing standardised risk warnings and mandatory disclosure of profit-loss ratios on client accounts by all providers, and setting lower leverage limits for inexperienced retail clients who do not have 12 months or more experience of active trading in CFDs, with a maximum of 25:1.
Read more: FCA gets tough on spreadbetters: But what is a contract for difference?
Within days, the proposed clampdown in the UK was followed by financial regulators in Germany and France unveiling similar plans.
Chief exec Peter Hetherington said he welcomed the intentions of European regulators adding:
In delivering a sustainable business for over 40 years, IG has always sought, and will always seek, to operate to the highest regulatory standards. As the largest provider in the industry, IG is engaging with the consultation processes.
IG Market also revealed its six month trading performance had swelled, with revenues growing by 14 per cent to £245m. Profit before tax was up 6.7 per cent to £105m. The group's shares fell by 1.95 per cent in trading on Tuesday.