IG Group seeks to capitalise on it’s as yet undominated US forex market.
IG Group has received official registration as forex broker and retail foreign exchange dealer in the US. In doing so, the group is looking to access a market which is says is underserved and also to improve its fortunes in the wake of ESMA’s clampdown on the spread betting market.
IG had been making plans to enter the US market for some time. Back in November it applied for a license to open a US subsidiary and says it has now completed hiring for its key roles. Rupert Simon Toby Osborne is Chief Executive Officer, Ronald Lee Wetzel is listed as Chief Financial Officer and Karen Alicia Degroot as Chief Compliance Officer.
They are here to take advantage of what they see as a relatively open playfield in the States. Currently, there are only few players in this space while the exit of FXCM, thanks to regulatory action earlier in the year, makes it fertile ground for new participants, especially one with the clout of IG.
Whether or not we’ll see others follow in the footsteps of IG Group remains to be seen, but the move comes at a time when life is becoming increasingly difficult for spread betting firms. The ESMA’s new regulations restricting the amount of leverage clients can take on has been a body blow for the sector.
While some had expected a degree of new regulation, few were prepared for how big an impact it would have. Several industry leaders have criticised the regulations as being too severe with Mike Read of social trading app Pelican summing up the mood when he warned the new rules would effectively ‘weaponised risk’.
Thanks to these new regulations, the good times have come to an end – at least for the time being. IG Group – like many of the other main players – has seen its share price head south.
To compensate they are looking for new areas of business and new models. For many this has started with a focus on professional investors, but others such as IG Group may also decide to branch out and tap new pastures in places like the US.
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Tom Cropper is a financial journalist with work which has appeared in titles such as the Guardian, Euromoney and many others.