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IG Group, the leading CFD, Margin Trading and Spread Betting provider, has announced the launch of a new service aimed squarely at institutional customers, High Net Worth Individuals (HNWI) and their families.
The new division is called IG Prime and as the name suggests it will offer Prime Brokerage services to organisations such as Hedge Funds, Family Offices and startup money managers
IG Group has courted institutional business for the last twenty years and indeed it started to offer prime brokerage services as far back as 2006. However the launch of IG Prime consolidates all of its institutional offerings and products under “one roof” and the division will seek to leverage IG’s presence in international financial centres such as Switzerland and Singapore.
Tony Lim who heads up IG’s Singapore operations said of the news
“IG has always taken pride in providing the best trading experience for our clients, the launch of IG Prime will enable us to better serve institutional clients based on their different trading needs with innovation and first-class technology,”
Whilst Fouad Bajja CEO of IG Bank in Switzerland commented that
“I am proud to announce the launch of IG Prime today” and that “ IG Prime gives hedge fund managers and family offices access to the full spectrum of prime brokerage services across synthetic, custody, trading and financing solutions”
The new division has a very specific target market in mind and will focus its attention on the 8000 funds that the company has identified, which have less than US$200 million in assets under management.
IG’s management believes that this pool of prospective customers represents a potential fee pool of some £500 million per annum for the company’s prime brokerage offering.
Given current market conditions, the timing of the launch may seem odd, however, there is likely to be a method to IG’s apparent madness
In the wake of previous market downturns, banks and other providers have historically trimmed their services and clients lists, by raising thresholds on client activity or fund size. It’s these small fish, that currently swim in the big ponds of the global investment banks, that IG is keen to catch.
IG Group’s status as an internationally regulated, well established listed company, that sits within the UK’s FTSE 250 index, is likely to provide new customers with a degree of transparency and financial security that many others in the small to medium prime brokerage sector, may not be able to match.
As was pointed out by Max Hayden IG’s Global Head of Prime Brokerage Sales who was quoted as saying
“Hedge Fund clients are more focused on cost than ever as the industry has gone mainstream, but they still want the comfort of a secure well capitalised counterparty”
This latest development is the latest in a series of moves by IG to try and diversify its income streams and move away from a reliance on retail trading flows and commission.
Given the dominant positions that IG has in that space, and the percentage of overall profits that the trading division makes for the business that will be no easy task.
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Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.