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IG, the biggest spread betting and CFD brokers in the world released another good set of results today.
Over the last six months brokers have seen a lot of new money in and clients sign up because of the high profile of crypto traders.
However, for the most part cryptocurrency traders, new to CFD trading or spread betting only give a short term boost. Most new traders speculating on high risk and volatile markets such as Bitcoin and Ether will probably lose their money fairly quickly and stop trading.
However, IG, has always had a focus on maintaining long term relationships with their clients. And a long term relationship is a profitable one. In the short term the high spreads and financing rates (despite high hedging costs) would have increased revenue margins. But, as IG themselves say, crypto trading has dwindled.
The IG share price has performed well over the last year (up 65%), although it’s not outperformed Plus 500 which has really jumped on the crypto bandwagon (up 140%). CMC Markets, which was pretty late to the Bitcoin party has seen it’s share price up 24% over a year.
Although all three brokers are still trading at a discount to their September 2016 highs when the leverage and bonus caps were announced.
You can view the full results here, but in brief (since the same per):
- Revenue of £152.9m is up 30% (beating the previously quarterly record of £135.2m)
- OTC leveraged revenue per client of £1,482 in the quarter was 25% higher than in the prior year
- The number of unique OTC leveraged clients active in the period of 99,500 was 4% higher than in the prior year, including 12,500 new OTC leveraged clients who traded for the first time in the period.
- Client trading in cryptocurrencies accounted for 11% of revenue in the period (Q3 FY17: 1%), however, cryptocurrency trading by clients has slowed markedly since the end of January.
- Year to date net trading revenue of £421.3m is 16% higher than in the same period in the prior year. Client trading in cryptocurrencies accounted for 7% of year to date revenue (Q3 FY17 YTD: 0.5%).
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Richard started the 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.