Before we kick off this interview I must disclose a bit of an interest. I’m a big fan of IG, in my mind, they are the default broker. When we review brokers, we tend to ask the question “why would you trade here rather than at IG?”
I’ve had an account with IG for about 20 years and I remember their first online trading platform when it was just basically a messaging system through to the dealing desk. Amazingly enough, it turns out that I was also in the same class (at two different schools over about five years) as founder’s daughter, but of course, didn’t know that back then.
When I was interning on the NYMEX and IPE trading floors in London and New York as a ticket checking clerk, I’d tap away on IG on my Ericsson R380 trying to emulate the bigger boys in the pit.
But anyway, after three years as a non-executive director, a year into her new role as IG CEO and on the back of a positive trading update. June Felix tell us about the highs and lows of the top job, what makes IG a market leader and her plans for the future…
What was the appeal of taking the helm of IG and becoming CEO? I know you’ve been involved in the company for some time, but what led you to take the top spot, and how do you think IG stands out within the trading landscape?
Well it’s a great question I’m super happy to answer because, there’s very few times when you get a chance to become CEO of a really great company, and one that has a heritage in innovation, one that has a global platform, a history and a team of very agile individuals that know how to perform, and that’s quite exciting.
We have the people, the platforms, the brand, in terms of a real good, strong brand, recognised for its innovation, and its excellence. And we also have real financial strength. So what a wonderful opportunity. So for me, it was international and there were still many more opportunities to expand from that platform.
In my history, I’ve been in financial services and technology for over 25 years, working in New York, in London, and also in Hong Kong, and had a chance to work with big companies and small companies, big broker-dealers, as well as big banks, small turnarounds, and IG is really well-positioned as a company.
What do you think is it about IG that stands out amongst its peers? I would say you’ve always resisted the spivy marketing? You know, when you were allowed to do it, you didn’t do welcome bonuses. You’ve always had sort of fairly responsible leverage. Why do you think clients have stuck with you as a broker when there are so many alternatives?
I think the client experience is a very short way to talk about it but we are incredibly focused on the customer, the client.
We really try to understand what’s important to them and deliver on that. And that means really outstanding execution, a broad range of products, you know, living in their skin as to what it’s like to be on the other side, and that’s led to innovation that really connects with their interests, and even our business model, which I think is really distinctive, as we look at all of the new players.
Because of our heritage, and our business model, which allows us to internalise orders, essentially being on the same side as the client.
We don’t look for clients to lose money in order for us to make money.
We have so many customers that know that they can trust our platform and our approach, that we have the scale to essentially hedge only a small percentage of the entire book. And that is really, really important because we’re never against our clients. We’re really working very hard to help them constantly trade better.
You mentioned internalising orders. How does that differ from the traditional B Book?
We don’t B Book. When we say internalise, it means that we’re able to take trades on different sides and essentially net them off against each other. In plain English, in any other industry, you would almost call it netting. It’s a little bit more intricate, many more algorithms to make that happen and we don’t systematically internalise. But we match trade flow on the bid and on the offer against each other, and whatever’s leftover from that, we hedge.
Moving on to the trading landscape, every year, there’s a black swan event or a disaster within the financial services industry. We had the Swiss Euro cap removal, then you had the regulatory restrictions on leverage and so on. How well-positioned is IG to deal with these?
Well first of all, we’re very well-positioned. I think that’s why I said in the very beginning what attracted me to this company is its incredible strong balance sheet, its financial resources, and the breadth and depth of its loyal client base.
I think that’s super important as you go into any changes going forward. It’s like in tumultuous times, boats that have sufficient ballast and sufficient capability, weather those storms very, very well. And we’re in that position as a company. We’re a leader in all the markets that we operate, and all the research and all the history shows that leaders actually come out of this ahead and actually distance the lead, as opposed to getting swamped by the tidal waves.
I don’t have a crystal ball but we have done a lot of planning and scenario analysis. We’ve learned from things that have happened in the past. We’ve made changes to technologies to ensure that everything that we can possibly do, we’re very well prepared for.
That actually brings us on quite nicely to the issue of neobrands or neobanks. IG’s obviously diversified into investments so clients can manage their long-term capital growth portfolios, alongside their high-risk trading.
There are a lot of neobrands popping up, like Robinhood in the States or Revolut in the UK, which essentially, are on a very well-funded customer grab. Whether or not their free stockbroking model is sustainable, and whether or not they’ll actually get people to pay a subscription for buying investments is another thing, but it’s certainly proved effective in things like food delivery, taxis and property. Deliveroo and Uber and Rightmove are now the go-to places where one brand that rules them all within the sector.
Obviously you’re at the top at the moment, but there’s a bit of a pushback from Millennials and beginners to avoid established brands and go with new disruptive startups.
Well I think, with all due respect to those brands, one of the reasons that customers have potentially sought different alternatives is because they weren’t treated very well.
So let’s start with I believe that one of the key trends that we’re really well-positioned for is what I call self-directed investing in trading. People don’t trust other people to manage their money anymore because they’ve done such a bad job, or the fees are too high.
What we have tried to do, historically and it’s evidenced by the really loyal clients we have is we’ve democratised a lot of those services. We have taken wholesale products that were historically not available to retail clients and brought them to retail clients.
What we’re doing is we’re also seeing that we appeal to both ends of the spectrum, from the sophisticated to the new players, and we’re very, very aware that there are these new players, and we’re, because of our strength in technology and also, in terms of understanding our clients, really progressively looking at new innovations to create new products, new services, and different kinds of experiences for them to use our services.
So a great example is mobile. We were one of the first to actually come up with the mobile trading platform, online trading in general, the 16,000 markets we have, constantly looking at ways to make it interesting, adding new content that’s more compelling. We’ve done some interesting exclusives with different providers. And we can do that because we’re a leader. So I think that as long as we stay really conscious of the client and the customer requirements, we’ll continue to be in a good shape.
The other thing that we’ve done as part of the new strategy is have a much deeper respect for different customer segments. Not all customers are the same. A Millennial has different needs than somebody that’s a sophisticated ex-hedge fund manager and everyone in between.
Plus we focus on local requirements, being able to localise things so that they really appeal to the tastes and the content that is for them. Japan is a good example. Japan is a market we have not in the past been very successful in because we’ve just exported what we did and plugged it into Japan and just changed the website. We found that that actually does not work and what you need to do is create an innovative product but also change the entire face and look and feel so it’s appropriate for a market with two million traders. And we’re seeing great traction there.
I know most retail traders tend to trade online now, but of the institutional and professional clients you have, do they still have good relationships with the trading desks? Does a lot of that flow go over the phone? Is that still a popular way to trade for the institutions?
Yes. For our biggest clients and institutional traders, they want to speak to someone who has been in the market for a while, who can work orders for them, in the same way, that the city’s been for many years. And I think for a very small percentage of high-value trades, people will always want to do that.
Yeah, they want that security. They don’t want to feel that when they push the button, something went wrong, even though, you know, 99.9999% of the time, that never happens, but it is also the other person on the other side.
I think this is also what distinguishes us, especially for the people that have been with us a long time and the large traders, is that personal, high-touch model. It really is done with a tremendous amount of diligence, care, and the relationships that have been built are part of the reason why people are with us for 30 years plus.
And so far, since you’ve been at the helm of IG, what would you say has been the best or the proudest moment?
I think the proudest moment is on May 22nd when we actually launched our new strategy, and it was really well received by the market. Our share price went up by ten percentage points. But also, the way it was received by the people across the organisation. All the stakeholders got behind it, as well as the board and investors, and I think that’s a great thing to do, to be able to identify our strengths and what we can build on.
I was particularly proud of the process and how well so many of our people, about 200 people across the organisation were involved in helping us distil down where our strengths were or what kind of efforts and initiatives would be actionable.
It’s easy to write a strategy on a piece of paper. It’s hard to execute it. And you don’t get people to execute it unless they believe in it. So having their involvement through that process, it was really exciting.
And of course, being balanced, the worst part? What’s been the biggest challenge?
The worst part probably is really understanding how we’re thought of as a place for punters to be… that always pains me. I think what we provide is an incredibly valuable and important service to people that love to trade, and we do it with great integrity, with great diligence, and really try to create an amazing experience for them, as well as a sustainable business.
So words do matter and I think when people just use the terminology that puts us in the same category as others that operate with different kind of integrity, that really bothers me.
So that’s my pain spot.
We are building a global brand, we have a wonderful brand in the UK and every market that we’re already in, people know us. However, my goal is to have a global brand that people recognise and respect, and any halo effect or smudge associated with being a place for punters does detract from that.
The thing that I really believe distinguishes IG from everyone else is the integrity with which we do business. I have met a lot of our top traders and some of the stories that they’ve told me about how they can’t get their money back from some of the platforms that they work with have appalled me. They say “Oh well, we could always get our money back without having to trade another three times” or do some other convoluted process.
That was shocking that anyone would actually behave that way, but evidently, there are new players or different players that have a different standard. And I think the care with which we try to ensure we retain that trust and really create best execution, ensure that people are able to trade in the quantity that they want, want they want, what they want is, paramount.
I think that is why we have the loyalty of big traders, and we have the longest loyalty of any of the platforms, not just because we’ve been around for a long time but because of how we service them and how we take their side, thinking about their experience and delivering.
And finally, we ask this of everybody, throughout your years of experience in the industry, what are your top three resources? Obviously not IG; I know you have your educational material. You know, thinking of books, websites, services, anything like that, what sort of three resources would you suggest to anyone who’s trading or investing that can help them improve the way they trade, the way they think about trading or their strategies?
Well you know, I think there are always new ones that are coming onto the scene that are very, very interesting. For example, I’ve been really impressed with what Real Vision’s doing. Real Vision is kind of the Netflix for traders.
And obviously, Bloomberg and we should say Good Money Guide too, absolutely. No, seriously.
But I have a podcast list that’s very, very long, and I rotate through all of them to figure out which of those has a topical topic that’s interesting. I think that right now, it’s such a complex time that is unprecedented because all the macroeconomics people are confused as well. So I read a lot of different things and listen to a lot of different things. So there’s not a particular go-to.
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.