IG Group
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| IG Group | |
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| Type | Public Limited Company |
|---|---|
| Founded | 1974 |
| Headquarters | London, UK |
| Key people | Jonathan Davie, Chairman Tim Howkins, Chief Executive |
| Industry | Financial Services |
| Revenue | £89.4m1 |
| Employees | 312 |
| Website | www.iggroup.com |
| 1. Annual results for year ended 31 May 2006 | |
IG Group (LSE: IGG) is a British speculative investment company, which has several operating companies in the UK, offering a variety of financial services to a retail and professional client base.
IG Group's most well-known business, IG Index, is the world’s leading financial spread betting company. The IG Index brand offers spread betting on financial markets, sporting, entertainment and political events, while IG Markets offers Contracts For Difference (CFDs) on a similar range of financial markets to IG Index.
A traditional fixed-odds sports service, with an emphasis on in-play betting, is offered by extrabet, while binarybet.com is an innovative hybrid of spread betting and fixed-odds, offered on sports and financial markets.
Headquartered in London, IG Group is listed on the London Stock Exchange as part of the FTSE 250 Index. While the majority of the company's activities are based in the UK, IG Group has also expanded internationally and now operates in Australia, Germany, Italy, Russia, Singapore, Spain and Sweden.
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[edit] History
IG Index, the original IG Group company, was founded in the United Kingdom in 1974 by former barrister Stuart Wheeler.
Trading under the name IG Index (an abbreviation of Investors Gold), the primary aim of the business was to enable UK residents to speculate on the price of gold at a time when exchange restrictions prevented UK residents from buying it, except at a premium. Wheeler's business model allowed clients to speculate on gold without actually having to own the underlying commodity.
Over time, as exchange controls were relaxed, the business expanded to include spread betting on commodities, indices, foreign exchange and other financial instruments, such as stock index futures.
An innovator, IG Index was the first company in the UK to offer bets on the FT30 in 1982; the first company in the UK to offer spread bets on individual publicly traded shares in 1995; and the first company in the UK to launch an online dealing platform for financial spread betting products in 1998. In 1993, the company branched out to include spread bets on sporting events, tapping into a highly active segment of the betting industry.
IG Group's first departure from its regular betting activity took place in 1996 with the introduction of foreign exchange dealing. This enabled the company to provide cost-effective access to the world's foreign exchange markets for the smaller currency speculator.
The launch of IG Markets was a key moment in the development of IG Group which saw the business expand into the area of financial derivatives, principally CFDs on shares and indices, as well as dealing in margined FX. Clients include brokers, fund managers and trading companies, as well as private investors.
In the financial year ended 31 May 2006, the London-based CFD business achieved revenue growth of 60% to £15.0m and now accounts for 17% of group revenues.
In March 2006, IG Group launched its fixed-odds betting service, extrabet. This brings IG Group’s sophisticated pricing technology to online sports betting, giving clients the ability to track their bets with a live valuation and take their winnings at any time, even during the event’s progress.
[edit] Listing and Delisting
In July 2000, shares in IG Group plc were admitted to the Official List and to trading on the London Stock Exchange. After three years of trading as a publicly listed company, Stuart Wheeler, who had retained a significant shareholding in the business at the time of flotation, sold his entire holding to raise capital to renovate his castle in Chilham, Kent.
IG Group took the opportunity to acquire Wheeler's shares, and those of certain other long-standing shareholders, in a management buy-out (backed by venture capitalists CVC Capital Partners Ltd) which valued the company at £143 million. IG Group plc's listing on the London Stock Exchange was subsequently cancelled on 7 November 2003.
While privately owned, IG Group introduced several new products including the popular business of binary betting, a hybrid of spread betting and fixed-odds betting which allows clients to back or lay discrete financial and sports events.
In May 2005, after two years of private ownership, IG Group and CVC Capital Partners re-floated the company on the main list of the London Stock Exchange for £393 million, a price which saw CVC Capital Partners triple its initial investment. On relisting, IG Group Holdings plc became a member of the FTSE 250 with a market capitalisation in excess of £500m.
[edit] International Expansion
In July 2002, IG Group commenced trading in Australia after a change in the country's financial services legislation made it possible to offer CFDs and spread bets to Australian residents. The Australian office now accounts for 10% of group revenues, with revenue up 136% to £8.9m in the financial year ended 31 May 2006.
The launch of IG Group's binary betting operation, binarybet.com, enabled further international expansion. As binary betting is a form of fixed-odds betting and, accordingly, not regulated by the FSA, the product has a much simpler account opening process, making it considerably easier to offer to an international audience.
[edit] Clients
The Group's client base is dominated by retail clients, particularly in its spread betting businesses and in binary betting. IG Group's client base for CFDs and trading on foreign exchange also includes market professionals and some corporate entities.
During the financial year ended 31 May 2006, 31,924 clients traded with IG Group, compared to 26,102 in the previous financial year.
[edit] Operations
IG Group offers a wide range of financial products and services to retail and corporate customers. In addition to its core business of financial spread betting, IG Group's other principal products and services include:
- Contracts For Difference (CFDs)
- Sports spread betting
- Binary betting
- Foreign exchange trading
- Fixed-odds sports betting (via extrabet)
The range of underlying markets offered by IG Group is wide, and currently includes:
- UK and international shares
- Global stock indices
- FX
- Metals
- Energies
- Commodities
- Options
- Interest rates
- Binary bets
- Worldwide sports events
[edit] Online Dealing
The emergence of the internet during the latter part of the 1990s, combined with the public's increasing awareness of, and familiarity with, online financial services and investment products, had a great impact on the company.
IG Group utilised the new technology to become the first spread betting company to offer online dealing in 1998 with their market-leading dealing software.
Online account opening also saw the number of new accounts increase significantly, with 21,891 new accounts opened in the financial year ended 31 May 2006, compared to 18,747 in financial year 2005, representing a 16.8% improvement during the year.
IG Group's client base increased significantly with the introduction of online dealing and now more than 90% of the Group's client transactions are executed online or via direct market access platforms.
[edit] Regulation
Two of the Group's principal operating subsidiaries, IG Index and IG Markets, are regulated by the Financial Services Authority (FSA) in the United Kingdom and by the Australian Securities and Investments Commission (ASIC) in Australia. IG Markets is also regulated by the Monetary Authority of Singapore (MAS) in Singapore.
IG Index and binarybet.com are also both required to hold UK bookmakers' permits.
The Group does not accept bets from residents in the United States for regulatory reasons, and has implemented a number of procedures to enforce this policy.
[edit] External links
United Kingdom
Australia
Singapore
