IG Group, the UK’s biggest online retail trading company, reported that the quiet winter trading period had pushed net trading revenues down 3.8 per cent to £117.4m for December 2016 to February 2017.
It comes as the retail trading industry faces a broad regulatory crackdown.
The FTSE 250 company pointed out that the slump was in comparison to the strongest quarter of the previous year, and that active client numbers were up 13 per cent thanks to online marketing campaigns.
Revenue per client was down 15 per cent, or 7 per cent if its lower client value non-leveraged business and Nadex, US exchange platform, are stripped out.
The UK and Ireland – IG’s biggest geographical market – saw the steepest fall over the Christmas and New Year period, with trading revenue down 15 per cent to £53.5m and revenue per client off 23 per cent year-on-year.
However its Rest of World segment, including Dubai and South Africa, outperformed – it saw revenues rise 23 per cent overall to £20m, with active clients up 22 per cent.
The company said its stockbroking business was growing well in the UK and Australia, with some 16,000 clients by the end of February.
IG reiterated that the “regulatory backdrop for leveraged trading in a number of countries remains uncertain”, with rule changes in the UK, Germany, France, the Netherlands, Ireland, and expected in Dubai.
Last year, many European financial regulators tightened rules on the sale of contracts for difference – which allow individual retail investors to take positions on financial markets without owning underlying stock – and binary options – risky up/down bets on the movement of financial markets.
But the UK’s Financial Conduct Authority surprised companies by proposing the harshest limits on the money customers can borrow to increase their stake, known as leverage.
IG suffered a £1.2bn drop in market capitalisation during frenzied trading in the days after the FCA’s proposal was published, and its share price has remained depressed.
In what was interpreted as a concession to regulators, IG announced in February that it would no longer offer one class of binary options products to new retail customers.
However, IG said: “none of the announced regulatory changes has yet had any impact, client recruitment remains strong and the underlying business is performing well.”