Comment on Press Speculation
RNS Number: 7688S
IG Group Holdings plc
26 May 2009
Comment on Press Speculation
IG Group Holdings plc (the "Group") notes recent speculation in the Japanese press regarding the possibility that the Financial Services Agency of Japan ("FSAJ") may shortly introduce rules which would limit the amount of leverage which can be offered to retail forex speculators in Japan.
The Group’s Japanese subsidiary, FX Online Japan KK (“FXO”), together with other retail forex providers in Japan, has recently made representations to the FSAJ via the Financial Futures Association of Japan regarding the possible introduction of limitations on leverage in the Japanese retail forex market. The Group anticipates that within the next few days the FSAJ will either agree to a short period of consultation with the retail forex industry in relation to the proposed changes to the regulatory framework or, alternatively, will publish draft rules and then enter into a short period of public consultation. This consultation period is then likely to be followed by a transitional period of a few months before any rule changes that are made would come into force.
Based upon its current understanding of the rule changes that are being contemplated, the Group believes that the FSAJ’s proposed methodology to limit leverage would only apply to a minority of the Group’s Japanese clients, measured both by number of clients and by trading volume. Whilst it is not possible for the Group to quantify what impact, if any, the FSAJ's proposed methodology might have on the future trading activity of FXO’s clients, the Group would not expect it to have a material impact on the Group’s revenues or profits.
FXO already offers standard leverage levels substantially lower than some competitors in Japan and will therefore be impacted to a lesser extent than these competitors. A restriction on the level of leverage that can be offered may therefore be beneficial to FXO’s competitive positioning within the Japanese retail forex market.
FXO has recently launched CFDs and binary options and take up of these new products has been building steadily. The Group does not expect these products to be affected by any proposed limitation on leverage.
The Group acquired FXO in October 2008. It currently contributes approximately 10% of Group revenue.
The Group will provide further updates as more information becomes available, or in its trading statement on 9 June 2009.
There will be a call for analysts and investors at 8am (UK time) this morning. The call can be accessed by using the international dial-in +44 (0)20 7806 1960 and passcode 3935470.
A replay of the conference call will be available for a period of 14 days after the event by dialling +44 (0)20 7806 1970 and using passcode 3935470#.
For further information please contact:
IG Group Holdings plc 020 7896 0011
Tim Howkins, Chief Executive
Steve Clutton, Finance Director
Financial Dynamics 020 7269 7114