Major brokerage IG Group (LON:IGG) encourages its clients to share their opinions about the recent proposal from the Financial Conduct Authority (FCA) to raise margin requirements for CFDs and spread betting, among other things. While the broker says it generally supports the regulator’s idea to raise conduct standards across the industry, there may be better tools to achieve this goal.
According to IG’s e-mail sent to all its clients, it is important that everyone involved in this business shares its opinion with the FCA, and especially traders. The broker further warns its clients that if the proposal goes through, they’d need to put more money on trading accounts, in some cases up to ten times more margin.
IG further clarifies FCA’s proposed amendments to trading rules and shares its opinion on each of them:
1. First, the proposed leverage limits are as follows:
IG believes that there are better measures for limiting traders’ exposure to risk – for instance, preventing clients from losing more than their initial deposit.
2. Brokerage companies must disclose their average client profit/loss, and use standardised risk warnings.
3. No bonus promotions allowed.
According to IG Measures 2 & 3 appear sensible, as the broker believes in transparency and doesn’t consider bonus promotions are good marketing strategies for winning new clients.
4. A full review of rules relating to binaries.
IG says it does not agree with FCA that inherent features of binary bets make them inappropriate for many retail investors. According to the broker, is binary options are marketed and sold responsibly, they are a useful tool for retail traders, especially inexperienced ones.
Yesterday, IG announced it has rebranded its binary options products and now calls them “Digital 100s”. Nonetheless, they are the same product that lets clients place binary bets on volatility by answering a simple yes/no question.
Traders may send their opinions to the FCA by mail or e-mail or by using a form available on the regulator’s website. What is more, IG Group’s client support team promises to assist clients and respond to any inquiries related to the matter.
IG Group offers trading in contracts for difference (CFDs), forex, stocks, bonds, binaries, and Bitcoin. It operates worldwide and has offices in 15 countries. It is regulated by the UK’s Financial Conduct Authority (FCA), but its units are also regulated by the relevant authorities in the countries where they operate. Besides, IG is listed on the LSE, and is a member of the FTSE 250.
According to a recent forexbrokerz.com survey on the proceeds of UK companies, IG is the most profitable one for the year 2015.