On February 22, London-listed trading platform IG announced it would withdraw a number of its riskier equities products. The announcement came after a frenzy of stock market bets by small U.S. investors earlier this year triggered huge swings in some shares prices.
In response to a Financial Times story, IG reported it would be withdrawing less than 8% of the 12,000 leveraged equities products it offers.
Leveraged products enable traders to boost their exposure to the market with relatively small capital investment.
Huge bets by individual investors, particularly in the shares of U.S. retailer GameStop, have triggered massive price swings in some stocks worldwide, leading some people to earn substantial profits but leaving others suffering large losses.
Along with rivals CMC and Plus500, IG had a rough several years before the coronavirus pandemic. Significantly, tighter regulations on certain leveraged products, such as so-called contracts for difference, affected profits.
However, the global health crisis prompted a sharp rise in business as more people in lockdown started to trade. Significantly, IG last month published a $1 billion deal to buy U.S. rival tastytrade after a robust 2020.
Consumers should prepare themselves to lose all their investments
On February 23, IG also announced it had reached its limit for the amount of cryptocurrency it holds as a business, and from now on, it won’t accept new cryptocurrency buy orders from clients.
A rally in bitcoin has been driven by signs it is gaining acceptance among mainstream companies. From Tesla and Mastercard to BNY Mellon.
Moreover, in January, Britain’s Financial Conduct Authority announced that investing in crypto assets involves very high risks. He said consumers should prepare themselves to lose all their investments if they invest in them.
The Financial Times announced earlier that IG had withdrawn certain types of trading in companies. Such as insurer Hiscox, malls operator Hammerson, and clothing brand Superdry.
According to the company, these equities represent a tiny part of their overall offering. Clients will still be capable of trading these equities through their share dealing offering. Furthermore, they announced that they have been in touch with customers who hold relevant positions.