Broker IG pulls some of its riskier products after GameStop frenzy
(Reuters) - London-listed trading platform IG said on Monday it would withdraw a number of its riskier equities products after a frenzy of stock market bets by small U.S. investors earlier this year triggered huge swings in some share prices
(Reuters) - London-listed trading platform IG said on Monday it would withdraw a number of its riskier equities products after a frenzy of stock market bets by small U.S. investors earlier this year triggered huge swings in some share prices.
In response to a story by the Financial Times, IG said it would be withdrawing less than 8% of the 12,000 leveraged equities products it offers.
Leveraged products allow traders to increase their exposure to the market with a relatively small capital investment.
Big bets by individual investors, particularly in the shares of U.S. retailer GameStop, have triggered massive price swings in some stocks around the world, leading some people to make hefty profits but leaving others facing large losses.
Along with rivals CMC and Plus500, IG had a rough couple of years before the COVID-19 pandemic as tighter regulations on certain leveraged products - including so-called contracts for difference - hit profits.
But the global health crisis drove a sharp rise in business, as more people in lockdown started to trade. IG last month announced a $1 billion deal to buy U.S. rival tastytrade after a strong 2020.
IG also said on Monday it had reached its limit for the amount of cryptocurrency it holds as a business and that it was no longer accepting new cryptocurrency buy orders from clients.
A recent rally in bitcoin, the most popular cryptocurrency, has been fuelled by signs it is gaining acceptance among mainstream companies, from Tesla and Mastercard to BNY Mellon.
Last month, Britain's Financial Conduct Authority warned investing in cryptoassets generally involved taking very high risks and consumers should be prepared to lose all their money if they do invest in them.
The Financial Times reported earlier that IG had withdrawn certain types of trading in companies including insurer Hiscox, malls operator Hammerson and clothing brand Superdry.
"These equities represent a very small part of our overall offering and clients will still be able to trade these equities through our share dealing offering. We have been in contact with clients who hold relevant positions," the company said.
"IG has experienced a sustained period of exceptional demand for the products we provide. This has been reflected across the market," it added.
(Reporting by Muvija M and Shubham Kalia in Bengaluru. Editing by John O'Donnell and Mark Potter)
This story has not been edited by Firstpost staff and is generated by auto-feed.
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