Mentioning IG, for some domestic and foreign exchange novices, might make them think of the IG team in League of Legends. In reality, the foreign exchange sector also boasts a renowned, long-standing financial brokerage service provider known as IG Group Holding plc. IG Markets, one of its brands, currently ranks first globally in the retail foreign exchange trading domain. IG Group Holding plc is a member of the FTSE 250 (Financial Times Stock Exchange 250), with a market capitalization of approximately $3.43 billion on the London Stock Exchange, making it the highest-valued listed forex broker to date.
However, IG Group exited the Chinese mainland market in 2019. At that time, the Chinese government sent a letter to the Australian regulatory body ASIC, strictly prohibiting Australian-regulated platforms from operating in the Chinese region. As a consequence, many major platforms also seized this opportunity to exit the Chinese mainland market, no longer accepting clients from mainland China, including IG.
Founded in 1974, IG Group is a British retail forex broker with a history of 50 years. Headquartered in London, UK, it has over 20 subsidiaries worldwide, with key branches in Australia (primarily developing the Pacific market), the United States, and Europe, in London. Since deciding to exit the Chinese mainland market in 2019, the only remaining operation of IG Group in China is its Shenzhen-based portal site DailyFX.
A Brief History of IG Group:
Early Years (1974 - 2000)
Initially a spread betting firm named IG Index, it primarily offered investors gold price index trading services, a derivative trading business that serves as an alternative to actual commodities trading. After more than 20 years of development, in July 2000, IG was listed on the London Stock Exchange, renaming itself IG Group Holding plc (IG Group plc).
Expansion Period (2001 - 2010)
In July 2002, following the passage of the new Australian Financial Services Act, Australian residents were allowed to participate in Contracts For Difference (CFD) trading, seizing this opportunity, IG Group entered the Australian trading market.
In 2003, IG Group experienced a significant reshuffling of shareholders. The company's management team, backed by private equity fund CVC, acquired all the shares from the founder Stuart Wheeler and several original major shareholders for £143 million. On November 7, 2003, IG Group plc delisted from the London Stock Exchange.
In May 2005, after two years of privatization, IG Group, led by private equity fund CVC, returned to the London Stock Exchange, with a market value rising to £393 million. In 2006, IG expanded its business to Germany and Singapore, and in 2007, it established branches in the United States, Spain, and France. In 2008, IG Group opened a branch in Italy and in the same year, October, acquired the Japanese retail forex company FXOnline, successfully entering the Japanese market.
For a long time, IG Group has been eager to enter the more profitable US market, but due to the main products of IG Group, Contracts For Difference (CFD) and Financial Spread Betting, were not legal at the time in the US, their ambition was delayed.
In 2007, IG acquired a small US company, Hedge Street, and renamed it in 2009 to the North American Derivatives Exchange (Nadex). Since CFD trading and financial spread betting were not yet regulated in the US, this acquisition allowed IG to legally circumvent regulation and start offering simplified derivatives contracts for retail in the US market. Nadex’s office is located in Chicago and is regulated by the United States Commodity Futures Trading Commission.
In 2009, IG branches in Sweden and Luxembourg began operations, and in 2010 and 2011, branches in Portugal and the Netherlands were established successively. In May 2010, IG Group obtained authorization from the United States Commodity Futures Trading Commission, striving towards compliance to anchor in global markets.
Recent Developments (2011 - Present)
In June 2011, IG Markets shut down the fixed odds betting service Extrabet, focusing on spot betting and unable to find a buyer for the overall business, the group decided to shift its focus towards financial betting.
In September 2014, IG Group launched its online stock brokerage service, offering trading quotes for over 4,500 stocks. In January 2015, the Swiss National Bank announced it would discontinue its minimum exchange rate policy. In October, IG Group accepted the ruling of the UK Financial Conduct Authority, compensating clients who suffered losses during the rapid appreciation of the Swiss Franc in January.
In December 2015, Tim Hawkins, who had led the group for nine years, retired, and Peter Hetherington assumed the role of CEO. In September 2016, IG Group acquired the forex trading news and research portal website Daily FX from FXCM for forty million dollars.
In February 2019, the US subsidiary of IG Group (IG US) received regulatory permission from the NFA and CFTC, becoming a Retail Foreign Exchange Dealer (RFED), a Forex Dealer Member (FDM), and an Introducing Broker, officially becoming one of the few forex brokers in the US.
Data shows that as of the end of November 2019, the client assets of IG US had accumulated to about 16.26 million dollars, a 23% increase from October. This figure is nearly five times higher than the 3.5 million dollars in client assets when IG US officially launched in the US.
Main Business and Product Services of IG Group
In 2012, IG Group consolidated its UK operations under the IG brand. Thus, “IG Markets” is the sole commercial name for several proprietary companies.
IG Group's main business includes three major segments: IG Index, IG Markets, and Daily FX. IG Index mainly offers financial market spread betting services, as well as binary options business under the supervision of the UK Gambling Commission. IG Markets, on the other hand, mainly provides Contract For Difference (CFD) services to the financial market.
Daily FX, a forex trading news and research portal website, provides real-time quotes for major currencies, financial calendars, instant forex, gold, and commodities market news, technical analysis, and trading strategy reports, among others.
IG Group's products and services mainly include Contract For Difference (CFD) trading, forex trading, options trading, bitcoin trading, and technical services needed to facilitate trading.
In terms of options trading varieties, in 2003, IG once again expanded its product range by adding digital 100 options CFD trading.
In April 2013, IG became the world's first online forex broker to offer bitcoin CFD trading, but suspended the bitcoin digital 100 CFD product a month later.
In November 2014, IG reintroduced the bitcoin digital 100 CFD product on its trading platform, allowing traders to trade on the volatility of the bitcoin market without actually holding bitcoin, and this contract supports multi-currency to bitcoin pairs.
In terms of trading technology services, IG was the first company to introduce an online trading platform in 1998. In 2007, it launched the web-based trading platform initially named “PureDeal”. Two years later, a web-based DMA platform was debuted.
In 2010, IG released Australia's first iPhone mobile trading version and supported all major mobile and tablet operating systems. It has also maintained partnerships with third-party vendors such as MetaTrader 4, ProRealTime, Autochartist, and Trading Central.
Financial Licenses and Regulatory Bodies of IG Group
Regarding financial licenses and regulations, the UK FCA license is currently one of the most valuable endorsements in the forex industry. Additionally, with the FCA providing a compensation guarantee scheme of up to 85,000 pounds, many people equate FCA with safety.
IG Markets is regulated by the Australian Securities and Investments Commission (ASIC) and holds an Australian financial services license with license number 220440; it is also an authorized futures dealer in New Zealand with company number 2249573. The subsidiaries of IG Group are regulated by local laws and regulations in their respective countries. Furthermore, IG Group's other main regulatory bodies include the Monetary Authority of Singapore and the Singapore Enterprise Development Board (MAS), Japan's Financial Services Agency (JFSA), South Africa's Financial Services Board (SAFAB), the United States Commodity Futures Trading Commission (CFTC), the UK Financial Conduct Authority (FCA), and others.
In October 2014, IG obtained a banking license issued by the Swiss Financial Market Supervisory Authority (FINMA) and officially commenced operations with the establishment of IG Bank SA in Geneva.
Looking through IG Group's entire history, it's evident that all business operations have revolved around "compliance" and meeting financial regulation requirements in various global regions. Indeed, while financial derivative trading provides ample liquidity to the market, it also comes with significant risks. Especially considering IG Markets initially focused solely on retail brokerage services for individual investors, adhering to strict regulation was inevitable. After all, compared to professional institutional investors, individual investors have weaker risk identification and risk tolerance capabilities.
Looking forward to the near future, it's hoped that IG Group, a venerable forex broker, can make a grand return and re-enter the Chinese mainland market.
