IG started off 36 years ago just as a UK company, and really for the first 30 years they were principally a UK business. IG started off in 1974 as a way for City workers to trade the gold price – in fact the company was initially namded 'Investors' Gold' but the Bank of England objected to the name on the grounds that it sounded too official. Founded in 1974 by Stuart Wheeler, the company at the time was still one year away from its stock-market flotation. At the time it had around 85 employees and revenues for that year were just £12 million. Today, [September 2011] revenues amount to about £320 million and there are 900 employees.
In 2000, IG Group listed on the LSE and in the 1998 the company developed the first simplistic dealing interface but this was nothing much more than a chat system replacing phone dealing. A functional online trading platform was launched in 2003 which proved to be the catalyst for exponential growth. In just 3 months after launch, internet trading moving from 15% of IG's dealing to 85%. This is now (November 2014) 99.6%.
IG Index remains one of the leading suppliers of speculative investment products to retail and professional investors here in the United Kingdom, although now they operate in 13 or 14 countries worldwide. In Australia IG have had a presence for 8 years whilst expanding its footprint into Spain, Germany, France, Singapore, Japan and the United States. Arguably IG Groups' main rival is CMC Markets, which is number two in the UK and Australia.
Two years ago the company was on average, opening 650 U.K. spread betting accounts and 350 CFD accounts worldwide per month. Both figures have increased progressively and over the last quarter it averaged more than 1,900 spread betting accounts and around 1,400 CFD accounts opened per month. In its latest update IG Group was opening about 2,000 new accounts a month in Britain, about 700 a month in Australia and 300-400 in Singapore. The firm, which has 550 staff and more than 32,000 customers in the UK and new account openings remained strong over the last quarter (up to March 2009) at 18,700.
Ten years ago, IG Index, the spread betting brand IG Group promotes to clients, had 5000 clients. Today, it has well over 100,000 (September 2011). To get an idea of the acceleration of sign-ups in the last year David Jones, Chief Market Strategist at IG Group, is quoted of saying that 'from May 2007 in a typical month we opened 1,000 UK accounts: in September 2008 that number was nearer 3,000'. It is interesting to note that in October 2008 a record number of spread betters opened accounts with IG.
As of January 2009 IG has 33,000 spread betting accounts, and 25,000 CFDs ones. Typically, a further 100 new British customers are signing up every day to try their hand at making a quick return.
In December 2007 the company completed its acquisition of HedgeStreet Inc, which is a U.S. exchange regulated by the Commodity Futures Trading Commission ("CFTC"). HedgeStreet has seen been rebaptized as Nadex and IG Group is now looking to continue expanding this retail market-focused exchange that offers simplified derivatives contracts in North America. IG Group also recently announced that it has signed up PFGBEST, a US retail broker offering futures, forex and options, as its first large client.
IG Group acquired FXO for 112m in October 2008 to get a foothold in Japan. However, regulatory restrictions on the amount of leverage allowed has meant that this market has underperformed rising just £100,000 to £11m [first-half sales were £11m (2010: £10.9m)]. The average monthly run rate of revenue fell from about £2.2m previously to £1.5m.
'Market volatility undoubtedly played a part in the growth that we have seen in the last six months,' Chief Executive Officer Tim Howkins said in the statement. IG is opening about three times more new accounts for so-called spread bets every month on average compared with two years ago, he said.
Sales have tripled in four years as IG has signed up more customers in Britain, its main market, expanded elsewhere and taken more online bets. Financial-market bets generate 93 percent of revenue, and the rest comes from sports wagers, the CEO said. The IG Group companies taken as a whole today (September 2010) have over 120,000-plus clients worldwide, although realistically the number trading in a cyclical month is about 55,000, over 90% of them online.
IG's average customer is a professional male (most clients are male, it is true) aged between 35 and 45 who typically spends about 250 pounds per trade, giving control over about 5,000 pounds worth of shares because of leverage, according to Howkins. Most clients are not traders, who are barred from making bets by workplace compliance rules, he said. A typical client would be a well-paid professional or someone who runs their own business.
Across the group as a whole, about 30% of IG Index's revenue comes from individual shares, about 30% from equity indices, about 30% from forex. And then the remainder is mainly commodities, and that tends to be particularly crude oil. IG last year hit 50,000 traders and investors in the United Kingdom - 30,000 of them actively trading - and 120,000 worldwide. Among those who open financial spread betting accounts, up to 30% never trade while another 20% give up in the first month. The Group achieved revenues of £298.6m in the year to May 31 (2010) and pre-tax profit of £157.6m. It has offices in 14 countries. At the present time IG Group is the 30th-biggest company on the London Stock Exchange at the moment [September 2011] and it is quite possible that one day the company might join the FTSE 100.
The increasing sophistication of IG Index and its clients means that only about 25% of trades are now directly on stocks. The rest consists of speculators taking a view on entire indices, foreign exchange pairs, commodities or treasuries.
Novelty markets include the VIX index which IG Index quotes with a minimum bet size of £50 per index point and Bitcoin and the BTP Italian bond contract which IG started quoting in August 2011 in response to client demand.
IG Group has recently taken occupancy of 87,000 sq ft of gleaming new offices off Cannon Street. The Group has 900+ staff, with 350 of them working in IT, representing over a third of their global workforce. They have 40 people just working on their mobile platforms.
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