The CEO of IG Group, Peter Hetherington, has purchased 200,000 shares of the company he is leading, a regulatory filing with the London Stock Exchange shows. The move comes weeks after the announcement that the UK Financial Conduct Authority (FCA) has triggered a massive selloff in the shares of UK-listed retail brokers.
Typically, similar moves by senior executives are associated with increased confidence in the future. The move by Hetherington can be seen as a good sign for negotiations with the UK’s financial regulator. Earlier today, IG Group reported record revenues for the first half of fiscal 2017.
The purchase was reported early morning on the 24th of January with the deal amounting to about £1.1 million ($1.38 million). Hetherington bought the shares at an average price of £5.496. Currently IG Group’s stock is trading at around £5.37, which is more or less flat on the day.
FCA regulatory overhaul not a worry
Shares of the UK-headquartered brokerage have traded to levels unseen since 2013 in the aftermath of the prospects for a dramatic regulatory overhaul in the UK. In December the FCA announced that it is proposing a cap on Leverage of 1:50 for experienced retail investors and 1:25 for novice clients of retail brokers operating in the country.
The news triggered a substantial selloff in the shares of publicly traded brokers CMC Markets, GAIN Capital, IG Group and Plus500. Companies that have been focusing on the UK market have been worried about the prospective consequences from the limitations which the FCA is going to impose on brokers.
Hetherington’s position is opposing the viewpoint of those who are worried about the industry in the aftermath of a regulatory overhaul. Several companies have expressed their views that clients should be given the opportunity to choose what levels of leverage they want to use.
In the meantime, CySEC has implemented the limitations on bonuses and mandated brokers to set the default leverage at 1:50, while leaving the door open for clients that want higher levels.
The softer approach by CySEC is welcomed by the industry with a number of companies expressing disdain for the UK financial regulator's proposed approach. After a three month consultation period which is set to lapse in March, the final rules by the FCA will be publicized in the second t of the month.
