IG Group (LON: IGG) announced its performance for the third quarter of the financial year 2023, reporting a 7 percent lower revenue at £239.3 million. The overall figure was dragged down by the OTC derivatives revenue, which was 18 percent lower at £179.4 million.

Lower Market Volatility Pushes down OTC Derivatives Revenue of IG

The London-headquartered group highlighted that lower market volatility between December and February resulted in a lower revenue per client in its OTC business, resulting in an 8 percent drop in active clients. In addition, it highlighted that the US OTC business witnessed “another strong quarter of growth” but did not provide any figures.

On the other hand, revenue from exchange-traded derivatives jumped 65 percent to £52 million. US-based tastytrade generated £44.9 million in revenue in the quarter, which was 57 percent higher than the previous year and driven by an increase in the interest income.

Further, stock trading and investments revenue were 19 percent higher at £7.9 million. Though the client trading activities in this product line decreased to pre-pandemic levels, the number of clients remains steady and higher than the pre-pandemic numbers.

“Q3 FY23 was a quieter quarter in the market, particularly in December, with lower market volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad Read this Term than in recent periods and in Q3 FY22. The benefit of our diversification strategy is becoming increasingly evident, with our exchange-traded derivatives business posting strong growth in both Europe and the US,” IG stated.

Moreover, IG categorizes its revenue streams by portfolio: Core Markets+ and High Potential Markets. While the revenue from the Core Markets+ portfolio went down by 18 percent to £186 million, the High Potential Markets is witnessing a massive demand as revenue increased 60 percent to £56.7 million.

IG Will Meet Market Expectations

Earlier, IG reported total revenue of £519.1 million and pre-tax profits of £240.5 million. While the revenue jumped 10 percent year-over-year, the pre-tax profits slightly decreased by 2 percent. On top of that, the platform added 37,500 new clients in the period, which is down from 53,600 new additions in the first half of FY22, thus ending the period with a total of about 312,000 clients.

“We anticipate FY23 revenue and profit before tax will be in line with current market expectations. Our medium-term revenue and profit margin guidance remains unchanged,” the broker added.

Meanwhile, IG is aggressively repurchasing its publicly listed stocks from the open market. Initially, it launched a £150 million buyback program but allocated an additional £50 million in January. The group disclosed that it had repurchased 17.4 million shares by 13 March at the cost of £137.4 million.