London Capital Group (LCG) is making the transition from being a spread betting and contracts for difference (CFDs) provider to becoming an introducing broker. As part of the move, the LCG has tapped its UK-based rival, IG Group, as its first third-party trading platform provider, the company confirmed to Finance Magnates on Tuesday.

LCG Becomes an Introducing Broker

Under the new arrangement, LCG said it will focus on providing its clients with ‘boutique’ and relationship management services while IG Group will provide the platform, pricing and execution services. The firm also plans to onboard other ‘leading third-party platforms’ in the future.

Recent developments show LCG's transition plans have been in the works for months. In January, Dave Worsfold, Matt Basi and Stuart Dorward took over the management of the company as the Chief Executive Officer, Managing Director and Head of Sales and Trading, respectively. In the following month, LCG announced that it had signed a new partnership deal with IG Group to leverage its technology. It also said it will engage other “industry leading providers” as part of “the new evolution of LCG.”

“By partnering with IG for the technology, pricing, execution, on-boarding and holding of client money, we are free to re-shape the business to focus on service and relationships,” Basi told Finance Magnates. “We’ve re-staffed the business accordingly and are really excited about the team we’re building, all of whom have deep experience and we’ve worked with before.”

LCG Says Trading Industry Is ‘Overcrowded’

The switch in business model occurred as LCG UK, which is owned by Charles Henri Sabet who controls Swiss firm Flowbank, suffered a decline of 86% in revenue during the fiscal year of 2021, owing in part to the UK’s exit from the European Union (EU). The company was a part of the London Capital Group Holdings. However, Sabet acquired the UK-based spread betting and CFDs provider and separated it from London Capital Group Holdings which went into liquidation.

Following Brexit, LCG lost its passporting rights for operations in the EU region and focused solely on the UK client base. However, its sister entity LCG Capital Markets Limited is based in the Bahamas and operates globally with authorization from the offshore regulator.

“Our view of the sector is that [the trading industry] is over-crowded with firms competing to be counterparty to client trades and [to] risk manage their flow,” Basi explained. “We feel that for clients to get the best outcomes, firms should focus on the value they can add to the client trading experience.”

LGC Gives Deadline for Account Closure

Meanwhile, LCG has said its clients can open and close their trades, make deposits and withdrawals until June 30, 2023. In a message sent out to clients, the spread betting and CFDs provider noted that clients will be given another period of four-week grace to close out any existing positions on their LCG accounts.

Confirming the deadline to Finance Magnates, Basi noted that the step is to help give its clients “appropriate time/notice to make the transition and to handle the business change in an orderly, professional way.” He added that “the next tranche of clients [will be contacted] in due course.”

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