London-based foreign exchange, CFDs and spread betting broker IG Group is expecting a pick up in profits this year, the company shared in a trading update issued via the London Stock Exchange.
The firm marked an increase in revenues when compared to a year ago for the fourth quarter that ended on May 31st 2017.
The news comes amid low volatility across the industry and is reinforcing the strong stance of the company into the end of fiscal 2017. IG Group expects its revenues for the full year to be higher by 7 percent when compared to fiscal 2016.
The full year results include massive volatility spikes around Brexit and the US Presidential Election that were the key drivers for the record first half of the year for IG. The first 5 months of the year are marked by a substantial decrease in trading activity and may yet lead to further challenges for the industry during the typical summer lull in trading volumes.
IG Group Expenses Flat
Total operating expenses at IG for the second half of fiscal 2017 that ends today, remained flat when compared to the first half. The costs include a one off rebate from the UK Financial Services Compensation Scheme, which is related to an adjustment the investor protection fund made in relation to prior years.
The brokerage expects its full year profit before tax and earnings to be slightly higher than in fiscal 2016. According to the annual Investment Trends survey, IG Group is holding a solid leadership position in the UK market.
Volatility Hits Multi-Year Lows
The final quarter of the fiscal year that ends today (May 31st) was marked by the most unremarkable period of volatility for the industry. Both measures of volatility that are key drivers to revenue from retail traders – the VIX (a measure of stocks volatility) and the CVIX (a measure of foreign exchange volatility) hit multi-year lows.
The stagnation in volatility is only likely to be affected by shifts in the political landscape. The markets are expecting major events such as the UK election and the passage of Donald Trump’s agenda through US Congress. Both events are likely to revitalize volatility across GBP and USD currency pairs with major risk assets, such as stocks being buoyed by Trump’s tax cuts proposal.
Sources: FinanceMagnates, IG Group