(Adds details, analysts’ comments)
March 23 (Reuters) - British online trading company IG Group Holdings Plc reported a 3.8 percent fall in quarterly revenue as it earned less per client, especially in the United Kingdom and Ireland - its largest market.
Shares of the company fell as much as 6.8 percent in morning trading on the London Stock Exchange.
The company, which provides online stockbroking and trading services to retail investors, said revenue fell to 117.4 million pounds ($146.8 million) for the third quarter ended Feb. 28, from 122 million pounds a year earlier.
Average revenue per client fell 15 percent with the United Kingdom and Ireland down 23 percent due to reduced trading by existing clients and lower margins in the North America Derivatives Exchange (Nadex) and stockbroking businesses.
However, the number of IG’s active clients grew 13 percent in the quarter.
The company, which was founded in 1974 as the world’s first spread-betting firm, said the fourth quarter saw a better start and that client recruitment remained strong.
IG said regulatory uncertainty has had no impact on its business so far, even as Britain’s financial watchdog seeks to shield individuals in the fast-growing spread-betting market.
The UK’s Financial Conduct Authority (FCA) joined other European regulators in December to regulate the 3.5-billion-pound industry, where it said most retail investors lose money. FCA is set to announce new regulations in the summer.
RBC Capital Markets analyst said “the worst is yet to come” as new regulations are expected to negatively impact the business.
The spread-betting market is regulated by EU rules, which have no caps on leverage. That means investors can take out bets that are far larger than their initial outlay, offering greater potential returns but also running the risk of huge losses. IG shares were down 4.6 percent at 500.29 pence at 0950 GMT. Up to Wednesday’s close, stock had fallen nearly 35 pct in the last 12 months.
$1 = 0.7995 pounds Reporting by Arathy S Nair in Bengaluru; Editing by Sunil Nair and Amrutha Gayathri