* H1 revenues fall 14 pct at spread betting company IG
* Company curbs spending in response to subdued markets
* QE programmes seen taking edge off market volatility
By Keith Weir
LONDON, Dec 11 Financial spread betting company
IG Group is reining in spending after a return of calm
to financial markets pushed revenues 14 percent lower in the
first half of the year.
IG, one of the few beneficiaries of the volatility that hit
markets at the height of the euro zone debt crisis last year,
also warned on Tuesday that the higher second half revenues it
normally sees may not materialise if markets remained subdued.
"We are not expecting a dramatic movement unless markets get
more interesting," chief executive Tim Howkins told Reuters.
Quantitative easing programmes to support economies on both
sides of the Atlantic appear to be sucking volatility out of
"There is a big wall of money and that absorbs market
movements," Howkins said.
IG, the world's largest financial spread betting company by
revenues, is feeling the effect of greatly reduced activity on
financial markets after the dramas of the euro zone crisis made
August and September 2011 record months for revenues.
"Volatility is at a 10-year low. It's a bit quieter than a
reversion to normal. Maybe it's the calm before the storm," said
Howkins, saying fresh problems in the euro zone or a failure to
resolve the "Fiscal Cliff" in the United States could breathe
fresh life into markets.
Spread betting allows small investors to speculate on the
performance of financial markets by enabling them to bet on the
price in the future of either individual instruments or baskets
IG's rivals include unlisted firms City Index and CMC
Revenues at IG were 169 million pounds ($272 million) in the
six months ended November, in line with forecasts, and
reflecting the problems of replicating last year's strong
IG's shares were down 3.1 percent at 423.1 pence 0935 GMT in
a broadly flat UK midcap stock index.
IG has responded to the slowdown by cutting around 30-35
jobs from a global workforce of around 1,000 and holding down
It now aimed to keep its cost base flat with last year,
rather than increasing it as previously planned, Howkins said.
Brokerage Numis retained its "buy" rating on the stock,
saying its size should help it to prosper in the long term.
"We believe spread betting and CFD (contract for difference)
trading to be in their infancy and are growth industries where
IG is winning market share," Numis said.
"Its scale means that despite the highest level of
investment spend IG achieves a 50 percent operating margin where
the majority of competitors struggle to break-even."