IG confident French trading laws have no 'material negative impact'

Spread betting provider IG Group does not believe restrictions enforced by the French stock market regulator will have a “material negative impact” in its business in the country.

The company said restrictions adopted by the Autorité des marchés financiers (AMF) following the passing of the Sapin Two law at the end of 2016, which puts certain restrictions on electronic marketing of contract for difference (CFDs) to retail clients in France, will have not have “material negative impact” to its business in France in the short term.

It also believes that the new law could could “ultimately enhance the company’s future competitive position in the country”.

CFDs are tax-free derivatives products that allow investors to trade on live market price movements without owning the underlying instrument on which the contract is based, while binary bets are another form of betting whether prices will go up or down.

In December, shares in IG and rival CMC Markets were sent reeling by news that the UK financial regulator was planning to clamp down on the sale of these products and binary bet products to less experienced traders, a move that came hot on the heels of a similar crackdown on leveraged trading by Cypriot regulator CySEC, which oversees a large number of spread betting operators who use the passporting rights conveyed by this license to trade in the EU.

In what is seen as a rising wave of regulation in the industry, Belgium has also banned CFD trading, the Netherlands is said to be exploring whether it will follow France in banning the advertising of CFDs, although Germany has proposed a regime that is seen as much less draconian.

IG said on Monday that the new French marketing restrictions do not impact the accounts that it now offers to new clients in France, because its accounts provide a “limited loss-by-position guarantee as required, and therefore also a guarantee of no negative balance”.

The AMF will also ban all electronic marketing involving foreign exchange and binaries, and the company maintains that “the restrictions have no impact on the current client base”

IG believes the AMF's restrictions will provide “substantial protection for consumers and greatly improve standards in the sector” and the company “supports robust and proportionate regulatory oversight of the CFD sector in all the markets in which it operates”.