IG Group Says SNB Surprise Move Affected ‘A Few Hundred’ Clients

IG Group Holdings Plc said Tuesday that “a few hundred clients” were hurt by the Swiss central bank’s surprise decision to abandon a cap on the franc.

The U.K. spread-betting company, founded in 1974, said in a statement that losses from a “sudden, extreme appreciation” in the Swiss franc probably won’t exceed 30 million pounds ($45 million). That would represent about 15 percent of first-half revenue. Some 18 million pounds ($27 million) in losses are attributed to client credit exposure, IG Group said.

“We will seek to learn lessons from this incident which we can incorporate into our risk management approach going forward,” Chief Executive Officer Timothy Howkins said in the statement. IG Group says it’s the biggest provider of contracts for difference, financial instruments that allow clients to bet on future movements of a security without owning it.

The shares fell 0.5 percent to 713.50 pence at 8:12 a.m. in London. They have increased about 13 percent over the past year.

The London-based company said trading revenue rose 8 percent to 197.4 million pounds in the six months through November from a year earlier. It will pay an interim dividend of 8.45 pence a share, up from 5.75 pence a year earlier.

“At this stage, IG remains on track to meet revenue expectations for the year, although profit and earnings will be negativel impacted by client debts associated with the Swiss franc movement,” the company said. “If full year diluted earnings per share were to be lower than last year purely because of this highly unusual event, the board’s current intention would be to maintain the full year ordinary dividend at last year’s level.”

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