By Aby Jose Koilparambil and Yadarisa Shabong
(Reuters) - Online trading platform IG Group reported falls in quarterly revenue and active client numbers on Wednesday, sending its shares down 7%.
Client trading activity at its stock trading and investments division also fell back to pre-pandemic levels, IG said, despite client numbers remaining higher than then.
IG, created by spread-betting pioneer Stuart Wheeler in 1974 to allow people to bet on the price of gold, said lower market volatility in its third quarter ended Feb. 28 dragged revenues for its over-the-counter derivatives 18% lower.
However, the company forecast its annual revenue and profit in line with market expectations and left its medium-term outlook unchanged.
RBC analyst Ben Bathurst said IG would need revenues to jump around 20% quarter-on-quarter to meet market expectations.
"(That) now looks slightly stretching, though volatility in March will likely serve as a tailwind," Bathurst said in a note.
Trading platforms, which saw a revival in volumes and client activity last year with the Ukraine war and increasing risks of a global recession, had a relatively quiet time in recent months before the collapse of Silicon Valley Bank (SVB) last week.
The VIX volatility index, Wall Street's "fear gauge," neared six-month highs on Tuesday night after shooting up on Friday, the day SVB's swift demise sent shockwaves through global banking shares.
Volatility tends to benefit trading platforms such as IG, and inter-dealer broker TP ICAP (LON:NXGN) has said it expects volumes to increase in 2023.
IG said active client numbers for the third quarter were down 5% at 335,400 year-to-date. Third quarter revenue fell 7% to 239.3 million pounds ($289.9 million).
($1 = 0.8228 pounds)