(Reuters) - Shares in IG Group (IGG.L) fell more than 11 percent on Thursday after the online trader said Chief Executive Peter Hetherington would step down, a departure that will increase uncertainty for the company amid a regulatory clampdown on spread-betting.
IG and its rivals, such as CMC Markets (CMCX.L), have faced tighter regulations on their products, which allowed anyone with a bank card to make highly-leveraged bets on financial markets via apps and online platforms.
Last week, IG said the tighter regulations and a dip in market volatility led revenue for its latest quarter to fall 4.7 percent.
IG did not give a reason for Hetherington’s departure but said it was “well advanced” in its search for a new chief executive. It has appointed Paul Mainwaring, IG’s finance chief, as interim CEO.
Hetherington, a 24-year veteran at IG, did not respond to a request for comment via LinkedIn on his future plans.
“We are not surprised to see (Hetherington) go, particularly since the company has been losing market share for years while redeploying cash into lower-returning activities such as broking,” Liberum analyst Ben Williams said in a note.
IG's shares were 11.8 percent lower at 0914 GMT, pushing the company to the bottom of the Midcap Index .FTMC. Taking into account Thursday's fall, the shares are down around 10 pct year to date.
Graphic: IG Group Performance Under CEO Hetherington (tmsnrt.rs/2N83KfD)
A former officer in Britain’s Royal Navy, Hetherington joined IG Group as a graduate trainee in 1994, rising through the ranks before taking on the top job in 2015.
The regulatory pressures on online betting firms, which include CMC Markets, increased after the European Union’s securities watchdog in July banned the sale of ‘binary’ options to retail customers due to concerns about the risks of these products. This has recently been extended.
The online traders have also been hit by low financial market volatility even though there has been a major trade dispute between the United States and China and uncertainty created by Brexit.
Reporting by Shashwat Awasthi and Noor Zainab Hussain in Bengaluru; Editing by Bernard Orr, Sinead Cruise and Jane Merriman