After the IG Selloff, Brokers Found Many Ways to Say ‘Business as Usual’

IG Group shares plunged as much as 27% in early trading on Friday, 2 October after the London-listed broker cut its revenue guidance, marking its worst session in nearly a decade. The shock quickly spread to listed peers, with CMC Markets and Plus500 falling by as much as 9% and 14% respectively before both moved to distance their own numbers from IG's.

At the centre of the miss is IG's own risk management rather than any collapse in retail trading demand. Retention of client trading income in its core over-the-counter derivatives business fell to 70% in the third quarter, against a historical average of about 80%, following an internal change in how the firm priced and hedged client flow in the second half of 2025. IG now expects Q3 revenue to fall 14% year-on-year to £240 million, and has trimmed its 2026 growth target to mid-single digits from the 10-15% range set out in May. CEO Breon Corcoran attributed the decline to "reduced OTC revenue retention in less supportive market conditions" while restating confidence in the firm's medium-term trajectory.

Analysts were less forgiving. Peel Hunt warned of a high-teens cut to consensus EBITDA, while Panmure Liberum lowered its price target to 1,500 pence from 2,000 pence and cut its 2026 EBITDA forecast by 18.3%, arguing the hedging shift makes IG's core earnings less predictable. The shares shed a further 2.5% by Monday. Separately, Group CTO David Perry and UK and Ireland CTO Qaiser Mazhar have both departed after roughly a year; IG has not confirmed the exits or linked them to a consumer-business restructuring expected to involve hundreds of job cuts.

Peers rushed to reassure investors. Plus500 said it continues to trade in line with full-year 2026 expectations and holds a strong cash position, pointing to a risk framework that has "been through various market cycles." CMC Markets founder and majority shareholder Lord Peter Cruddas bought 23,011 shares at around £6.04 and said he would purchase up to £5 million in total, adding that he has not sold a single CMC share since its 2016 IPO. Privately held Pepperstone reported volume growth above 30% for July to September, with new-client first trades 40% ahead of last year — figures the firm described as self-reported and unaudited.

IG's underlying customer metrics held firm: organic first trades rose 25% and active customers 17%, while Underdog, the US prediction market it is acquiring for $1.3 billion, doubled quarterly revenue to $105 million. Maksymilian Bączkowski, senior quantitative analyst at AI Investments Ltd, said the 22.6% closing decline exceeded what the earnings reset alone would justify. "Treating one quarter at 70% retention as the new normal looks overdone," he said, adding that the 22 October Q3 update will test whether retention can move back toward 80%.

Structural pressures remain unaddressed. Customer acquisition costs are climbing — IG lifted Premier League advertising spend by 51% this season — while Revolut, armed with a new UK banking licence and 68 million users, already offers CFDs in 29 countries. Prediction markets continue to draw younger, risk-tolerant traders, with Kalshi raising $1 billion at a $22 billion valuation and Polymarket in talks above $20 billion, even as several US states have won injunctions against Kalshi.