Will be an interesting week in many favourites. IG Group is exiting the market in 600-1000 highly speculative companies, and they will be requiring 100% margin from Friday.
What does providing 100% margin buy you? Another 30 days to close positions entirely. They want out. #IGG
What does providing 100% margin buy you? Another 30 days to close positions entirely. They want out. #IGG
IG Group have been notoriously sound with risk management in the past but it does have an effect to those with highly leveraged positions. This is as brutal a change that they have ever come up with though. An immediate jump to 100% margin in so many retail favourites is a killer
IG Group make v little from their small cap stock trading but it’s highly capital intensive. Their prime brokers have forced them into what will be a very unpopular move but I can see other firms following suit. After $GME blew up both short & longs, no-one wants to be bagholder.
Switching the position to another spread bet provider is unlikely to be anything other than a short term solution. This move is being driven by Prime Brokers, who act for them all. Others might ignore the extra cost of capital for a bit on behalf of clients but it won’t last long
Perversely, the existence of short sellers at IG in those stocks affected would help as they would be buyers. Unfortunately, there are virtually none! One of the reasons that this is happening is because everyone is long, and prime brokers and IG don’t want to carry credit risk.
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