FxPro halts listing as UK's spread-betting crackdown takes toll
FxPro, a prominent currency trading platform headquartered in Cyprus, has halted its plans for an IPO on the London Stock Exchange following the recent surprise crackdown by the Financial Conduct Authority (FCA) on spread-betting companies. The FCA, concerned about the level of financial risk for retail investors, is proposing to cap the maximum leverage at 50 times the original bet. Other online platforms, including CMC Markets and IG Group, are considering a move to Germany where regulatory guidelines are more lenient.
One of the biggest privately owned currency trading brokers operating in the UK has shelved plans for a London stock market flotation amid a crackdown by regulators on financial spread-betting groups.

Sky News has learnt that FxPro, a prominent player in the retail foreign exchange trading sector, has informed a number of prospective non-executive directors that their appointments will no longer take place as the company opts to remain in private hands.

Sources said on Wednesday that the new board members were to have included Owen O'Donnell, a director of the gaming group Rank.

Richard Kilsby, a former director of the London Stock Exchange and the online gambling group 888, joined FxPro as its chairman last year, and will continue in the role "for the foreseeable future", a source said.

Credit Suisse and Morgan Stanley had been lined up to oversee the London listing, which sources said had been postponed until the regulatory climate became clearer.

FxPro, a former sponsor of Fulham Football Club, is headquartered in Cyprus, and has tens of thousands of UK-based clients who can trade futures, shares and commodities using a range of spread-betting products.

The Financial Conduct Authority (FCA) stunned traders last month when it unveiled plans to cap the level of financial risk that retail investors can take when using their services.

The proposed reforms have prompted one of the industry's biggest players, CMC Markets, to begin evaluating whether to shift chunks of its business away from the UK.

The board of CMC - which was founded by the prominent Conservative Party donor Peter Cruddas - is now expected to put the potential move of hundreds of jobs on its agenda ahead of the FCA's crackdown.

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Such a move could mean shifting CMC's headquarters as well as its London-based contracts-for-difference (CFD) operations, where approximately 300 staff are based, to Germany, Sky News revealed last month.

The idea of CMC relocating its HQ and significant numbers of jobs is at an embryonic stage, and any decision will not be taken until after the conclusion of the FCA's consultation later this year.

More than £1bn was wiped off the value of the London stock market's main financial spread-betting groups - CMC, IG Group and Plus500 - when the FCA unveiled proposals to curb spread-betting risks.

CMC is already the largest provider of CFD products - a form of spread-betting instrument - to retail clients in Germany, and it has welcomed a blueprint published by BaFin, the country's main financial regulator, which was less draconian than that of the FCA.

The German watchdog set out guidelines that would prevent retail clients losing more money than is deposited in their accounts, but would not impose leverage limits or significant marketing or distribution restrictions.

IG Group, another big player in the sector, has kicked off talks with German regulators about its planned reforms.

IG clients were told by Mr Hetherington last month that under the FCA's proposals, they would need to deposit up to 10 times more money with the company in order to trade with it.

He encouraged clients to contact the City watchdog to protest at its proposals.

The FCA said it had "serious concerns that an increasing number of retail clients are trading in CFD products without an adequate understanding of the risks involved, and as a result can incur rapid, large and unexpected losses".

It added that its analysis of a representative sample of client accounts for CFD firms had found that 82% of clients lost money on such products.

If implemented, the FCA's proposals would involve the introduction of standardised risk warnings, and would cap the maximum leverage that customers can take on at 50 times their original bet.