Derivatives trader IG still spreading its bets

It has opened an office in Beijing and won permission from US regulators to trade its products through brokers on its Chigago-based exchange.

However, Canadian regulators have shut the door on IG introducing spread bets or other derivative products there.

Tim Howkins, chief executive of IG, said: "Regulatory change has been one of the key determinants which has shaped our international growth strategy."

IG opened its Beijing office despite Chinese regulators maintaining bans on trading retail derivative products.

"One of the purposes of that is to demonstrate some commitment to the country and to establish a bit more of a dialogue with the regulator," said Howkins. "It needs regulatory change before we can actually offer our product in China."

Such products are also banned in the US unless they are "over the counter" or traded through a regulated exchange.

The US cracked down on unregulated derivatives trading following the Lehman crisis, but the Commodities Futures Trading Commission has given IG the green light for it to offer a limited range of products to retail investors on its new North American Derivatives Exchange (Nadex).

Howkins expects US regulators will also tighten rules on unregulated foreign currency speculation driving that trade on to IG's exchange. "As the only US-based retail exchange we think Nadex is uniquely positioned to capitalise on that."

Howkins said the US forex market was "huge". Currently IG has 70,000 to 80,000 clients worldwide but the US market could attract an extra four million clients.

He is confident that, following discussions with European regulators, unlike institutionally traded derivatives, spread bets and foreign exchange deals will not require a central clearing process.