IG buys Tastytrade as retail investors embrace derivatives

London

BRITAIN'S IG Group Holdings Plc agreed to buy online brokerage Tastytrade Inc for US$1 billion, predicting retail stock traders in the US are about to embrace derivatives.

"We see a secular shift in the market for self-directed investing and trading," IG chief executive officer June Felix said in an interview on Thursday. "Individuals will be taking more control of their financial outcomes and financial wealth, and this fits perfectly into that. Derivatives is the next step."

The deal comprises US$300 million in cash and the issuance of 61 million IG shares to Chicago-based Tastytrade's shareholders, according to a statement. The combination would add Tastytrade's more than 105,000 active accounts to IG's platform, whose core markets include the UK, European Union, Australia and Singapore.

IG said retail futures and options will complement the online share trading industry that's enjoyed a surge in volume in the past year as market volatility and work-from-home orders draw more customers to platforms such as Robinhood Markets Inc. British platform AJ Bell reported a 30 per cent rise in clients on Thursday.

"It's not the Robinhood segment - that's going after anyone that can sign on, anybody that is interested but not necessarily informed," said Ms Felix of IG's acquisition. "This is going after, educating and also serving the more active and informed, wealthier, older group of traders." The average age of options traders is about 50, she added, and derivatives allow clients to manage risk in a "more holistic way". BLOOMBERG