FNG Exclusive… FNG has learned that FCA licensed Retail FX and CFDs broker London Capital Group (LCG) is making a radical change to its business model.

Starting July 1, LCG will effectively become an introducing broker to (former) rival and leading online broker IG Group (LON:IGG). The company will no longer directly hold client accounts or client funds, nor act as a principal in client trades.

LCG has sent a message to all clients (see full text below) that, beginning July 1, they will no longer be able to deposit funds or open new positions directly with LCG. There will then be a further four week window (until the end of July) during which clients can close out any positions on their accounts. At the end of this period, all remaining positions will be automatically closed.

LCG stated that while it will continue to provide client service and account management, the platform, pricing and execution will be provided by IG Group. Clients wishing to “continue” with LCG will need to first open accounts directly at IG, and deposit their fund there.

While LCG only mentioned IG as a partner to which it will introduce, it did state that in the future it plans to introduce clients to “leading third party platforms,” which could expand beyond just IG.

We believe that the changes relate only to the UK-based, FCA licensed entity London Capital Group Limited and its clients. The company will continue operating its offshore Bahamas domiciled business LCG Capital Markets Limited as an active broker and market-maker. LCG used to also operate a Cyprus-based, CySEC licensed operation London Capital Group (Cyprus) Ltd, however it relinquished that license in 2021.

FNG reported early this year that LCG inked a new partnership with IG Group, to leverage IG’s platform, pricing and execution – which now appears as if it was the first step in this plan to move to introducer-only mode. That followed an FNG-exclusive report from December 2022 that LCG ownership went out and hired a new management team in a plan to revive the once-proud brand, led by CEO Dave Worsfold and Managing Director Matt Basi.

The changes come as competition in the online trading sector has become increasingly intense in LCG’s home market in the UK, as well as across the EU, MENA, and the Far East. LCG’s latest financials (from before the current management team arrived) indicate an 86% drop in Revenues, and an annual loss of £1.7 million.

LCG is controlled by Swiss neobroker FlowBank, which is run by former LCG CEO Charles-Henri Sabet.

FNG spoke with LCG CEO Dave Worsfold and Managing Director Matt Basi about the changes:

“The spread betting and CFD market in the UK is crowded with brokers competing to be counterparty to clients’ trades. Our feeling is that going forwards, firms need to find a niche or USP that adds value to their clients. Our ambition is to re-focus LCG as the best provider of high touch service and relationship management in the sector.

We’re excited about the team we’re building for this purpose, which is full of guys with 20+ years’ experience looking after active clients. We’ll be announcing more on that front shortly. In the meantime we’re delighted to have partnered with IG in the UK and feel their product is a great fit for our clients. Our plan is to continue to build that relationship and to work with our parent company FlowBank to transition our European client base.”

The message sent out today by LCG to its clients reads as follows:

London Capital Group – Important Changes

Dear [client]:

As you know, London Capital Group is a longstanding provider of CFD and Spread Betting services, having first opened our doors to clients over 20 years ago. The industry has changed beyond recognition in that time, and it continues to evolve today. We believe that LCG needs to adapt to these changes and that our role in the sector should be more clearly defined, as an Introducing Broker providing best-in-class service to our clients in partnership with industry-leading firms.

As such, rather than acting as principal to your trades (and therefore being the trade contract counterparty), in the future LCG will instead introduce clients to leading third party platforms.

Under this arrangement, we will provide client service and account management, but with the platform, pricing and execution provided by our partners at IG Group. This will allow clients to trade the widest range of products possible with the leading providers in the industry, whilst benefitting from LCG’s renewed focus on service.

What does this mean for you?

For now, your existing LCG account continues to operate as normal – you can open and close trades, make deposits and withdrawals.

This will continue to be the case until Friday the 30th of June 2023. After this date, you will no longer be able to deposit funds or open new positions directly with LCG. There will then be a further four week window (until Friday 28th of July 2023) during which you can close out any positions on your account. At the end of this period, all remaining positions will be closed.

The inability to add new funds to your account after Friday 30th of June increases the risk of your positions being closed due to margin requirements. We therefore encourage you to review any positions you have open.

To open an account with our partners IG, please follow the link below. One of our team will then be in touch to help you move any cash on your account and get up and running.

Create Account

We would like to introduce you to our partners so that you can benefit from:

• Leading trading technology and pricing
• A dedicated account management service and personal point of contact
• A smooth transition of your trading account

Our Client Service team is available to answer any questions you may have. Their contact details are below.

We look forward to servicing your account with our partners in the future.

Best Regards,

London Capital Group