FNG Exclusive… FNG has learned via regulatory filings that FCA licensed CFDs broker London Capital Group (or as it is more commonly referred to, LCG) saw a decline in Revenues and a large loss in 2023, as the company’s new management team transitioned the company to an Introducer-Only model.

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FNG had also exclusively reported, back in mid 2023, that in a change in business models LCG decided to become an introducing broker to (former) rival and leading UK online broker IG Group (LON:IGG), as well as to its parent FlowBank in Switzerland, under new managers Dave Worsfold and Matt Basi.

While that strategy might pan out in the long run, in 2023 LCG saw its Revenues decline by 16% to just £1.68 million (from £2.0 million in 2022). The company posted a Net Loss of £6.0 million in 2023, more than double 2022’s loss of £2.4 million.

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As recently as 2018 LCG was doing more than £31 million in Revenue, as one of the premier brands in UK online brokerage.

LCG change to Introducer model

LCG revenues during the period were generated from a ‘back-to-back’ arrangement with parent FlowBank in Switzerland, which saw LCG’s risk (generated from client trading activity) hedged one-for one with FlowBank. In turn, FlowBank paid LCG fees for trading volume generated. Additional revenues were generated from Introducing Broker/Partnership agreements with third party providers of spread betting and CFD services that saw LCG introduce clients to partner firms, who in turn paid LCG a proportion of the clients’ trading costs.

As noted above, the LCG  business continued to be loss making during the period. In December 2022 a new management team comprising Dave Worsfold (CEO) and Matt Basi (Managing Director) were brought into the business to lead a change in the business model. The focus of the ‘new’ business is working in partnership with the largest firms in the industry to give clients access to leading technology and pricing, whilst providing bespoke, high-touch service to valuable clients. Outsourcing the provision of technology, client onboarding, custody of client monies and all associated operating expenses has allowed LCG to move forward with a much-reduced cost base and a strong focus on client service.

The board reports that the Introducing Broker business has accelerated during 2024, and will allow LCG to show a profit for H2 2024.

LCG has more recently been caught up in parent FlowBank’s bankruptcy. FlowBank’s liquidators, Walder Wyss, have been actively trying to find a buyer for LCG.

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LCG’s 2023 income statement and balance sheet follow below.