RE: Share price fall23 Feb 2021 18:58
IG have issued a list of about 900 companies who they will discontinue supporting in respect of leveraged trades (CFD's & Spread bets). Anybody holding spread bet positions in any of these companies, received an email yesterday listing said companies. I received that email. The only 'covid' stocks listed were Deepverge and Novacyt. They instructed that margins on all these 900 companies will be increased to 100% this coming Friday. If you don't have the funds to keep your bets going, you will have no choice but to close the positions - I did it yesterday with Deepverge, expecting that the rush to sell would crash the price.
In any case, even if you have the funds to keep your position open, you can only keep it open up until 26th March. At that point, if you haven't already closed it yourself by then, IG will close it for you at whatever the prevailing price is on that day.
I dare say this has affected the share price of small cap stocks generally, even outside the list of 900 companies. That's because people will be scrambling around closing positions in many stocks, just to free up spare capital. I dare say a lot of highly leveraged NCYT holders will be crapping themselves this week.
There is actually a way around it. If you are a premium account holder, you can sign a form of Title Transfer to IG. That means they don't hold your funds in a separate client account, with the financial guarantees that go with that. Only problem with that is, if IG ever go bust, you will have no avenue for compensation from the financial authorities...your money sinks along with IG.
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