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Trading against coustomer?


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Hey @pravid17 I hope you're well. 

In the leveraged trading industry there are brokers who don't hedge client's exposure and brokers (like ourselves) who do hedge client's exposure. 

In a perfect world the exposure of short clients would net off the trades of long clients however this is not always the case. Our hedging model allows us to take an exposure in the underlying market for the remaining exposure which doesn't offset - This way we don't need to hedge every trade, worry about profits of our clients and results in lower costs for hedging in the underlying market (commissions, interest etc.).

So say 60% of IG customer exposure in the ASX was long and 40% of exposure on the ASX was short. The 40% would net each other off but there's a remaining 20% of customers who need to be hedged to cover their positions. We go into the market and hedge this. 

We make our money primarily through our spreads and overnight funding  with other fees making up a small proportion of our revenue.

I would like to remind also that IG is regulated by several bodies globally, including top-tier regulators like the UK's FCA, Germany's BaFIN, Australia's ASIC - This should be quite reassuring from a dealing execution and transparency perspective. 

I hope this helps, let me know if you have any other question 

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