Without traders, no market is possible. Since Brexit, all European markets have been competing to attract them. Nearly fifteen trading companies (Jump trading, Radix, Hard Eight Trading, Gelber Group, Tower Research, Mako Derivatives, etc.) as well as trading platforms (Chicago Board Options Exchange, etc.) and the global management giant BlackRock have obtained their licenses to operate in the Netherlands following Brexit, notes the Netherlands Authority for the financial markets (AFM), the Dutch regulator.
These new players will increase the activity and influence of a market, which is already one of the big winners from Brexit. For traders, this means more volumes and profits. Amsterdam has already dethroned the City in equities. A comeback for the one who was the first B
European bear created in 1602 and the first to launch an investment fund in 1774.
Today it has more than thirty trading firms, some local companies of which are major players on a global scale such as Flow Traders (created in 2004), Optiver (1986), IMC Financial Markets (1989 ). These high-frequency traders (ultra-fast trading companies) or “THF” were trained by traders of derivative products from the old auction markets.
Cradle of derivatives
The first European options market was born in Amsterdam in 1978. Its floor traders then created the Dutch School’s high-frequency trading firms. When the auction markets closed to electronic, these traders successfully converted. These are the main THF firms in Europe against the great American rivals of Chicago. Amsterdam attracts them with its fast and sophisticated data transmission network. A prerequisite for the arrival of THF, obsessed with speed. Traders appreciate the pragmatic and non-dogmatic approach of the Dutch regulator and the attractive taxation of the country.
Bonuses uncapped
Trading firms escape the bonus cap rule. In the Netherlands, the variable part of the remuneration cannot exceed 20% of the annual fixed remuneration in the financial sector since 2015. This limitation is supposed to avoid excessive risk-taking by financial institutions (banks, insurance companies, management companies). ). It led to crises, especially that of 2008 and the banks had to be bailed out by the taxpayer.
Private trading firms which will not be assisted by the state in the event of bankruptcy have been exempted. Unlike banks, they do not have a systemic dimension. The bankruptcy of one trader would not lead to the bankruptcy of others like dominoes. This trading sector could hardly have come to terms with such a framework for remuneration to recruit the best employees in fierce global competition. This limitation of bonuses would also have prevented it from attracting traders who would then have chosen Paris and Frankfurt instead after Brexit.
Traders campers
Dutch institutions such as pension funds generally do not share the reservations of their European counterparts on high frequency trading. The largest Dutch pension fund APG (577 billion euros) remains opposed to a tax on financial transactions. “We are acting quickly. But this speed is mainly necessary to cover our risks. Our profit does not come at the expense of, for example, pension funds, ”Dennis Dijkstra, Managing Director of Flow Traders told“ Quotenet ”.
At the start of the pandemic and the containment, a real campsite – a very popular leisure activity in Holland – with tents had been set up in the offices of Flow Traders. As in most Dutch THFs, it is very relaxed, unlike the big investment banks in the City. She was successful at Flow Traders which saw her income soar in 2020.
Amsterdam, 3rd in Europe for currencies
On the largest market in the world, that of currencies, an important axis of development for trading firms, the place of Amsterdam is third in Europe but it has seen its activity halved in six years. On average, 64 billion dollars were traded there in 2019, behind Frankfurt (124) and Paris (167). London remains the world leader (3576 billion dollars per day) of the currency market.
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