Financial Institutions Looking for EU Access to Amsterdam

AmsterdamThe Netherlands’ capital Amsterdam is emerging as one of the European cities likely to take advantage from the Brexit-triggered hunt for a new base in order to serve the European Union market. Frankfurt and Paris are two other options for banks as well as other financial institutions looking for a new base.

In the last couple of months, MarketAxess and Tradeweb which are two of the largest fixed income trade platforms globally have shown their interest in moving over to Amsterdam. Royal Bank of Scotland’s NatWest Markets Unit and Japanese Bank MUFG have also studied the capital of Netherland as a possible base for their operations.

The aforementioned companies’ executives are chalking out plans publicly in the light of rising uncertainty over having a transitional period in place before the European Union departure. If Britain is likely to leave the United Kingdom in 20 months without any transitional plan or deal, all the companies in the UK need to have a plan beforehand.

RBS and MUFG will be able to spread their operations of subsidiaries already possessing licenses from EU to service the entire Eurozone while Tradeweb and MarketAxess need to set up fresh subsidiaries as they are dependant on the passport facility of United Kingdom.

The Vice Chairman of European Principal Traders Association (which is a Dutch trade group for electronic traders), Mark Spanbroek, has highlighted a number of different benefits of relocating to Amsterdam. Some of the many advantages of the relocation include broad financial community, robust network for digital communication and strong infrastructure.

Amsterdam has a glorious trading history in past and was the first city ever for hosting stock exchange. Also, it was the first city for developing derivatives in the middle of 17th century related to Tulip Mania. Amsterdam is the home for some high-speed traders of the world like for instance IMC and Optiver that is regarded as a pioneer of automated trade.

Karel Lannoo who is the Chief Executive Officer of Centre for European Policy Studies made the following comment;

By tradition their economic model is German but in other areas, they are much more British, Atlanticist in outlook. On the financial services side, they are more open to derivatives than Germany has ever been. The tulip market was in some ways the beginning of the derivatives market.

The officials of the company are very much impressed by the nation’s regulators having quite a liberal approach. Mark Spanbroek further commented that the regulators have a sound understanding of risk management. There are many other supporting factors like for instance strong transport network, extensive usage of English and highly skilled local talent pool. However, there are few executives who have shown their concern that the Dutch system might impose a lot of fees as compared to rivals like Frankfurt or Paris whereas other executives believe that the existing rule will restrict the bonus for staff members.

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