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Financial Institutions Looking To Amsterdam For EU Access

AmsterdamAmsterdam, the capital of Netherlands is emerging as one of the European cities likely to benefit from the Brexit-triggered hunt for a new base to serve the EU market. Paris and Frankfurt are other options for banks and financial institutions looking for a new base.

During the last two months Tradeweb and MarketAxess which are two of largest fixed income trading platforms in the world have shown interest in moving over to Amsterdam. Japanese bank MUFG and Royal Bank of Scotland’s NatWest Markets unit are also reported to have studied Amsterdam as a possible base for their operations.

Executives from these companies are making their plans public in light of the increasing uncertainty over having a transitional period in place prior to the departure from the EU. UK based companies will need to have a plan, if Britain leaves the UK in 20 months without a deal or a transitional plan.

MUFG and RBS will be able to expand operations of their subsidiaries already possessing EU licenses to service the entire Eurozone while MarketAxess and Tradeweb would need to set up fresh subsidiaries since they have been depending on UK’s passporting facility.

Mark Spanbroek, vice-chairman of the European Principal Traders Association, a Dutch trade group for electronic traders pointed out the numerous benefits of relocating to Amsterdam. Some of the benefits highlighted include strong infrastructure, robust digital communications network and a broad finance community.

Amsterdam has a long trading history and was the first city to host a stock exchange. It was also the first city to develop derivatives in 1630s related to the Tulip Mania. Amsterdam is home of some of the largest high speed traders including Optiver and IMC, the pioneers of automated trading.

In a statement Karel Lannoo, chief executive officer of the Centre for European Policy Studies said

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

Company officials are also favorably impressed by the country’s regulators having a relatively liberal approach. Spanbroek also highlighted that the regulators had a good understanding of risk management. Other supporting factors are skilled local talent pool, wide spread use of English and a strong transport network.Some executives however expressed concern that the Dutch system might impose higher fees than rivals like Paris or Frankfurt while others noted the existing rule restricting bonuses for bank staff.

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