How Amsterdam is getting ahead of its rivals as a Brexit trade center By Reuters

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2/2 © Reuters. FILE PHOTO: Overview of the interior of the Amsterdam Stock Exchange as Prosus goes public on the Euronext Amsterdam Stock Exchange 2/2

By Tommy Wilkes, Toby Sterling, Abhinav Ramnarayan and Huw Jones AMSTERDAM / LONDON (Reuters) – There was talk of Frankfurt or Paris attracting financial business from London as Britain moved away from the EU. However, it is Amsterdam that is proving to be the most visible early winner. Data from last week showed that the Dutch capital had displaced London as Europe’s largest equity trading center in January, grabbing a fifth of the € 40 billion share a day, down from less than a tenth. of operations before Brexit. Yet that’s just one of several areas in which the city has quietly gotten ahead of its rivals as it attracts business from Britain, evoking memories of its history as a global trading power in the 17th century. Amsterdam has also overtaken London to become Europe’s number one corporate listing site so far this year, data shows, and the leader in euro-denominated interest rate swaps, a market estimated at around $ 135 trillion in 2020. “Trading culture, and being around that was very positive,” said Robert Barnes, chief executive of the London Stock Exchange-owned Turquoise stock trading platform, which has selected the Dutch capital over Paris for its post-Brexit hub. “It has some of the big institutional banks, it has specialized commercial companies, a dynamic retail community. But it is also in the heart of continental Europe.” Cboe Europe, a stock exchange, told Reuters it will launch a stock derivatives company in Amsterdam in the coming weeks to emulate the trading model built at its Chicago home. When asked why Cboe chose Amsterdam over its rivals, Howson said the Netherlands was where he saw “substantial growth” for his industry in Europe. He also cited the wide use of English in the city and Dutch regulation that is friendly to global investors, in contrast to the preference of some European countries to defend country-focused companies. “Central Europe needs to be globally competitive,” Howson said. “A more insular Europe or too much national interest makes that difficult.” However, while the arrival of these types of companies can generate higher tax revenues from commercial volumes and private investment in infrastructure, the city is not experiencing a job boom, as many companies that move there tend to be smaller and highly specialized employers. Turquoise’s new Amsterdam operation, for example, is housed at the former headquarters of the Dutch East India Company, the commercial mega-corporation that fueled Amsterdam’s rise to its former financial fame, but employs only four people. The Netherlands Foreign Investment Agency, which has led the effort to attract the Brexit business, told Reuters it estimated that financial firms that moved their operations to Amsterdam had created some 1,000 new jobs since Britain left. The EU. That’s a fraction of the 7,500 to 10,000 jobs estimated to have left London for the EU since 2016, when Britain voted to leave the bloc, and a drop in the bucket compared to the financial workforce of the EU. British capital, which exceeds half a million. Many investment banks with their large staff have looked elsewhere on the continent, deterred in part by Dutch laws limiting bank bonuses. HOW YOU’RE ADVANCING Amsterdam leads the European stock market this year, having attracted $ 3.4 billion in initial public offerings (IPOs), Refinitiv data shows. That included Poland’s InPost, which raised € 2.8 billion in the largest European IPO in 2021 so far. Spanish fintech Allfunds, Dutch web startup WeTransfer, and two “blank check” firms, one backed by former Commerzbank CEO Martin Blessing and the other by French magnate Bernard Arnault, plan to list on Euronext Amsterdam. At least three Central and Eastern European tech companies are also considering going public, as Brexit weakens London’s appeal, bankers told Reuters. Banking sources working at the two Special Purpose or Blank Check Acquisition (SPAC) companies said the Dutch regulations were closer to the rules in the United States, facilitating appeal globally. In the euro-denominated interest rate swap market, the Amsterdam and New York platforms have seized most of the business lost by London, whose share fell from just under 40% in July to just over 10% in January, IHS Markit data show. That made the Dutch capital the biggest player, a breakthrough since last July, when platforms in the city dominated just 10% of the market. Amsterdam will also become home to European carbon emissions trading, worth € 1 billion a day in trade volumes, when the Intercontinental Exchange (NYSE 🙂 moves the London market later this year. LARGE BANKS AND BONUSES The Netherlands Foreign Investment Agency, which began looking at where Amsterdam could capitalize after Britain’s decision to leave the EU in 2016, said it had identified certain financial sectors in which it believed it could have an advantage. “We focused on specialized areas … which were commerce and financial technology,” said spokesman Michiel Bakhuizen, adding that the city took advantage of the strength of its low-latency digital commerce infrastructure. “The big investment banks were always going to move to Frankfurt and Paris because of the Dutch legislation that is in force for bank bonuses,” he added, referring to a 2015 law that limits variable pay to a maximum of 20% of salary. base. This drive to focus on niche areas rather than attracting more broadly could be reflected in the number of companies relocating. In response to Brexit, 47 companies have moved their operations fully or partially to Amsterdam from London, according to preliminary data compiled by New Financial, a think tank. That’s lower than the 88 companies that have moved their businesses to Paris and the 56 to Frankfurt. Companies that have moved their operations to the Netherlands include CME, MarketAxess, and Tradeweb. A handful of asset managers and banks, including Commonwealth Bank of Australia (OTC :), are moving there as well. In contrast, the companies that have moved departments and staff to Frankfurt have been primarily large investment banks, including JP Morgan, Citi, and Morgan Stanley (NYSE :), while Paris has mainly welcomed banks and asset managers, according to New Financial. ‘TOO EARLY TO CALL’ William Wright, Managing Director of New Financial, notes that although fewer companies have moved to Amsterdam, the city’s share “is highly concentrated by sector, and Amsterdam has a clear advantage in areas such as brokerage, trade, exchanges and fintech “. Amsterdam’s apparent success, however, may be flattered that Brexit has hit trade harder so far, and that business may be easier to move. “The first data on the impact of Brexit is based mainly on trade, so it seems that Amsterdam is doing particularly well,” added Wright. “And I am not going to call Amsterdam for IPOs just yet because I think it is too early.” Sander van Leijenhorst, Brexit program manager at Dutch financial regulator AFM, said authorities would have preferred London to maintain dominance because of the efficiencies that come from concentrating everything in a single European hub, he said. But once the implications of Brexit became clearer, it was obvious that Amsterdam, home to the world’s oldest stock exchange, would be attractive, he added. “There was already a group of merchants here. They tend to gather, they tend to group.”