By Tommy Wilkes, Toby Sterling, Abhinav Ramnarayan and Huw Jones
AMSTERDAM / LONDONR (Reuters) – The whole talk was that Frankfurt or Paris would lure London’s financial business as Britain left the EU. Yet it is Amsterdam that is showing the most obvious early winner.
Data last week showed the Dutch capital had shifted London as the largest stock trading hub in Europe in January, capturing a fifth of € 40 billion a day in action, down from one-tenth of pre-Brexit trade. .
However, this is just one of several areas where the city has quietly stolen a march against its rivals as it draws businesses from Britain, evoking memories of its history as a trading powerhouse in the 17th century.
Amsterdam has also surpassed London to become the number one corporate country in Europe so far this year, data show, and a leader in euro interest rate swaps, a market valued at about $ 135 trillion in 2020 .
“There is a whole culture of trading and being close to it was very positive,” said Robert Barnes, CEO of the London-based stock exchange platform Turquoise, which has chosen the Dutch capital over Paris as its post-Brexit center. .
“You have some of the big institutional banks, you have specialized trading firms, a dynamic retail community. But it is also in the heart of continental Europe.”
Cboe Europe, a stock exchange, told Reuters it was launching a capital derivatives venture in Amsterdam in the coming weeks to mimic the trade model built at its Chicago home.
Asked why Cboe chose Amsterdam ahead of rivals, Howson said the Netherlands was the place where he saw “substantial growth” for his industry in Europe. He also cited the widespread use of English in the city and Dutch regulation being friendly to global investors, in contrast to the preference of some European countries to run country-focused firms.
“You need Europe essential to be competitive on a global scale,” Howson said. “A more isolated Europe or too much national interest makes it a difficult thing.”
However while the arrival of such businesses may bring higher tax revenues from trading volumes and private investment in infrastructure, the city is not experiencing a job boom, as many companies relocating there tend to be highly specialized and more employers small.
Turquoise’s new Amsterdam operation, for example, is located at the former headquarters of the Dutch East India Company, the trading corporation that spurred Amsterdam’s rise to its former financial fame – yet it employs only four staff.
The Dutch Foreign Investment Agency, which has led the effort to win the Brexit business, told Reuters it estimated an estimated 1,000 new jobs had been created by financial firms moving operations in Amsterdam since Britain left the EU.
This is a fraction of the 7,500 to 10,000 jobs estimated to have left London for the EU since 2016, when Britain voted the exit block and a drop in the ocean compared to the British capital’s financial workforce, which numbers over half million.
Many investment banks with their large staff have sought elsewhere on the mainland, partly hampered by Dutch laws restricting bankers’ bonuses.
AS GSHT PRESENTED
Amsterdam tops the European charts this year, having attracted initial bids worth $ 3.4 billion (IPOs), Refinitiv data show. This included Poland’s InPost, which raised 2.8 billion euros in Europe’s largest IPO in 2021 to date.
Allfunds’s Spanish fintech, Dutch startup WeTransfer and two “empty” firms – one backed by former Commerzbank chief executive Martin Blessing and another by French tycoon Bernard Arnault – are planning to join Euronext Amsterdam.
At least three tech companies from Central and Eastern Europe are also considering the lists as Brexit introduces the lure of London, bankers told Reuters.
Bank sources working at the two companies buying empty controls, or special purpose (SPAC), said Dutch regulations were closer to rules in the United States, making global appeal easier.
In the euro interest rate swap market, platforms in Amsterdam and New York have captured most of the lost London business, whose share fell from just under 40% in July to just over 10 % in January, IHS Mark data show.
This made the Dutch capital the biggest player, a breakthrough from last July when platforms in the city commanded only 10% of the market.
Amsterdam will also become the trading house of European carbon emissions, worth one billion euros a day in trading volumes, when the Intercontinental Exchange (ICE) moves the market from London later this year.
BANKS AND LARGE BONUSES
The Dutch Foreign Investment Agency, which began analyzing where Amsterdam could capitalize after Britain’s 2016 decision to leave the EU, said it had identified certain financial sectors where it believed it could have an advantage.
“We focused on specialized areas … that also traded fintech,” said spokesman Michiel Bakhuizen, adding that the city was playing the power of its low-delay trading infrastructure.
“Large investment banks would always move to Frankfurt and Paris because of Dutch legislation in force on bank bonuses,” he added, referring to a 2015 law limiting variable pay to a maximum of 20% of pay. basic.
This attempt to focus on specialized areas rather than on appeal may be reflected in the number of enterprises relocating.
In response to Brexit, 47 firms have relocated operations in whole or in part to Amsterdam from London, according to preliminary data compiled by New Financial, a think-tank.
This is lower than the 88 firms that have moved business to Paris and 56 to Frankfurt.
Companies that have relocated operations to the Netherlands include CME, MarketAxess and Tradeweb. A handful of asset and bank managers, including the Commonwealth Bank of Australia, are also relocating there.
In contrast, those firms that have moved departments and staff to Frankfurt have been mostly large investment banks, including JP Morgan, Citi and Morgan Stanley, while Paris has mostly welcomed banks and asset managers, according to New Financial.
‘MAYNYR SHUM T HALL
William Wright, Managing Director of New Financial, notes that although fewer firms have made the move to Amsterdam, the part of the city “is very sector-centric, with Amsterdam having a clear advantage in areas such as intermediation, trade, exchanges and fintech “.
The apparent success of Amsterdam, however, may be gratifying because Brexit has so far hit more trade and such a business may be easier to navigate.
“Early data on the impact of Brexit is largely trade-based, so Amsterdam seems to be doing particularly well,” Wright added. “And I’m still not making a call in Amsterdam for the IPO as I think it ‘s too early.”
Sandervan Leijenhorst, Brexit program manager at Dutch financial regulator AFM, said authorities would actually have preferred London to maintain its dominance because of the efficiency that comes from concentrating everything in a single European hub, he said.
But once the Brexit implications became clearer, it was clear that Amsterdam – the home of the world’s oldest stock exchange – would appeal, he added.
“There was already a group of traders here. They tend to come together, they tend to flock together.”
(Edited by Rachel Armstrong and Pravin Char)
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