Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
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1.) Amsterdam enters the running for next major financial district post Brexit fallout
Amsterdam has seen a flurry of activity over the last month, with various financial institutions choosing to shift their bases over to the Netherlands rather than the anticipated districts, such as Frankfurt and Dublin. This month it was announced that two leading FX traders, MarketAxess and Tradeweb, will be setting up in Amsterdam, whilst NatWest Markets Division and Japan’s largest bank Mitsubishi UFJ Financial Group are also planning to house their investment operations there.
This week we have taken a look at some of the reasons why this trend is beginning to emerge and what makes Amsterdam such an attractive option.
For traders, Amsterdam poses a viable option for a European hub. The experience built up by the Netherlands Authority for Financial Markets (AFM) offers a regulatory incentive for trading firms as the Dutch licence is essentially tailor-made for markets activity.
Due to the lengthy history of trading in the Dutch financial district as well as its openness towards derivatives, the AFM expresses a more liberal outlook on these products compared to other regulators.
A major incentive specifically for proprietary trading firms is the rare ability to trade directly with big pension funds and insurance companies without considering them clients, something which massively reduces their legal and regulatory burden and is uncommon in other EU locations.
High frequency trading
It can’t be denied that Amsterdam presents essential benefits for high frequency traders. The city operates on some the world’s fastest data links, a fundamental aspect to the operation of HFTs.
Good data connectivity will further benefit businesses in the foreign exchange industry, for whom speed is also vital. However, due to the existing high-speed sub-Atlantic cables between London and New York, primary bases for these institutions may well remain in London.
After the financial crisis in 2008, Amsterdam suffered a blow to its financial services economy, leading to cap on bonuses for individuals working in this sector. For prop traders however, they remain unaffected by the bonus cap as they don’t use depositors’ money and therefore wouldn’t ever require a taxpayer bailout. Although this barrier would deter the larger banks from settling in the city, traders can enjoy the logistical and regulatory benefits without the financial downfall.
It’s no surprise given Amsterdam’s setup as the ideal hub for high frequency trading, but the Dutch have also fostered a burgeoning fintech movement across all areas of banking and finance, which is driven by their appetite for lean efficiencies and advancements in technology. The AFM is one of the most forward-thinking regulators in catering for innovation in financial markets and those choosing the Dutch city as its new base will likely benefit from this when it comes to staying ahead of the curve and integrating fintech as part of its offering.
Overall, there is a clear incentive for traders to move to the Netherlands, however, due to disproportion in advantages for traders compared to major banks, it could bring about a fragmentation of the financial services sector. As the trading community mulls over a move to the Netherlands; retail banks consider a shift to Dublin; many firms likely to remain in London, and various larger players moving to Frankfurt – it looks like everyone could win a piece of the pie.
If you would like to talk further about opportunities in the Dutch market, please get in touch with Directors Tom Spence (firstname.lastname@example.org / 0203 642 1871) and Phil Burdon (email@example.com / 0203 642 1873) who lead our Amsterdam offering and have an extensive network in the local market which they have built over a number of years working in the region
2.) Movers & Shakers
German banking and finance head Martin Kaiser moves to Ashurst with Associates Sahra Demirbilek and Stephan Lehnen.
Former Gibson Dunn & Crutcher partner Philip Crump joins DLA in London, alongside Kirkland & Ellis partner Doug Murning in Hong Kong.
Partners Jurjen Bevers, Heico Reinoud, Paul Halprin and Marnix Veldhuijzenjoin become the first to join specialist Tax practice Dentons Bokel.
Kirkland & Ellis has recruited a five-partner investigations and government enforcement team from Ropes & Gray, including Chicago managing partner and global anti-corruption and international risks co-chair Asheesh Goel, New York securities and futures enforcement co-head Zachary Brez, alongside three other government enforcement partners – Kim Nemirow in Chicago, Marcus Thompson in London and Cori Lable in Hong Kong.
Latham & Watkins has recruited Linklaters M&A partner Nikolaos Paschos in Duesseldorf.
US firm Pillsbury Winthrop Shaw Pittman has taken on international disputes lawyer Deborah Ruff from Norton Rose Fulbright to launch a London dispute practice
MERGERS & ALLIANCES
OFFICE OPENINGS AND CLOSINGS