London-based props eye Amsterdam on Brexit fears

At least four major London-based proprietary trading firms are seeking to relocate operations to Amsterdam in advance of Brexit negotiations, the deputy-head of a prop trade body has said.

Amid fears uncertainty around the UK’s exit from the European Union will hit the City of London, Mark Spanbroek, vice-chairman of the FIA European Principal Traders Association, said he has spoken with members and non-members looking to relocate to Amsterdam from London.

“At least four companies are seriously interested in setting up a regulated entity in Amsterdam,” Spanbroek, who is based in Amsterdam, told FOW. 

“They are talking with lawyers, accountants and auditors with a view to moving to Amsterdam with some looking to relocate or set up part of their operations here bypassing the UK entirely.”

Spanbroek did not name the firms but said they were a mix of US and European-regulated firms and hinted that some of the major US firms with their EU-operations based in London are among those looking to move out of the City.

US firms, such as DRW, CTC, Quantlab, Jump Trading, Ronin Capital and Jane Street, all have their EU operations based in London. It is not known if any are among those seeking to relocate to Amsterdam.

Amsterdam is seen as a viable alternative to London for market-making firms wanting certainty in the wake of the UK’s vote to leave the EU. 

It is home to large market-makers Optiver, IMC, Webb Traders and a host of smaller, highly sophisticated proprietary trading groups, and boasts a solid local infrastructure and a deep talent pool. 

It also has a regulator in the AFM that understands and is used to dealing with low latency, market-making firms. 

Dublin has been named as another alternative destination. The Irish capital is home to Virtu and Susquehanna as well as a number of sizable point-and-click trading firms. 

At the heart of the concerns of major proprietary trading firms is unrestricted access to the European markets in the event of a so-called hard Brexit. 

Under Mifid II, firms will have to be regulated by European Securities and Markets Authority and may be required to have a physical presence in the EU to gain unfettered access to European derivatives markets. 

While some equivalence deal is likely to be reached for City firms and the UK is set to fully implement Mifid II ahead of its formal departure from the Union, Spanbroek believes firms would not be risking disruption by seeking to move ahead of negotiations. 

Is a hard Brexit a threat to the City? Join us at Derivatives World London: The Debates on 7 December to find out. Register now at: http://www.fow.com/events/derivatives-world-london-the-debates/agenda.html