Table of contents
2
Management Board report
3
2021 at a glance
6
Message of the Management Board
9
Our prole
15
Share information
18
Value creation and strategy
24
Our performance
48
Our risk management
61
Governance
77
Report of the Supervisory Board
78
Message of the Supervisory Board
80
Supervisory Board report
86
Remuneration report
111
Financial statements
112
Consolidated Financial Statements
156
Company Financial Statements
163
Other information
3 2021 at a glance
6 Message of the Management Board
9 Our prole
15 Share information
18 Value creation and strategy
24 Our performance
48 Our risk management
61 Governance
Management
Board report
2021 at a glance
2021 BY NUMBERS
Market ETP
Value Traded (€bn)
36,835
5%
2020: 34,920
EBITDA (€m)
159.4
2020: 586.6
Net Prot (€m)
114.9
2020: 464.5
Flow Traders ETP
Value Traded (€bn)
1,541
2%
2020: 1,515
Flow Traders Total
Value Traded (€bn)
5,750
10%
2020: 5,210
Net Trading Income
(NTI) (€m)
384.0
2020: 933.4
Basic earnings
per share (€)
2.63
2020: 10.26
HIGHLIGHTS
■
Delivered strong nancial
performance amidst normalizing
markets
■
Third consecutive year with more than
€1 trillion ETP value traded
■
Enlarged our global ETP footprint
■
Expanded into single bond market
making across corporate credit and
emerging market sovereign bonds
■
Enhanced coverage of crypto and
currency markets
■
Rened a systematic ecosystem
approach - completed strategic
investments in MEMX, shape Q,
and D2X as well joining the Pyth Network
AMERICAS
Number of
ETP listings
5,547
ETP AuM (€bn)
6,597
FLOW ETP Value
Traded (€bn)
740.6
NTI (€m)
74.4
FTE
111
EUROPE
Number of
ETP listings
5,013
ETP AuM (€bn)
1,454
FLOW ETP Value
Traded (€bn)
703.3
NTI (€m)
245.8
FTE
422
ASIA
Number of
ETP listings
2,727
ETP AuM (€bn)
979
FLOW ETP Value
Traded (€bn)
96.8
NTI (€m)
63.8
FTE
80
2021 at a glance
2021 FINANCIAL OVERVIEW
In thousands of euro For the year ended
2021 2020
Net Trading Income 384,041 933,425
Employee expenses (xed) 54,604 47,701
Technology expenses 49,769 46,544
Other expenses 17,750 24,404
Fixed operating expenses 122,123 118,649
Employee expenses (variable) 102,469 228,115
Total operating expenses 224,592 346,764
EBITDA 159,449 586,661
Depreciation / amortization 15,287 14,285
Write offs, tangible assets 20 103
(Result)/impairment of equity-accounted investees (585) 358
Profit before tax 144,727 571,915
Tax 29,793 107,402
Net profit 114,934 464,512
Net trading capital 610,591 771,586
Regulatory capital available 482,602 438,929
Regulatory capital required 242,640 217,600
Excess capital 239,962 221,329
KPI
EBITDA margin 41.5% 62.8%
Basic earnings per share 2.63 10.26
Fully diluted earnings per share 2.52 9.81
2021 at a glance
In 2021, we continued to make strong progress with our
growth ambitions, expanding our trading operations across
EMEA, APAC and the US. This supports Flow Traders’
commitment to create fairer, more transparent and efcient
markets for all participants. During the year we onboarded
additional counterparties to our fast-growing network,
collaborated with a range of new partners, increased our
activities across all asset classes we trade in, and were
actively involved in launching innovative and sustainable
products.
Against the backdrop of the ongoing pandemic, we remained
focused on the safety and wellbeing of our people. Our new
hybrid work model helped ensure we could operate securely
and effectively, while continuing to deliver the high standard
of service and experience our counterparties and partners
have come to expect. Throughout the year, we also
continued to systematically seek opportunities, presented by
the fast evolving nancial ecosystem and to structurally grow
our business even further.
Strength of our people
To support our growth, we welcomed more than 160 new
colleagues in 2021. We opened a branch in Paris, France,
enhancing our physical presence in one of EMEA’s key
markets and increasing our proximity to institutional
counterparties. Flow Traders now has locations in
Amsterdam, London, New York, Cluj, Singapore, Hong Kong,
Milan and Paris. As we expand our operations and
geographical footprint, we continue to embed environmental,
social and governance (ESG) principles across our
organization and nd new ways to be more sustainable as
a business.
Message of the Management Board
From left to right: Folkert Joling, Britta Achmann, Thomas Wolff, Dennis Dijkstra and Mike Kuehnel.
“Our success is testament
to our unique company
culture, in which our
people demonstrate
tremendous dedication,
collaboration and
entrepreneurship.”
Trading highlights
We maintained our position as a leading liquidity provider in
ETPs on- and off-exchange and hold the number one
position in EMEA in equity, xed income, cryptocurrency and
commodity ETFs. As a leader in this space, we aim to
contribute to developing innovative and sustainable
investment products. One example is operating as market
maker for the world’s rst physical carbon ETC, launched by
SparkChange. We also worked closely with iShares on the
launch of two sustainable ETFs in EMEA and the US. In line
with our strategic ecosystem approach, we completed
a strategic investment in Shape Q, a ntech start-up
developing a RfQ marketplace for physical energy, green
energy and environmental commodities.
In FX, we widened our network of prime brokerages and
have built-up the capability to trade with counterparties on
a bilateral basis. For spot precious metals, we retained our
position as a top-three market maker in Europe.
Continued growth
Building upon our successful xed income ETP trading
footprint, in 2021, we strategically expanded into single-bond
market making. Leveraging the accelerating trends towards
electronication, something Flow Traders supports fully,
we went live on Bloomberg, TradeWeb and MarketAxess as
a disclosed liquidity provider. We also went live on Neptune
as an axe aggregator. Our expanded market making
activities in xed income garnered recognition externally
across media outlets and we were lead sponsor of the large
Fixed Income Leadership Summit, which took place in
London in October.
We continue to be extremely proud of how our team stayed
connected and were able to deliver at the highest level.
Our success is testament to our unique company culture,
in which our people demonstrate tremendous dedication,
collaboration and entrepreneurship.
We also increased our focus on the development of digital
assets and decentralized nance, by increasing our crypto
ETP market share in Europe, becoming market maker in the
rst US crypto ETF, and became part of the Pyth network,
an effort to increase transparency in the market by sharing
data as well as completing a strategic investment in D2X.
We also worked with TP ICAP, acting as the initial liquidity
provider for their digital assets wholesale trading platform
launch.
Regulatory changes
In 2021, Flow Traders implemented the new EU IFR/IFD
regulations and throughout the year continued to engage
effectively and constructively with regulators. We also
successfully registered with the Dutch Central Bank (DNB) in
line with regulations relating to cryptocurrency to at
currency trading. During 2022, EU nancial market
regulations will be reviewed and optimized, and we will align
accordingly. Globally, we expect that new regulatory
initiatives will address the accelerating global digitalization of
market structures and we expect to see an increasing
amount of opportunities related to the global digital assets
evolution and market data consolidation provided to market
participants. We have also kept abreast EU sustainable
nance regulation, particularly with respect to the EU
Taxonomy.
Strong response to COVID-19
While year-two of the pandemic brought additional
challenges, as a business we adapted to the new normal.
Our business continuity plan remained effective,
we continued to provide our people with a range of support
services, and we introduced new exible work schemes
across all our ofces.
“We completed a
strategic investment
in Shape Q, a ntech
start-up developing
a RfQ marketplace
for physical energy,
green energy and
environmental
commodities.”
Finally, a priority remains the wellbeing of our team across,
a team which we would like to put a spotlight on for their
amazing efforts throughout 2021. We are incredibly proud of
our team as they continue to demonstrate their dedication to
building our business and enabling Flow Traders to reach its
full potential. We would also like to recognize our
shareholders and other stakeholders for their ongoing
support and contribution.
Regards,
Dennis Dijkstra, Britta Achmann,
Folkert Joling, Mike Kuehnel and Thomas Wolff
Since joining, Mike has been impressed in particular by Flow
Traders’ entrepreneurial culture, the commitment towards
collaboration and the team’s dedication to continuous
excellence. In these initial rst months, he has also gained
a deep insight into the business, across all asset classes and
geographies and the technological capabilities. For Mike,
both Flow Traders’ existing intrinsic value and the rm‘s
long-term potential as an active participant in the rapidly
evolving nancial markets ecosystem has become truly
evident.
Looking ahead
Our key focus in 2022 will be to drive forward our strategy
even further and leverage the exciting opportunities created
in the developing nancial markets landscape. We will create
the path for Flow Traders to embrace its next phase of
development and take our extensive expertise forward to
grow our business. We will also seek to develop a full ESG
and sustainability strategy. This will include alignment with
GRI as well as setting targets and associated KPIs. We will
also develop and adopt specic policies, including human
rights policy, environmental policy and supply chain policy.
Our network of counterparties and partners will continue to
benet from our ability to provide efcient market access and
uninterrupted liquidity. We will further expand our trading
capabilities and infrastructure, collaborate on innovative
products and further systematically expand our footprint as
a key player in the global nancial market ecosystem.
Operationally, we were able maintain our ability to provide
uninterrupted liquidity and pricing to markets globally.
This resulted in investors and market participants being
able to trade in their preferred asset class at any time. We
increased our societal efforts during the year, expanding the
work undertaken by the Flow Traders Foundation. In total,
we supported over 40 charities in 2021.
Financial overview
Amidst normalizing markets, we had a successful year in
2021, recording NTI of €384.0 million and demonstrating
a healthy EBITDA margin of 41% with EBITDA of €159.4
million. Ultimately, we recorded a Net Prot of €114.9 million
with basic EPS of €2.63. This, along with our strong capital
position, allowed the company to pay a total dividend for
2021 of €1.35 per share to shareholders.
New Management Board member
During the year we welcomed Mike Kuehnel to the
Management Board as Chief Financial Ofcer (CFO),
following receipt of regulatory and shareholder approval.
Mike is responsible for Finance, Tax and Investor Relations
as well as our dedicated Strategy and M&A functions.
He joined the organization with a stringent focus on
developing the Flow Traders’ strategy further, further
strengthening our role in the global nancial market
ecosystem and systematically evolving the functions he
oversees, in line with the company’s ambitious growth plans.
Given his background in developing winning strategies for
leading nancial organizations, he brings a wealth of
experience to the role and strengthens our team further.
We provide this liquidity via two main routes: “on screen”
which is conducted on stock exchanges where Flow Traders
is a registered market maker in ETPs and “off exchange”
where we trade bilaterally with institutional counterparties,
often through Request for Quote (RfQ) platforms such as
those operated by Tradeweb, MarketAxess and Bloomberg.
More recently, we have diversied our market making
activities into other asset classes, such as Foreign Exchange
(FX), commodities, cryptocurrencies and xed income.
Flow Traders’ group companies can be found in Note 30 on
page 146 in the Financial Statements.
What we do
WWe are a nancial technology company operating in the
global nancial markets, using our proprietary technology
platform to provide liquidity by quoting bid and ask prices in
thousands of nancial products. Flow Traders ensures the
provision of this liquidity to support the uninterrupted
functioning of nancial markets. Our core trading focus is on
exchange-traded products (ETPs) and we do this globally,
enabling investors to buy and sell ETPs efciently by quoting
bid and ask prices under virtually all market circumstances.
Who we are
Flow Traders is a leading global nancial technology-
enabled liquidity provider in a wide range of nancial
products, historically specialized in Exchange Traded
Products (ETPs), now further expanding into other asset
classes. Flow Traders ensures the provision of liquidity to
support the uninterrupted functioning of nancial markets.
This allows investors to continue to buy or sell ETPs or other
nancial instruments under all market circumstances.
We continuously grow our organization, ensuring that our
trading desks in Europe, the Americas and Asia can provide
liquidity across all major exchanges and trading platforms,
globally, 24 hours a day. Founded in 2004, we continue to
cultivate the entrepreneurial, innovative and team-oriented
culture that has been with us since the beginning.
Our prole
Products
Exchange-traded products (ETPs)
ETPs, the main products that we trade, are often compared
to mutual funds largely because they are both baskets of
shares, bonds, or commodities. However, that is where the
similarity ends. Unlike most mutual funds, the majority of
ETPs simply track an index without trying to outperform such
indices. ETPs have open-ended fund structures rather than
closed-end and, unlike mutual funds, can be continuously
bought and sold on trading venues during trading hours and
off-exchange at all times.
ETPs provide investors with exposure to a wide variety of
underlying assets, ranging from ETPs that replicate the
composition of a particular equity index, to those that provide
investors with exposure to assets in specic sectors or
countries, to commodities, or to currencies. ETPs also
enable investors to create and manage diversied
investment portfolios in an efcient manner, as well as
enabling them to switch exposures at any given moment
during trading days. There are broadly three main categories
within ETPs in which we trade:
Exchange-traded funds (ETFs)
This category is the most traded, when compared to ETCs
and ETNs. ETFs derive their value from shares or bonds
held in proportion to an index. For example, a Euro Stoxx 50
ETF would hold the same shares as the Euro Stoxx 50
index, in approximately the same proportions. Fixed-income
ETFs derive their value from a portfolio of debt instruments.
For example, bonds included in the Barclays US Treasury
1-3 Year Term Index. ETFs are the most widespread among
ETPs as measured by Assets under Management (AuM).
This increases the ETPs’ Assets under Management (AuM).
In this way, the issuance of ETPs through APs provides the
issuers with access to a broad investor market without
having to support a complex and costly trading infrastructure
which would be non-core to their business. Redemption is
the reverse of the creation process: the AP transfers ETPs to
their issuer in exchange for the underlying assets (or a cash
equivalent). The issuer then cancels the ETPs it received.
This decreases the ETPs’ AuM.
Secondary market
The secondary market is where ETP trading takes place
between market participants, similar to the trading of
ordinary shares, at market-determined prices. Secondary
market participants include institutional and retail investors,
liquidity providers and APs. Secondary markets include
exchanges and other automated trading venues, as well as
off-exchange trading between market participants such as
large institutional investors.
Fixed income, currency and commodities (FICC)
Leveraging the scale and capabilities of our ETP proprietary
technology-enabled trading platform, Flow Traders has been
able to also trade an increasing volume of the underlying
asset classes in 2021 mainly in FICC. The xed income
markets in particular is experiencing a wave of
electronication which is expanding the opportunities
available to non-bank liquidity providers such as Flow
Traders.
Flow Traders started providing liquidity in FX as a separate
asset class during 2018 and we have invested further in the
business in order to drive growth in 2021. We provide
liquidity in an increasing number of FX pairs on spot and
futures in the EMEA and APAC markets to a fast-growing
The ETP ecosystem
The ETP ecosystem is made up of a number of participants
who together make ETP investing and trading possible.
These include investors, ETP issuers, exchanges and other
trading venues and authorized participants, who can also act
as liquidity providers, such as Flow Traders. The ETP
ecosystem can be further divided into two markets: the
primary market and the secondary market.
Primary market
Interaction in the primary market takes place between
authorized participants (APs) and the issuers, who either
issue or cancel ETPs. This is done in reaction to market
demand and is called the creation and redemption process.
APs can create ETPs with the issuer by transferring the
underlying assets (or cash equivalent) to the issuer in return
for a corresponding number of newly issued ETPs.
Exchange-traded commodities (ETCs)
ETCs typically derive their value from a commodity index,
such as the Bloomberg Commodity Index, although in some
cases they derive it from just a single commodity, such as
gold or oil, or a certain currency. For example, the SPDR
Gold Shares ETC tracks the value of physical gold.
ETCs may hold physical assets, but exposure can also be
held through derivatives of the underlying commodity,
in combination with cash.
Exchange-traded notes (ETNs)
ETNs are types of unsecured, unsubordinated debt
securities issued by an underwriting bank. The returns of
ETNs are based on the performance of the index being
tracked. For example, the iPath S&P 500 VIX Short-Term
Futures Index TR ETN would track the S&P 500 VIX
Short-Term Futures volatility index.
Liquidity Provider
Leading liquidity provider
Flow Traders has two main roles in the nancial ecosystem.
The rst is as a liquidity provider. In this role, we help
maintain and improve the overall transparency and efciency
of the ecosystem, by quoting bid and ask prices for nancial
products like ETPs, bonds, cryptocurrency, FX and other
products on trading venues, as well as off-exchange to
institutional investors, which market participants can trade
against. By providing liquidity we make it easier for investors
to buy and sell nancial products at a price that should
reect the (relation with the) current price of the underlying
asset, and contribute to lower trading costs.
Another role we play in the ETP landscape is as an
Authorized Participant (AP). We have AP-agreements in
place with all the major ETP issuers. These agreements link
the primary and the secondary ETP market and allow us to
either create or redeem the ETPs and optimize our role as
a leading liquidity provider in ETPs.
Flow Traders also trades cryptocurrency, which we consider
to be a key part of our FICC proposition, which is a growing
part of our overall business and a key strategic focus. Flow
Traders is the number one market maker in cryptocurrency
ETPs in Europe being active on 15 exchanges globally,
providing 24/7 liquidity. We are also a leading spot OTC
liquidity provider. We have seen that there has been
a continued adoption of this asset class by institutional
investors with subsequent inows in cryptocurrency ETPs
and ETNs. Flow Traders has continued to participate in the
development of the digital asset and decentralized nance
space through joining the Pyth network, supporting the
launch of Reactive Markets’ Switchboard and providing
liquidity and partnering with TP ICAP to be one of the initial
liquidity providers on the launch of their innovative wholesale
trading platform for cryptocurrency.
Flow Traders expects that this diversication will lead to
a larger contribution of underlying asset classes to the total
value traded. It will also improve our ETP trading capabilities
and improve our ability to grow NTI structurally. In 2021,
there were further positive NTI contributions from non-ETP
trading activities as returns from investments in trading
diversication became evident. Ultimately, Flow Traders’
goal is to become a one-stop shop liquidity platform in
nancial markets globally.
number of counterparties on an expanding number of
platforms, including Bloomberg’s FX platform. In 2021,
Flow Traders maintained its top three market maker position
on major FX ECNs (Electronic Communications Networks) in
spot metals.
In commodities in general, Flow Traders has always been
active in the ETP market as well as the underlying asset
classes. Moreover, we hold physical storage as collateral
with our prime brokers if physical delivery is demanded by
counterparties.
In Fixed Income, 2021 saw continued ETP market growth.
Flow Traders has a strong position in this market, particularly
in EMEA and in the US. By leveraging the infrastructure of
Flow Traders’ leading xed income ETP trading footprint,
a multi-year investment has enabled an expansion into single
bond market making in 2021. Flow Traders is supporting and
advancing electronication, transparency and cost efciency
across the xed income markets. Flow Traders is now
continuously quoting in excess of 9000 ISINs across USD
and Euro corporate credit and emerging market sovereign
bonds and is providing pricing on all major platforms
including Bloomberg, TradeWeb, MarketAxess and Neptune.
> OUR PROFILE
Cutting edge proprietary technology
platform
Developing software in-house
As noted, we are a technology company operating in the
nancial industry. As such, technology lies at the core of our
business, enabling us to provide liquidity in a variety of
market environments across the globe. We trade using
proprietary and scalable software with the vast majority of
our applications developed in-house. These include pricing
and trading software, market data processing tools,
pre-trade risk controls, and other risk and compliance tools.
This is the main reason that our technology department
makes up over 40 percent of our total staff and is our largest
employee group.
One of our software platform’s core features is its modular
design, which allows us to rapidly test and implement
ongoing enhancements. This also means we can easily and
cost-effectively expand our coverage of securities, asset
classes, and geographical markets as we grow the business.
In 2021 our total technology expenses increased by 8
percent versus 2020 as we invested further in the trading
business. Our technology expenses represented 41 percent
of our total xed expenses and the number of technology
FTEs grew to 244 from 221 in 2021, in order to support the
execution of our growth strategy. Technology remains the
largest employee group at Flow Traders.
Pricing
Pricing accurately
Being able to accurately price the various nancial products
that we provide liquidity in is vital to the success of our
business. Get it wrong, and we risk not winning the trade or
losing money due to bad prices. Our experience in
establishing the pricing and hedging across different
products in a variety of market conditions means we can
offer competitive bid and ask prices, while still covering our
trading costs and locking in transaction prot. We achieve
this using pre-set hedging strategies, which, when possible,
instantly reduce our market exposure, creating a market-
neutral position. This approach is also taken with respect to
providing liquidity in all asset classes we trade such as
cryptocurrency and corporate credit.
Flow Traders is a Critical Component of the ETP Ecosystem.
Performance and key figures
KEY FIGURES PER SHARE
Earnings per share €2.63
P/E ratio 12.2
Interim dividend per share €1.00
Final dividend per share €0.35
Total dividend per share €1.35
Dividend yield 4.2%
Year-end share price* €32.20
* Source: Euronext, based on year-end closing.
Introduction and key figures
KEY SHARE INFORMATION
ISIN NL0011279492
Bloomberg ticker: FLOW NA
Reuters ticker: FLOW.AS
Number of shares outstanding 46,534,500
Free oat* 70%
Market cap at year end (€) 1,498,411
Source: Euronext as per 31 December 2021.
* Ofcial Euronext denition.
Flow Traders N.V. shares are listed on
Euronext Amsterdam and are included in the
Amsterdam Midcap Index (AMX), carrying a
weight of 2.00 percent as at the end of 2021.
Flow Traders shares are also included in
several other indices issued by leading index
providers, such as MSCI (MSCI Netherlands
IMI 25/50 Price Return USD Index), FTSE
(FTSE Developed ex US All Cap Net Tax
Index) and Euronext (Euronext AEX All-Share
Index, AEX All-Tradable Index, Euronext 150
Index, AEX Financials Index).
Share information
Board, subject to the approval of the Supervisory Board,
may deem relevant. Our intentions in relation to dividends
are subject to numerous assumptions, risks and
uncertainties, many of which may be beyond our control.
The Management Board, subject to the approval of the
Supervisory Board, may decide to make allocations to
reserves and therefore decides how much of the prot will be
allocated to reserves. The prots remaining shall be at the
disposal of the General Meeting.
Reserves and dividend proposal for the nancial
year 2021
Pursuant to Article 24.1 of the company’s Articles of
Association, the Management Board, with the approval of
the Supervisory Board, has decided that of the prot for
2021 (totaling €114.9 million), an amount of €55.9 million
shall be added to the reserves. The remaining amount of
€59.0 million is at the disposal of the General Meeting.
It is proposed to the General Meeting that a total cash
dividend of €1.35 per share will be paid out to shareholders
for the nancial year 2021, subject to a 15 percent dividend
withholding tax (dividendbelasting). An interim cash dividend
of €1.00 per share was paid out on 20 August 2021.
This means that the nal cash dividend proposal to the
General Meeting is €0.35 per share. Subject to approval by
the General Meeting on 29 April 2022, shares will trade
ex-dividend on 3 May 2022. Payment of the nal dividend is
anticipated to be made on 6 May 2022. Please also refer to
the Dividend Policy section in the chapter Our governance.
Financial calendar
Q1 Trading Update 22 April 2022
Annual General Meeting 29 April 2022
Final dividend 2021 ex-dividend date 3 May 2022
Final dividend 2021 record date 4 May 2022
Final dividend 2021 payment date 6 May 2022
H1 results release 22 July 2022
Dividend policy and dividend proposal
Dividend policy
Flow Traders intends to pay dividends annually in two
instalments, with a target aggregate dividend pay-out ratio of
at least 50 percent of the company’s net prots realized
during the nancial year. The Management Board may
decide, with the approval of the Supervisory Board, that the
prots realized during a nancial year will fully or partially be
appropriated to increase and/or form reserves. A distribution
of (interim) dividends is subject to applicable rules and
regulations, the Articles of Association of the company,
the By-Laws of the Management Board, and the By-Laws of
the Supervisory Board.
It is anticipated that our interim dividends will be declared
and paid following the publication of our results for the rst
half of each year. However, there can be no assurance that
in any given year a dividend will be proposed or declared.
The payment of dividends, if any, and the amounts and
timing thereof will depend on a number of factors, including
legal and regulatory requirements, future prots, nancial
conditions, general economic and business conditions,
future prospects and such other factors as the Management
VOLUMES
Total annual volume 5 4,6 37, 236
Daily volume - high 1,639,337
Daily volume - low 36,584
Average daily volume 211,772
Source: Euronext.
SHARE PRICE PERFORMANCE
Opening price 4 January 2021 €27. 3 4
Annual highest price (closing) €38.52
Annual lowest price (closing) €27.6 8
Closing price 31 December 2021 €32.20
Source: Euronext.
Analyst coverage
The following analysts cover Flow Traders as of the date of
this annual report:
Institution Analyst
ABN AMRO - ODDO BHF Julian Dobrovolschi
Bank Degroof Petercam Michael Roeg
Exane BNP Paribas Gregory Simpson
ING Reg Watson
Jefferies Martin Price
KBC Securities Thomas Couvreur
UBS Michael Werner
Investor Relations
Investor Relations (IR) focuses on optimizing the
communication and understanding between Flow Traders
and the investor community, its advisors and the analyst
community. By attending broker conferences, organizing
roadshows to institutional investors after Half Year and Full
Year results, organizing investor conference calls, analyst
days and the Annual General Meeting, Flow Traders further
optimizes the information stream to the market. Flow Traders
has a corporate website (www.owtraders.com/investors)
where, among other information, its nancial calendar, press
releases, presentations, reports and the dividend policy can
be found. IR is the rst point of contact for interested
investors, shareholders and analysts.
INVESTOR RELATIONS CONTACT DETAILS
Jonathan Berger Investor Relations Ofcer
Telephone +31 20 799 6799
E-mail investor.relations@owtraders.com
Our strategy
We will achieve our strategic ambition by continuing to grow
our business and diversify into other asset classes.
This should result in increasing our Net Trading Income
(NTI), while maintaining our desired risk prole, controlling
costs, and securing and attracting the right talent. Increasing
our NTI involves increasing the product of volume and the
net margin we capture per trade, where volume is the value
of products we trade and the net margin is the margin we
capture per trade after the corresponding exposure has been
hedged. Our risk prole is characterized by having no
directional opinion on the market. In other words, our results
do not depend on the direction of market prices.
By expanding our presence as a liquidity provider in both the
ETPs and underlying asset classes, Flow Traders can
maximize the growth of its NTI.
By growing our presence in the global nancial market as
a liquidity provider, we build a foundation to support our
long-term growth trend. By growing our presence in
underlying asset classes, we expect to improve our
performance in the future, including during those periods
where the trading activity in the market may slow down.
This is aligned with our ESG ambition and mission. Growing
our presence in the nancial markets through expanding and
deepening our ETP trading footprint as well as improving
pricing and access to xed income, commodity and FX
liquidity will only make markets more efcient and reduce
trading costs for investors globally. It will also enable the
nancing of the shift towards a sustainable world economy.
Our ambition and strategy
Our strategic ambition
Our ambition is to become a one-stop shop liquidity platform
in nancial markets globally.
Our market and environment
We operate in a highly dynamic world, which is characterized
by mega trends such as globalization and technological
development which only accelerates the pace of change.
This only intensies the competition in our markets,
for example by through the increasing electronication of
trading enabled by technology developments. Moreover,
our markets are characterized by ever increasing regulation.
This typically creates greater transparency and a more level
playing eld within our markets, which plays to our strength
as a technology-enabled liquidity provider. Yet the markets’
core functions remains the same: transferring risk between
various market participants. This is where we add value.
Accordingly, our focus will continue to be on providing
liquidity in more and more products in the nancial markets
with a core focus on ETPs.
Our business principles
Our business principles are being exible, agile and focused
on continuous improvements. To be successful,
we recognize that we need to perform well across all areas
of the business. Achieving this involves diligently studying
the markets and our responses to them, and using our
resources where they have the greatest impact.
The outcome of this process denes whether or not we have
a competitive edge.
We create value in a number of nancial and
non-nancial ways for a variety of
stakeholders. Supported by our proprietary
technology platform, we provide liquidity in
nancial products that helps contribute to
more efcient markets by lowering overall
trading costs, delivering greater execution
quality and market transparency. For our
employees, we provide a compelling and
constantly evolving work environment that
enables them to develop to their full
potential. We take an active interest in the
societies in which we operate, contributing to
local learning initiatives and charities
through the Flow Traders Foundation.
And we care for our investors by focusing on
growing protably and providing dividend
returns. Our value creation model shows how
we create value and the impact our business
has on our stakeholders.
Value creation and strategy
> VALUE CREATION AND STRATEGY
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global ETP AuM grew from €6,422 billion at the end of 2020
to €9,030 billion by the end of 2021. This growth is expected
to continue, as investors continue to invest in low-cost,
transparent and easy-to-trade passive investment strategies.
This contributes to the long-term value creation of Flow
Traders’ strategy.
We believe there are a number of reasons for this trend to
continue, including beyond 2022: one is that investors are
attracted to the transparent nature of ETPs, which enables
them to follow clearly how the underlying securities are
performing. Another reason is that ETPs are liquid and
available at low-cost and can be bought and sold easily
during market hours. A third reason is that ETPs can be
composed of nancial instruments from almost any asset
class, sector or location, providing investors access to
markets that would normally be difcult to reach.
differences that are realized between buying and selling
related or correlating assets. Whether that is between the
ETPs we buy or sell, and the prices we pay or receive for the
underlying or related nancial instruments to mitigate our
risk, or trading FX pairs.
We are not a bank, broker or investment manager and do not
have our own Assets under Management (AuM). We also do
not develop or make products, do not provide any services
and do not have (consumer) clients. Our value chain
comprises, among others, of our institutional counterparties,
prime brokers and regulators.
ETPs
In recent years, the ETP ecosystem has continued to mature
and experience signicant growth in both Asset under
Management and number of products. According to ETFGI,
Moreover, in order to drive forward our growth agenda we
rely on the talent and integrity of all colleagues at Flow
Traders in line with our focus on business ethics and creating
sustainable employment.
Markets and trends
Our business
In 2021 we had access to more than 180 trading venues in
40 countries around the world. We provide liquidity in over
8,000 ETP listings on- and off-exchange, which is around 60
percent of all ETPs globally.
Off-exchange, we provide liquidity in ETPs on a request-
for-quote basis to more than 2,000 institutional
counterparties across the globe, including banks, asset
managers, pension funds, insurance companies, family
ofces, hedge funds, and others and this number is
increasing on an almost daily basis.
In addition to ETPs we provide liquidity in similar instruments
whose value is correspondingly affected by a change in the
value of underlying or related assets, such as futures or
bonds.
During 2021, we continued to implement our diversication
initiatives into other asset classes and provided liquidity as
a market maker including in FX, xed income, commodities
and cryptocurrency.
Irrespective of what we trade, as a liquidity provider we
generally do not have a directional opinion on the market.
In other words, our results do not depend on the direction of
market prices. Our NTI is realized through the small price
APAC region remained dominated by the top-10 most traded
ETP products, as those 10 determine roughly 55 percent to
65 percent of the total market volumes. The total ETP value
traded (on-exchange and off-exchange) was €3.7 trillion in
2021, including China, while the total ETP value traded at
our APAC ofces was €96.8 billion. Flow Traders had a
successful year in 2021 in APAC in terms of trading volumes,
conrming the contribution of specic recent investments
made in the region. In 2021, Flow Traders deepened its
partnership with the HKEX by acting as a liquidity provider
across a number of their new product suites.
The EMEA ETP market had a total ETP value traded of
€2.0 trillion in 2021. Our total ETP value traded from our
Europe ofces was €703.3 billion in 2021. We remained the
number one liquidity provider in ETPs in EMEA and
managed to grow our on- and off-exchange presence
fur ther.
In APAC, the ETP market remained fragmented, with large
differences in trading volumes, trading costs, regulation and
maturity across the nancial markets. Volumes traded in the
Review of 2021
Global ETP markets grew by 38 percent in 2021 measured in
AuM, driven again by the popularity of equity and xed
income ETPs. Annual global inows of ETP AuM were
€1,138 billion in 2021 (2020: €617 billion in 2020 – source
ETFGI). Overall trading activity in 2021 increased as the
markets continued to absorb the impacts of the COVID-19
pandemic as well as increased retail investor activity,
particularly in the US.
Global coverage
Following Flow Traders’ recent expansion, we trade globally
from four ofces: in Amsterdam, Hong Kong, New York and
Singapore. In addition to our branch ofces in London and
Milan, we announced the opening of a branch ofce in Paris
in 2021 which is consistent with Flow Traders’ growth strategy
to deepen its geographical footprint and it will enable us to
increase our proximity to institutional counterparties. In 2021,
Flow Traders ETP value traded once again surpassed the €1
trillion mark. The largest ETP market is still in the United
States, where total ETP value traded (on-exchange and
off-exchange) was €31.1 trillion in 2021. Our New York ofce’s
total ETP value traded was €740.6 billion in 2021, markedly
higher than in 2020 and, for the third year in a row, a record
year for Flow Traders US since inception. With institutional
trading gaining further momentum in 2021, Flow Traders US
continued to grow and deepen its overall presence in this
important market. In December, Flow Traders made a further
strategic investment in Members Exchange (MEMX).
MEMX was founded in 2019 as a new US equities exchange
and other members of the investor group include leading
banks, retail brokers, asset managers as well as market
makers. This investment underlines our long-term
commitment to the US equities ecosystem as we seek to
grow our business and presence further.
In general, we believe we can accelerate growth in all
regions in the coming years, as the pace of electronication
of trading intensies across nancial markets and we
increasingly leverage on our technology and trading
knowledge to progress the trading of other asset classes.
In terms of the ongoing discussions on regulation,
we continue to anticipate changes that further support a level
playingeld.
Fixed income
Electronic trading has increased dramatically over the last
few years. For example, 45% of Euro-denominated
investment-grade (IG) credit is now executed electronically,
reaching 75% on a ticket-count basis. The COVID-19
pandemic has only further accelerated this trend with the
buy-side favouring the use of RfQ platforms to an even
greater extent. This increase has contributed to the
approaching inection point of electronication in credit
markets, comparable to what we have witnessed in other
markets, such as foreign exchange (FX), US equity options
and exchange-traded funds (ETFs). This transition is being
driven by better pre- and post-trade information, the rise of
algorithmic trading and new trading protocols being
embraced by the buy- and sell-side. Initially driven by
regulation such as MiFID II, it is likely that the regulatory
landscape will continue to accelerate this electronication
trend.
By leveraging the infrastructure of Flow Traders’ leading
xed income ETP trading footprint, a multi-year investment
has enabled an expansion into single bond market making.
Flow Traders is supporting and advancing electronication,
In Europe we have cemented our position as the leading
liquidity provider by continuing to grow our presence on
different venues and grow the number of counterparties.
We have established a connection with virtually all ETP
issuers active in Europe and we continued to grow our
institutional counterparty-base substantially in 2021. MiFID II
continues to have a benecial impact on our counterparty
base, as investors increased their focus on best execution,
regardless of research access. With the recent expansion of
our ofces into Milan, which opened in 2020, and Paris in
2021 alongside the launch of liquidity provision in other asset
classes, we have the building blocks in place to further
increase our presence in Europe in 2022.
In the Americas, our ETP value traded continued to grow in
2021, but remains relatively limited compared to the overall
market size. We believe there is signicant growth potential
in Fixed Income ETFs, developed market equity ETFs and
institutional trading. Institutional trading continued to gain
mass in 2021 and is expected to grow further in 2022.
We will continue to expand the number of products traded,
the number of venues we trade on and the number of
counterparties we are connected to in the US.
In Asia we continue to increase our participation in the
markets where we are already active, and expand into new
markets. At the same time, we remain focused on markets
that are potentially opening up, such as China,
by capitalizing on our experience and increasing our
business development capacities. We have also been
increasing our footprint and visibility in the region, supporting
our institutional trading and reafrming our role in the
regional ETP ecosystem.
ETP market remains a high growth market
We still see signicant opportunities for growth in the ETP
market, driven by the widely expected expansion of this
industry in the near future. This is due to a number of
changes within the asset management industry, including:
■
the continuing shift to global electronic trading, which
cuts costs and maximizes efciency and transparency;
■
a shift in asset growth from active strategies to more
cost-effective, passive strategies;
■
increasing ETP adoption globally among institutions,
intermediaries and retail investors;
■
long-term shifts driven by regulators looking to increase
nancial stability and transparency.
To take advantage of this expected growth, we aim to
expand our presence further in all areas of ETP trading in all
regions.
It is clear that digital assets are here to stay and Flow
Traders has the strong conviction that they will drive
signicant change across the nancial markets in the coming
years not only from a trading perspective but also in terms of
asset allocation by the buy-side.
Strategic ecosystem approach
During 2021, Flow Traders designed and implemented
a strategic ecosystem approach to accelerate the execution
of our strategy and as well as capturing more of the overall
value chain. This is a natural evolution given Flow Traders
position within the nancial markets ecosystem and our core
capabilities. The focus is on three key building themes
across our three strategic focus areas of equities, xed
income and crypto. These themes are: platforms, data,
and connectivity and are, in of themselves product agnostic.
This translated into several strategic investments / actions:
market infrastructure namely in custody solutions, prime
brokerage, data and analytics, AML-KYC and other risk
solutions, digital property rights, digital identity solutions as
well as DEFI ecosystems.
Crypto ETPs are another clear example of regulatory and
investor acceptance of digital assets. They solve liquidity
and custody issues many investors, both retail and
institutional, face by having an exchange-listed instrument
with registered market makers providing liquidity under all
market circumstances.
Flow Traders’ crypto liquidity provision commenced 4 years
ago and spans OTC spot as well as ETPs. Flow Traders is
the number 1 liquidity provider in crypto ETPs in Europe with
a circa 45% market share. The digital assets space is well
suited to Flow Traders’ technology-enabled capabilities.
transparency and cost efciency across the xed income
markets. We are now continuously quoting in excess of 9000
ISINs across USD and Euro corporate credit and emerging
market sovereign bonds and providing pricing on all major
platforms including Bloomberg, TradeWeb, Neptune and
MarketAxess.
Cryptocurrency / digital assets
In recent years, cryptocurrency has emerged as an
important asset class with increased institutional
acceptance. This rise of digital assets has naturally been
seen increased trading volumes. For example, the combined
trading volume of bitcoin (BTC) and ether (ETH) futures
surged to over $32 trillion in 2021, according to The Block
Research, which represents a 338% increase compared to
2020 trading volumes. In 2020, bitcoin and ether futures saw
a combined trading volume of over $7 trillion. The increased
popularity of cryptocurrencies has also driven the
development of institutional grade and regulated digital asset
Company Date Description
MEMX May 2020 & December 2021 New US fastest growing equities exchange founded in 2019
Shape Q September 2021 Pan-European RfQ marketplace for physical energy, green energy and environmental commodities
Pyth Network October 2021 Next generation high-speed data solution built on Solana blockchain
LedgerEdge October 2021 Greater precision and improved execution in the corporate bond market
D2X December 2021 Building the rst institutional-grade and regulated options and futures exchange for digital assets in Europe
high level of ow visibility and counterparty and product
coverage. There was also signicant contributions from the
US and APAC. During 2021, we were able to successfully
leverage the recent investments made in the US and in xed
income and cryptocurrency.
In the fourth quarter of 2021, Flow Traders reported NTI of
€80 million which reected generally higher activity levels in
the markets.
Market volatility
In 2021 market volatility declined from the levels witnessed
in 2020. The main volatility took place in during January,
February and December with average VIX levels of 25,
24 and 22 respectively. For the remainder of 2021, markets
were for the most part more normalized.
Operational expenses
On the cost side, we maintained a rm discipline on costs
with xed operating expenses amounting to €122.2 million in
2021 (2020: €118.7 million), which is within the guided xed
cost growth rate of maximum 15 percent for 2021. The main
drivers of the increase in xed expenses were technology
investments to support diversication initiatives and
efciency improvements as well as new hires. FTEs
increased by 11 percent to 613. There were also €2.5 million
of additional one-off expenses in 2021 (2020: €11.4 million)
relating to the continued activation of the business continuity
plan. Variable employee expenses decreased to €102.5
million (2020: €228.1 million) which reects the lower overall
nancial performance of the business during the year.
Financial overview
Net Trading Income
The market environment in 2021 was more normalized
compared to the exceptional market circumstances seen in
2020 with the onset of the COVID-19 pandemic. Volatility in
2021 was on average lower than seen in 2020 as measured
by the VIX index (19.88 vs 29.49). By way of contrast,
the VIX reached a high of 85.47 in 2020 whereas the high in
2021 was 37.51. Given the ongoing impact of the pandemic,
the global economy as well as the equity and bond markets
continued to receive considerable support from governments
and central banks. For example, the Federal Reserve
System continued to purchase xed income ETPs
throughout the course of 2021.
Given this market backdrop and our leading global ETP
trading footprint, Flow Traders total value traded in 2021
grew to €5.7 trillion (2020: €5.2 trillion), of which €1.54 trillion
(2020: €1.52 trillion) was traded in ETPs (on-exchange and
off-exchange). The rest was traded in related nancial
products to facilitate competitive pricing in ETPs as well
trading in other asset classes, such as xed income, FX and
cryptocurrency. Meanwhile, ETP market value traded
(on-exchange and off-exchange) also increased during the
same period to €36.8 trillion (2020: €34.9 trillion).
The market environment experienced in 2021 along with
Flow Traders’ own pricing, hedging and risk management
capabilities translated into Net Trading Income (NTI) of
€384 million (2020: €933 million) - the second most
successful year for Flow Traders. Europe, our home market,
contributed the most to our NTI which reects that region’s
Overall, 2021 saw a more normalized market
environment compared to the extraordinary
market circumstances experienced in 2020
with the onset of the COVID-19 pandemic.
Notwithstanding this market environment,
2021 was a successful year for Flow Traders.
We recorded Net Trading Income in 2021 of
€384 million (2020: €933 million) and
signicant progress was made in terms of
executing the strategic growth agenda with
the expansion into single bond market
making, broadening and deepening our
digital assets footprint and completing
several strategic investments.
Our performance
IFR/IFD came into force on 26 June 2021 and replaced CRR
from a regulatory capital requirements perspective. As at
31 December 2021, our regulatory capital requirements
under IFR/IFD were €243 million. As Flow Traders’ total
regulatory capital stood at €483 million, this resulted in an
excess capital position of €240 million. Trading capital
stood at €611 million at the end of 2021 the fourth quarter
(€772 million as at 31 December 2020).
Cash flows
Cash ows from operating activities reduced to €244.8
million in 2021 (2020: €271.3 million) reecting lower net
trading income and net prot generation than the previous
year. Cash outows from investing activities amounted to
€13.8 million in 2021 (2020: €9.4 million) as additional
Given these income and cost dynamics, Flow Traders
continued to demonstrate strong operational leverage with
an EBITDA margin of 41% in 2021 (2020: 63%) with EBITDA
of €159.4 million (2020: €586.6 million).
Capital base
During the year we continued to maintain a strong, stable
capital base, comfortably exceeding both our regulatory and
prime broker capital requirements. We paid out a €1.00
interim dividend in August 2021 and propose to pay €0.35 as
a nal dividend over 2021. Over the course of 2021 we
therefore aim to return a total of €1.35 per share through
dividends to our shareholders, which represents a 51
percent dividend pay-out ratio.
strategic investments were made in line with our dedicated
strategic ecosystem alongside continued investment in the
business. Lastly, cash outows from nancing activities in
2021 amounted to €234.6 million (2020: €258.9 million) as
lower dividends were offset by increased share buybacks in
connection with various employee incentive plans.
Growth
We continued to grow our global team, trading strategies and
infrastructure in 2021. We increased our institutional
counterparty base globally to over 2,000 as well as being
connected to over 180 trading venues. To facilitate this
growth, we continued to grow the business during the year
across all regions, resulting in an increase in the number of
FTEs to 613 by year-end (2021: 554).
Outlook
In order to accelerate the structural growth in the core ETP
business as well in xed income and digital assets, guidance
remains for a maximum growth in xed operating expenses
of c. 15% for 2022. FTEs are expected to grow by c. 10% in
2022.
Substantial progress has been made in the detailed and
thorough review of Flow Traders’ capital structure as
announced at the time of Q3 21 trading update and Flow
Traders will remain focused on all arising opportunities to
create shareholder value through systematic capital
management going forward.
international tax laws and also the standards set by the
OECD Guidelines. Flow Traders is aware that its
business, including our approach to tax, has an impact
on society. See pages 38-39
■
Societal commitments and charities
Supporting charitable initiatives and engaging in
community giving, not only nancially but also by
offering access to our knowledge and experience.
A key part of this support will be through the Flow
Traders Foundation which was established in 2020.
See pages 39-40
■
Stakeholder engagement
Engaging with stakeholders that may be affected by
decisions and giving stakeholders the opportunity to
inuence decision making processes through extensive
stakeholder dialogue. See pages 40-41
■
Carbon emissions, material use and waste
Reducing the amount of carbon we emit through
energy consumption and travel as well as reducing the
amount of materials we use and waste at our ofces
which consists of stationary products and general
household waste. Flow Traders does this e.g.
by sourcing sustainably, video conferencing, buying
green energy, limiting the amount of food wasted
during lunches and separating waste. See pages 41-42
■
Diversity and inclusion
Pursuing a diverse and inclusive business. Diversity is
dened as the range of human differences, including
but not limited to race, ethnicity, gender, gender identity,
sexual orientation, age, social class, physical ability or
attributes, religious or ethical values system, national
origin, and political beliefs. Inclusion is dened as
involvement and empowerment, where the inherent
worth and dignity of all people are recognized. For Flow
Traders it implies being a truly equal opportunity
employer, by recruiting, retaining and promoting people
based on merit, and merit alone. See page 33
■
Sustainable employment
Creating a context that contributes to sustainable
employment, which refers to the extent to which workers
are able and willing to remain working for Flow Traders.
Flow Traders creates such a context by offering
high-quality jobs, developing talent in-house,
maintaining a substantial employee shareholder base,
offering variable remuneration which allows employees
to share in the success of Flow Traders and creating
and maintaining high-quality jobs in the places where
we conduct business. See pages 33-38
■
Fair taxation
Pursuing the principle that tax should follow the
business. Consequently Flow Traders pays taxes where
prots are earned in accordance with local tax
legislation. We aim to comply with domestic and
Our ESG focus areas
■
Business integrity
Being able to act with honesty and being consistent in
whatever it is you are doing based on the particular
moral value or belief compass you have. For Flow
Traders this implies conducting business within
a framework of laws and regulations, high ethical
standards, respecting human rights and own policies
and procedures. See page 32
■
Liquidity in nancial markets
Providing liquidity to global nancial markets to
promote fair, transparent and stable markets.
Flow Traders ensures the provision of liquidity to
support the uninterrupted functioning of nancial
markets. The provision of this liquidity allows investors
to continue to buy or sell ETPs or other nancial
instruments under all market circumstances.
See pages 32-33
■
Good corporate governance
Pursuing the highest standards of good corporate
governance to make sure we take actions that have
a benecial effect on all our stakeholders. Corporate
governance is the system of rules, practices,
and processes by which a rm is directed and
controlled and essentially involves balancing the
interests of a company’s many stakeholders, such as
shareholders, senior management executives,
customers, suppliers, nanciers, the government,
and the community. See page 33
Summary ESG approach
OBJECTIVES HOW WE AIM TO CONTRIBUTE GOVERNANCE TRACKING PERFORMANCE
Flow Traders ESG ambition is to
ensure to smooth functioning of
markets which will assist in
nancing the transition towards a
sustainable society
Flow Traders has a critical and important
role to play in the global nancial ecosystem
and ensures that nancial markets function
in an orderly manner
Strategy and agenda set by the Management
Board with regular monitoring by the
Supervisory Board
■
Expand trading footprint through
connecting additional counterparties,
venues and countries
■
Uninterrupted provision of liquidity
■
Promoting the trading of ESG products
ESG FOCUS AREAS
Business integrity Acting with honesty and integrity
■
Robust Compliance and Risk Management
processes
■
Code of Conduct
■
Continuous training
■
Number of regulatory breaches
■
Number of bribery and corruption incidents
■
Number of risk management incidents
Liquidity in nancial markets Providing liquidity to global nancial markets to
promote fair, transparent and stable markets
■
Regular monitoring by Chief Trading Ofcer
and the Heads of Trading as well as the
Management Board
■
Continuous investments in trading
infrastructure
■
Value Traded
■
Number of counterparties
■
Number of venues
■
Number of listings traded
Good corporate governance Pursuing the highest standards of good
corporate governance
■
Two-tier Board structure
■
Broader organizational structure
■
Internal rules and regulations, including our
Articles of Association, Management Board
By-Laws, Supervisory Board By-Laws, the
Terms of Reference of our Supervisory
Board committees and our Code of Conduct
■
Overseen by Supervisory Board and
Company Secretary
■
Number of Supervisory Board and
Committee meetings
■
Full and transparent reporting
Diversity and inclusion Pursuing a diverse and inclusive business
■
Regular monitoring by HR, Management
Board and Supervisory Board. Reference
made to Equal Opportunity Policy
■
Number of nationalities
■
Gender representation
OBJECTIVES HOW WE AIM TO CONTRIBUTE GOVERNANCE TRACKING PERFORMANCE
Flow Traders ESG ambition is to
ensure to smooth functioning of
markets which will assist in
nancing the transition towards a
sustainable society
Flow Traders has a critical and important
role to play in the global nancial ecosystem
and ensures that nancial markets function
in an orderly manner
Strategy and agenda set by the Management
Board with regular monitoring by the
Supervisory Board
■
Expand trading footprint through
connecting additional counterparties,
venues and countries
■
Uninterrupted provision of liquidity
■
Promoting the trading of ESG products
ESG FOCUS AREAS
Sustainable employment Creating a context that contributes to
sustainable employment
■
Agenda set by the Management Board and
implemented by senior management across
the company
■
Absenteeism rate
■
Training hours
■
Employee share ownership
Fair taxation Pursuing the principle that tax should follow the
business
■
Monitored by Global Head of Tax to ensure
best practice and adherence to relevant tax
laws. Additional oversight from the
Management Board and Supervisory Board
■
Taxes paid by category
■
Overall tax disclosure
Societal commitments and
charities
Supporting charitable initiatives
■
Employee led with Management Board
oversight
■
Total charitable contributions
■
Employee participation in the Flow Traders
Foundation
Stakeholder engagement Engaging with stakeholders that may be affected
by our business
■
Agenda set by the Management Board and
monitored by the Supervisory Board
■
Number of meetings with investors
■
Engagement with issuers, exchanges,
counterparties
■
Participation in leading industry events
■
Membership of industry associations
Carbon emissions, material use
and waste
Reducing the amount of carbon we emit and the
amount of waste we generate
■
Agenda set by the Management Board and
monitored by the Supervisory Board
■
CO
2
footprint
■
Remaining carbon neutral
OBJECTIVES HOW WE AIM TO CONTRIBUTE GOVERNANCE TRACKING PERFORMANCE
Flow Traders ESG ambition is to
ensure to smooth functioning of
markets which will assist in
nancing the transition towards a
sustainable society
Flow Traders has a critical and important
role to play in the global nancial ecosystem
and ensures that nancial markets function
in an orderly manner
Strategy and agenda set by the Management
Board with regular monitoring by the
Supervisory Board
■
Expand trading footprint through
connecting additional counterparties,
venues and countries
■
Uninterrupted provision of liquidity
■
Promoting the trading of ESG products
ESG FOCUS AREAS
UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS
SDG 4 Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
SDG 5 Achieve gender equality and empower all women and girls
SDG 8 Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
Flow Traders ESG ambition is to ensure to smooth
functioning of markets which will assist in nancing the
transition towards a sustainable society by:
■
Investing in our trading capabilities to ensure that
sustainable investment products can be traded easily
and efciently;
■
Promoting the drive for fair and transparent markets,
in continuous collaboration with the nancial and
investment community;
■
Operating with high ethical standards at all times and
compliance with laws and regulations and respecting
human rights;
■
Promoting sustainable tangible practices within our
company and towards our communities, by respecting
and developing our people and by supporting our
ecosystem.
EU Taxonomy
The EU Taxonomy is a classication system, which will be
used to determine, and report on, which activities are
sustainable, through the creation of activity specic
sustainability criteria. As nancial and non-nancial actors
must report on their performance in reference to the same
criteria, the Taxonomy will create a common language for
companies, investors and society alike. Corporate activities
(known as economic activities under the Taxonomy
regulation), will need to be aligned with the following three
elements to be considered sustainable or “green” under the
Taxonomy Regulation: a) Substantially contribute to at least
one of the six environmental objectives per the Technical
Screening Criteria (TSC) dened in the Regulation; b) Do no
signicant harm to any of the remaining ve environmental
objectives; and c) Comply with the minimum social
Flow Traders ESG mission and
ambition
The world is facing signicant challenges in ensuring
a sustainable future for our people and our planet.
Many national and international initiatives are addressing
these challenges. Every organization will have to play its
own role in the transition to a sustainable society, depending
on its impact and its opportunities.
The nance sector can be an important contributor to the
global sustainability agenda and can promote sustainable
nance, by incorporating environmental, social and
governance (ESG) factors into investment decision-making,
and by supporting the allocation of capital to sustainable
initiatives.
Flow Traders has a critical and important role to play in the
global nancial ecosystem and ensures that nancial
markets function in an orderly manner. We serve the real
economy by allowing investors, including pension funds and
retail investors, to manage their risks by being able to trade
at all times. Moreover, market makers such as ourselves,
have made it much cheaper and more efcient to trade than
in previous decades, which benets everyone. In this key
role Flow Traders has a responsibility to contribute to the
nancial stability and the sustainable agenda in the countries
in which we operates (see Flow Traders’ value creation
model). As a key market participant, at the core of the
nancial ecosystem, Flow Traders will support the
acceleration of the transition towards sustainable growth and
nance, notably by providing liquidity in the ever growing
suite of ESG ETFs.
Shared value
Flow Traders was founded more than 15 years ago, and in
that time we have developed an innovative and
entrepreneurial spirit that enables us to grow and explore
new markets. We recognize that with this growth come
responsibilities that go beyond our core business, and that
our activities inuence the society in which we live and
operate.
At the same time, society has a very real impact on our
business and operations. Both the Management Board and
the Supervisory Board pay close attention to a wide variety
of developments and trends that could pose either a risk or
an opportunity and in 2021 the COVID-19 pandemic as well
as Brexit implementation were such events. Another is the
opportunity that comes with the shift to digitalization, which
is helping make nancial products and services more widely
available to investors across society.
For us Environmental, Social, and Governance (ESG) is
about creating shared value. To better help manage our
impact and our need to create shared value, we have divided
our ESG focus across nine main focus areas. We have also
connected these 9 ESG focus areas with three
corresponding United Nations Sustainable Development
Goals (SDGs) that we believe are particularly relevant for
Flow Traders.
Below we outline our priorities within each of these ESG
focus areas, and explain our extended efforts to positively
impact the world around us. At the end of this chapter we
provide more information on our SDGs.
Stakeholder expectations and
materiality analysis
As a rst step towards the creation of our ESG strategy,
we performed in late 2020, a materiality analysis to identify
the ESG related issues that should be our main areas of
focus. Based on internal and external developments we
determined a shortlist of relevant topics. To determine the
priority of the relevant topics we rst launched a stakeholder
consultation process to identify the ESG related issues that
various stakeholders believe should be our main areas of
focus, through a survey. Flow Traders has had the feedback
from a wide selection of stakeholders, including
shareholders, counterparties and issuers and employees.
These stakeholders were selected because Flow Traders
directly inuences their interests. Flow Traders’ stakeholders
recognize that we play a role in ESG from numerous
standpoints: Flow Traders as a participant in the nancial
markets ecosystem, Flow Traders as a business providing
services and as a corporate actor. In each of these roles,
Flow Traders has different responsibilities. An internal
consultation was held with internal management to prioritize
the issues with which Flow Traders can have the most
economic, environmental and societal impact. The outcomes
of the stakeholder and management prioritization is
presented in the materiality matrix below which was
validated by both the Management Board and Supervisory
Board, helped us determine our ESG priorities. The x-axis
represents the prioritization by internal management and the
y-axis the prioritization by stakeholders. On the basis of the
materiality matrix Flow Traders has identied 9 key issues,
of which ve are considered highly material.
Accordingly, we report a nil value for the Eligibility EU
Taxonomy percentage for 2021. As a global liquidity provider,
we have no direct access to the entities for which we hold
ETP, equity, debt or other instruments on our balance sheet
as at 31 December 2021. Moreover, 2021 annual accounts
including Taxonomy information are not available. We have
not provided disclosure regarding voluntary EU Eligible
Taxonomy percentages as our balance sheet reects
a point-in-time position and our trading books reect the
extremely short holding periods in relation to the underlying
assets. In our view, a voluntary eligible EU Taxonomy
percentage will not provide readers of this report any insight
to our contribution to Climate Change Mitigation and/or
Climate Change Adaption.
safeguards. The European Commission (EC) is dening TSC
for the six environmental objectives at a sector and
economic activity level. The TSC for Climate Change
Adaptation (CCA) and Climate Change Mitigation (CCM)
have already been dened in the EU Taxonomy Climate
Delegated Act.
The EU Taxonomy Regulation was adopted by the European
Parliament in June 2020 and is now binding throughout the
EU. The EU Taxonomy currently applies to Flow Traders as
Flow Traders falls under the scope of the Non Financial
Reporting Directive (NFRD) and as an Investment Firm
under IFR/IFD.
As part of the EU Taxonomy Regulation, the Group has
prepared the mandatory overview of Total Assets broken
down into EU Taxonomy KPI relevant asset classes.
(€ millions) Total
Of which
covered
by the KPI
(dealing on
own account)
Climate change
mitigation
(CCM)
Climate change
adaption
(CCA)
TOTAL
(CCM + CCA)
Of which assets
covered by the
EU Taxonomy
(%) (Ta xonomy-
eligible)
Of which assets
covered by the
EU Taxonomy
(%) (Ta xonomy-
eligible)
Of which assets
covered by the
EU Taxonomy
(%) (Ta xonomy-
eligible)
Total assets invested under investment
rms’ activities dealing on own account
(as per Section A of Annex I of Directive
2014/65/EU)
Of which: on own behalf 10,739 5,048 0% 0% 0%
1
The exposure to non-NFRD counterparties amounts to €5,367 million.
2
The exposure to central government, central bank and supranational issuers amounts to €315 million.
3
The exposure to derivatives amounts to €9 million.
products (ETPs) and other nancial products to be traded
across the world’s markets, by continuously quoting bid and
ask prices. As an innovative segment of global nancial
markets, ETPs have introduced efciencies and cut
investment costs substantially for a wide range of investors,
from pension funds to retail investors. Increased liquidity,
higher execution quality, and lower overall trading costs are
just some of the benets that liquidity providers, such as
Flow Traders, offer through these innovative nancial
products compared to more traditional investment products.
In 2020 we saw an increase in the amount of ESG ETFs and
ETPs, including ESG products focused on clean/alternative
energy investments. As a leading liquidity provider in ETPs
globally, Flow Traders naturally trades ESG-related products
with its counterparties. For example, in 2021 we traded
€26.9 billion off-exchange in more than 490 different ESG
and SRI ETPs in Europe alone.
Our role is to enable trading in widely diversied investment
products to anyone at any time, allowing end-investors to
invest with lower costs and thus produce potentially higher
returns. As a result of the efforts of liquidity providers such
as ourselves, over the years trading costs have dropped
dramatically and access to transparent and inexpensive
investment products for anyone has never been more open
or efcient. This benets institutional investors, individual
investors and, ultimately, society at large by creating a more
open and accessible nancial market.
This role was never more important than during the
exceptional and extraordinary market circumstances evident
in late March and early April 2020 when Flow Traders was
able to continuously provide liquidity and pricing to the ETP
markets on a global basis. End-investors, issuers and
counterparties have been reassured by our continuous
notably social rights, freedom of association and equality,
abolishment of forced and child labour. An example of our
business integrity can be seen in the fact we have zero
tolerance towards bribery and corruption and we actively
ensure that no such behavior occurs. No cases of bribery or
corruption were reported in 2021. Continuous training of staff
as well as robust risk and compliance controls contribute to
the business integrity of Flow Traders.
2. Liquidity in financial markets
As a liquidity provider we are active on global nancial
markets and we contribute to transparency in the pricing
process, enabling market participants to invest at fair prices
and lower costs. We enable thousands of exchange-traded
Activities relating to ESG priorities
1. Business integrity
At Flow Traders, business integrity means conducting
business within a framework of laws and regulations, to high
ethical standards, and in accordance with our own policies
and procedures. We also have a great respect for human
rights in every jurisdiction where we operate. Moreover,
Flow Traders operates in an industry where the risk of
modern slavery and human trafcking is inherently low and in
jurisdictions where labour standards are high. Nonetheless,
we have applied to become a signatory to the United Nations
Global Compact. Flow Traders’ complies with these
fundamental rights, conventions and recommendations,
delighted to welcome Linda Hovius and Ilonka Jankovich to
the Supervisory Board in 2021. Accordingly, Flow Traders
already meets the new Dutch legislative requirement that at
least one-third of its Supervisory Board consists of women
and one-third consists of men. For any further future
Management Board and Supervisory Board appointments,
due regard will of course be made towards our Equal
Opportunities Policy.
We also believe in open communication and encourage
collaboration across the company. Everyone within the
company has unrestricted, direct access to senior
management and are regularly informed and consulted
about key developments. People are encouraged to speak
their minds to help make Flow Traders a better place to work.
Information travels freely and is not restricted unless we
need to protect overriding interests, such as those
concerning regulations, commercial sensitivities or to protect
our intellectual property.
We are a sponsor of Women in ETFs and have co-organized
inspirational women events for the Amsterdam Chapter of
Women in ETFs.
5. Sustainable employment
Since the day we were founded, our goal has been to foster
a culture that encourages innovation, entrepreneurialism and
risk-awareness, while focusing on drive, teamwork and
ownership. By developing talent in-house and maintaining
a committed and substantial employee shareholder base,
we have strengthened internal bonds and helped create
a loyal, forward-looking team. We are proud that we create
and maintain high-quality jobs, which result in a stable and
trusting working environment that benets our people,
objectives and ESG priorities. ESG strategy and agenda is
determined and set by the Management Board with regular
monitoring by the Supervisory Board. Please refer to the
chapter ‘Governance’ for further information.
4. Diversity and inclusion
Flow Traders is a multinational company with ofces across
the globe. This naturally creates an environment where
people of diverse cultures and backgrounds collaborate and
drive our organization forward, excel every day, and perform
at the highest level possible. We believe that a diverse
workforce, which has open communication channels and the
freedom to collaborate and introduce best practices, helps
create a richer variety of ideas and can better develop
solutions to the challenges we face.
We have a long-standing policy of recruiting and retaining
the best talent available and aim to provide an inclusive
working environment regardless of the gender, ethnicity, faith
or sexual orientation of our employees. We are committed to
providing equal employment opportunities to all qualied job
applicants. As a result, we employ people from 53
nationalities across our ofces. The composition of our
workforce tracks the outow of the education system in the
various roles we offer. We strongly encourage women to
apply for any function within the rm, particularly when they
have a background in elds that traditionally have a higher
proportion of male employees. This is supported by our
Equal Opportunity Policy (please refer to the chapter Our
governance for further information).
We are committed to being a truly equal opportunity
employer, by recruiting, retaining and promoting people
based on merit, and merit alone. This also holds for our
Management Board and Supervisory Board and we were
presence when markets were under pressure which has
enabled them to trade in all circumstances and when liquidity
is most sought after.
We are not a bank, broker or investment manager and do not
have our own Assets under Management (AuM). We also do
not develop or make products, do not provide any services
and do not have (consumer) clients. Our value chain
comprises, among others, of our institutional counterparties,
prime brokers and regulators.
3. Good corporate governance
We operate a two-tier governance structure, consisting of
a Management Board and a Supervisory Board.
The Management Board is responsible for the day-to-day
management of the company, formulating strategies and
policies, and setting and achieving our objectives.
The Supervisory Board supervises and advises the
Management Board. Each board is accountable to the
General Meeting for the performance of its duties.
Our governance is reected in our internal rules and
regulations, including our Articles of Association,
Management Board By-Laws, Supervisory Board By-Laws,
the Terms of Reference of our Supervisory Board
committees and our Code of Conduct. These, together with
our policies, can be found on our website.
Flow Traders remains focused on long-term value creation,
culture and risk management while balancing the interests of
our many stakeholders, such as shareholders, senior
management executives, counterparties, suppliers,
investors, employees, regulators and the community.
When making decisions, both boards carefully weighs the
interest of all these stakeholders in relation to our company
numerous informal events such as the annual poker
tournaments in Amsterdam, Australia and New York, chess
tournaments in Amsterdam, and trading competitions in
select universities in Canada, the US, Australia, Hong Kong
and Singapore.
As a technology enabled rm, we facilitate opportunities for
young talent in technology. In 2021 we continued to invest in
the Graduate Software Development program, which will
enhance the experience of new graduates joining the
company in 2022. The program was designed for ambitious,
skilled and creative graduates who like to be challenged
every day and who strive to make visible contributions to the
further growth of our business. Successful applicants join
the company’s development teams for one year to work on
a variety of projects. One of the goals is to improve the
proprietary technology platform that enables Flow Traders to
trade on exchanges worldwide. The projects cover multiple
areas of our technology landscape. After completing their
project, participants present their results to a jury, led by
senior members of the Technology department. Throughout
the program, graduates receive continuous support from
dedicated mentors, not only in the eld of technology,
but also in the area of personal development.
Graduate Software Developers are typically recruited
straight from university, having Computer Science or
Engineering-related educational backgrounds. All graduates
share a strong interest in either C++ or Java, which is why
a coding test is an important part of the selection procedure.
To experience development at Flow Traders rst hand,
we invite an exclusive group of students to our technology
event CODE@FLOW in our Amsterdam ofce. The two-day
challenge gives participants an opportunity to engage in
our business, and society. This is reected in a low
absenteeism rate of 1.51% globally in 2021 (2020: 0.90%).
Our ofces are all growing, and we look to hire as many
qualied applicants as we can nd. However, our selection
standards remain high – our candidates need to go through
a number of tests and interviews, with less than 1 percent of
applicants for trading positions ultimately receiving a job
offer. To nd people with the unique skill sets needed for
a global liquidity provider we recruit across the globe,
advertising and searching across multiple platforms. We also
visit campuses in India, Hong Kong, Australia, Singapore,
the US, and across Europe, meeting talents in career fairs
and workshops. This year, due to the pandemic and the
resulting restraints, we have moved the bulk of our
recruitment efforts online. We still recruit for all disciplines
and look for the best caliber available, regardless of their
gender, age, ethnicity, faith or sexual orientation. To take an
unbiased decision, in our recruitment process for certain
events, certain data, including names and gender, is blacked
out.
Graduate traders are typically recruited straight from
university. Although our traders have a varied educational
background, they share a strong numerical aptitude, which is
why a numerical test is an important part of the selection
procedure. To experience the world of trading rst hand,
we invite a select group of students to our Business Courses
in our Amsterdam and New York ofces. The two-day event
is packed with interesting and challenging trading exercises
and simulations and includes quantitative and technical
cases to mirror the evolving nature of the role. In a similar
fashion, we host the Flow Traders Arbitrage Challenge case
competition in Singapore and Hong Kong. We also host
“To experience the
world of trading
rst hand, we invite
a select group of
students to our
Business Courses in
our Amsterdam and
New York ofces.”
We are a fast growing company, which creates good jobs
across a variety of departments. In 2021 we welcomed 165
new hires (2020: 138), resulting in a 11 percent increase in
the number of FTEs year-on-year. Our new colleagues join
us from all parts of the world. To make sure they feel at
home quickly we offer full relocation support for everyone
moving to our ofces from abroad. We help with nding
a home, applying for a visa and getting to know the local
culture. We also offer our international employees based in
high-tech discussions and technical cases with our
specialists in software development and trading, followed by
a competitive hackathon.
In 2021 we continued hosting, participating in,
and sponsoring a variety of events, ranging from in-house
days to a special event for women who are curious about
a career in the trading industry to various meet ups. With the
opening of our new London branch in 2018, we have
structurally increased our presence at the relevant
universities in the UK and held multiple recruitment
campaigns.
All our ofces are designed to provide a pleasant and
ergonomically sound place to work. They are ooded with
light, have attractive, well laid out interiors and
ergonomically-optimized furniture. In addition, to give our
people the opportunity to perform at their best, we offer
healthy breakfast and lunch options, have our own bar in
Amsterdam, Hong Kong, New York and Singapore,
and organize great company trips and parties.
In Amsterdam, we also have our own in-house gym facilities
and an in-house barber in New York. We not only use our
newly-designed bars for after work gatherings, but also for
recruiting events and quarterly staff updates. We believe
these benets are important to maintain a healthy and happy
workforce and to stimulate bonding and connections beyond
employees’ direct circle of colleagues, helping to encourage
teamwork across the whole company. This year, as was the
case in 2020, these workplace related benets could not be
enjoyed to the fullest as a large portion of our staff was
working from home due to the COVID-19 pandemic.
Therefore, we invested in people’s home ofce environments
by granting a budget for buying equipment and offering other
support measures to staff.
Amsterdam the opportunity to attend Dutch language classes.
This year specically, we had to onboard a large part of our
new hires online, as we were limiting presence in the ofces
by having the majority of our staff working from home for
a prolonged period of time, to help reduce the spread of
COVID-19.
EMPLOYEES PER BUSINESS UNIT/NATIONALITIES ON 31 DECEMBER 2021
Dutch American Indian British Romanian German Russian Italian Chinese French Other TOTAL
Trading 58 36 8 15 1 10 1 6 7 7 37 186
Technology 38 23 32 12 20 7 20 10 5 4 70 241
Risk & Operations 19 9 4 4 0 1 0 0 1 2 13 53
Management Team 10 0 0 0 0 3 0 1 0 0 1 15
Supervisory Board 4 0 0 0 0 0 0 0 0 1 1 6
Legal & Compliance 14 7 1 6 0 0 0 1 0 1 5 35
HR & Facilities 19 9 2 2 4 0 0 0 1 0 7 44
Finance & Tax 8 2 0 1 1 0 0 0 0 0 3 15
Business Development 1 2 0 0 0 0 0 0 1 0 3 7
Audit 3 0 0 0 0 0 0 0 0 0 0 3
TOTAL 174 88 47 40 26 21 21 18 15 15 140 605
NUMBER OF EMPLOYEES AS OF 31 DECEMBER 2021
Amsterdam Cluj London Milan Paris Singapore Hong Kong New Yor k TOTAL
Female 65 4 3 0 0 5 11 17 105
Male 340 8 5 1 1 13 49 83 500
Total 405 12 8 1 1 18 60 100 605
for their own personal development. In 2021, we further
expanded the available offerings, with mainly online training
session formats.
In total, employees undertook 13,413 training hours during
the course of 2021 which comprised external training,
mandatory training and onboarding (general and
technology).
Many of our managers are ‘home-grown’, having developed
into their positions after a number of years working with the
company. They set an example and act as an inspiration for
new hires, illustrating the career paths open to them. And to
complement self-growth, we also like to give our employees
the chance to transfer between our ofces and experience
life and work elsewhere.
We believe in sharing our prots with all relevant
stakeholders, including our employees. Given good
performance, employees from any role and ofce are
We invest in our people. For example, we provide them with
a range of excellent training programs, benetting them and
the company.
Our new hires in trading and technology start with an
intensive introduction program, bringing them up to speed
with our way of working and training them in the specic
skills they need to do their job well. All junior traders –
including those hired for our Asian and the US ofces –
begin their global training program at our ofces in
Amsterdam.
And all new employees receive an introduction to Flow
Traders through the Flow Academy, including online and
on-site training that provides programs in a wide variety of
subjects, including culture, technology, regulatory
developments, trading for non-traders, and the
Whistleblower Policy, including anti-corruption. Through
Flow Academy we offer everyone varied training
opportunities, aimed at improving function-specic skills or
AT A GLANCE
Culture
Informal ‘work hard-play hard’ culture
■
Casual dress code
■
Highly skilled people
■
Drive, teamwork, ownership
■
Aiming to be the best
■
Playing to win
■
Enjoying life, organizing great events
Ofce
Stimulating collaboration and collegiality
■
Open ofce spaces
■
In-house bar
■
Annual company trips
Lifestyle
Enabling a healthy lifestyle
■
Free healthy breakfast and lunch
■
In-house gym
■
Sports programs and events
■
Personal trainers
■
Chair massage
■
Free drinks and snacks
■
Quarterly health checks
■
In-house barber
6. Fair taxation
We are committed to being good corporate citizens, bringing
positive value to the communities we operate in. We pay
taxes where they are due and subscribe to fair taxation in
terms of corporate income tax. We note that taxes are not
limited to corporate income tax but also include VAT, wages
tax, social securities, dividend withholding tax, stamp duties
and other transaction taxes. In 2021 we incurred total
corporate income taxes of €30 million (2020: €107 million)
which was 21% of our taxable income. We believe it is vital
to operate a fair, transparent and straightforward tax policy,
which is required when running a sustainable business and
delivering long-term value to all our stakeholders.
Flow Traders is prudent and transparent in respect of its
nancial reporting and its relations with tax authorities
globally. With regard to nancial reporting, conservative
accounting principles are being applied and one-offs must
occur infrequently and be clearly documented. In the current
rapid changing tax landscape and the associated various
(new) tax reporting requirements, Flow Traders as
a technology enabled liquidity provider strives to automate
tax ling processes as much as possible. Flow Traders is
a strong believer that by automating tax processes it
improves the compliance quality and the insight of the
company’s tax position.
The dialogue we have with stakeholders includes
discussions on our nancial reporting and tax policy and,
as with all stakeholder input, is considered during our
decision-making process. However, so far we have not seen
a desire among stakeholders for a change to our tax policy.
We support transparency initiatives, such as country-by-
country reporting and Base Erosion and Prot Shifting from
the Organization for Economic Co-operation and
In 2015 a group of employees bought shares in Flow
Traders. These shares are subject to a six-year lock-up
period. 25 percent of these shares have been released on
1 June 2018, 1 June 2019 and 1 June 2020. The last 25
percent of the shares was released on 1 June 2021.
SHARES HELD BY MEMBERS OF THE MANAGEMENT
BOARD
(31 December 2021)
% of
outstanding
total shares
Dennis Dijkstra (CEO) 1,075,000 2.31
Folkert Joling (CTrO) 414,817 0.89
Thomas Wolff (CTO) 31,000 0.07
Britta Achmann (CRO) 7,50 0 0.02
Mike Kuehnel (CFO) - -
Total 1,528,317 3.28
Shares held by members of the Supervisory
Board
The co-founders of Flow Traders, Roger Hodenius and Jan
van Kuijk, are currently members of the Supervisory Board.
The table below provides an overview of the shares
indirectly held by them on 31 December 2021 as also
reected in the relevant AFM register.
SHARES INDIRECTLY HELD BY MEMBERS OF THE
SUPERVISORY BOARD
(31 December 2021)
% of
outstanding
total shares
R. Hodenius
(Avalon Holding B.V.) 4,686,825 10.07
J.T.A.G. van Kuijk
(Javak Investments B.V.) 5,686,826 12.22
Total 10,373,651 22.29
entitled to receive variable compensation relative to their
contribution to the rm as a whole. We are transparent about
how we pay our people and how much we pay them,
including management. We have a Remuneration Policy that
permits variable pay only when a prot is made. We are
constantly looking for ways to improve our remuneration
principles. And because variable remuneration is, to a large
extent, deferred, it remains at risk of forfeiture if we sustain
a loss. We believe this is the strongest incentive for
sustainable, risk-aware behavior for all our staff. In addition,
we promote employee shareholding through rewarding
a signicant part of variable remuneration in shares.
This aligns the interests of the company and its shareholders
with those of our employees by creating ‘skin in the game’.
Shares held by employees and
Management Board members
We have a long-standing philosophy of encouraging
management and employee share ownership, thus aligning
the company’s long-term success to their personal nancial
circumstances. Since IPO, we have utilized a number of
share schemes. Around the time of the IPO, our CEO and
a signicant number of current and former employees
invested in Flow Traders. Subsequently, the Flow Traders
Cash Incentive Plan (FCIP) and Flow Traders Loyalty
Incentive Plan (FLIP) were introduced. The FCIP was
replaced in 2020 by a new share plan which provides the
award up to 50% of variable remuneration in shares (or
share-like instruments).
On 31 December 2021, out of 605 active employees, 407
(31 December 2020, 429 out of 564) employees are active
participants of various employee share plans.
The key participants in the Tax Control Framework are well
established and include the Supervisory Board,
Management Board, Finance department, Tax department,
internal auditors and external auditors. They are able to
assess and weigh the risks associated with the tax decision
process for our business and stakeholders. Under Flow
Traders Tax Control Framework, signicant tax positions,
including the tax strategy, are always shared with and
subject to the approval of the Management Board.
Flow Traders pays taxes where prots are earned in
accordance with local tax legislation. We do not use tax
haven jurisdictions for tax avoidance purposes and carry out
our business through entities in jurisdictions where we
factually operate our business. With this simple tax
philosophy in place, the company can operate its business in
line with its belief that it is part of the corporate social
responsibility duty to pay taxes where it operates. In addition
to corporate income taxes, Flow Traders pays many other
taxes, including but not limited to, payroll taxes and social
security contributions on the wages of its employees, value
added taxes and property taxes. All these taxes are
a signicant basis of funding governmental public services.
It is our social responsibility to contribute through taxes in
the regions we operate in. For more information on our tax
position, please refer to note 11 of the nancial statements.
7. Societal commitments and charities
At Flow Traders, we believe it is important for us to back
initiatives that contribute to society. We’ve done so for many
years – through the rm and through our colleagues’
personal efforts. We support a number of charities, not only
nancially but also by offering access to our knowledge and
experience. Our people are enthusiastic about supporting
charitable initiatives, which has always been part of our
Development (OECD), and frequently assess the impact of
such initiatives. We also closely monitor the reporting
thresholds under the country-by-country reporting rules,
to ensure that we meet our reporting obligations when we fall
under the scope of this rule. Where necessary or relevant,
we take the appropriate actions to adopt these initiatives in
our tax control framework. Further details on our tax policy
can be found under Tax Principles on our website. The tax
principles also serve as KPIs throughout our performance
measurement. The tax function within the company will
therefore provide appropriate input as part of the approval
process for business proposals to ensure a clear
understanding of the tax consequences.
We have good standing relationships with the tax authorities
in each region in which we operate. We proactively manage
our relationship with the tax authorities with the aim of
minimizing the risk of challenge, dispute or damage that
could have an impact on our credibility. We concluded
a horizontal supervision agreement with the Dutch Tax
Authority (horizontaal toezicht) with a view to further
strengthening our transparent and professional relationship
with the tax authorities. Tax laws, rules and interpretations
are continuously subject to a changing social view towards
tax and we cannot be certain of continued benet from
certain tax regimes, such as the innovation box regime in the
Netherlands. Given the complexity of the continuously
changing tax legislation, and the fact that this may create
uncertainty for Flow Traders, we obtain independent external
tax advice through reputable tax rms or, when appropriate,
approval is obtained from tax authorities on specic material
or complex tax matters.
Note: Total taxes due shows the total amount of tax due as a result
of the nancial performance of the Group in the respective year
■
Robin Hood Foundation
■
Moustaqbel
■
Jeugd Sportfonds Amsterdam
8. Stakeholder engagement
Flow Traders operates in one of the most regulated and
competitive markets and in an innovative industry. In the era
in which we nd ourselves today, business, politics and
society merge almost seamlessly together.
New opportunities, challenges and regulatory change are
always on the horizon as the industry continues to innovate.
To be able to take our corporate responsibility agenda to the
next level, we engage with our stakeholders on a regular
basis to understand whether we have a mutual vision on
business developments and essential reforms in our
regulatory environment. We consistently carry out materiality
assessments to categorize topics that may affect our
business operations and that could inform our strategy,
targets and reporting.
Commitment
We commit to continuously providing liquidity to secure
global nancial markets which are essential for real
economic growth and create value for all people. We always
enter the public debate with full transparency, substantiate
our long-term vision with data-driven arguments and identify
viable improvements for the nancial markets.
Our contributions to the regulatory and legislative dialogue
are typically made public and we are always willing to
discuss our position and the interests we take into account.
In 2021, one of the main issues we addressed in our
engagement with regulators marked the capital requirement
regime for investment rms. Aligned with this issue we
campaigned along with industry peers an alternative
Traders N.V. and will receive an additional allocation of
€430,000 from the 2021 variable remuneration pool.
This funding allowed the Foundation to commence fullling
its aim of promoting and funding health and well-being
charities globally. At the Flow Traders Foundation, there will
be a pursuit of making things better by tackling problems
through supporting highly transparent and cost-effective
causes that improve people’s lives. The strategy of the
Foundation is based on the United Nations Sustainable
Development Goal 1 - No Poverty. In 2021 the focus within
this strategy was Education in the light of ghting Poverty.
This resulted in annual donations to several projects which
supported and stimulated Education for people in poverty.
The charities and projects of the Flow Traders Foundation
are divided in 3 different categories:
1. Ad-hoc
2. One - year (based on the annual theme,
Education in 2021)
3. Long term (3 years)
Based on the categories and the annual theme of 2021 we
supported 40 different charities/ projects across the globe.
Next to this we continued our support for the long term
projects from 2020 such as SINA, JINC and Tiny Miracles.
Some of the charitable organizations supported by the
Foundation in 2021:
■
Free a Girl
■
Hack your Future
■
War Child
■
Flor Ayuda
■
UNHCR
■
IIMPACT
■
Feeding America Bank
working culture. We do this by supporting Flow Traders
employees in fundraising activities by giving time or access
to our network.
Once again, instead of the usual holiday gifts, the
Institutional Trading team in EMEA asked counterparties to
select a shortlisted charity for a €50 donation to be made.
Ultimately, 210 selections were made and donations were
made to charities including The Ocean Cleanup, Free a girl,
Flow Traders Foundation, the International Red Cross and
Caritas.
To continue giving to our communities in a more structured
manner, in 2020 we established the Flow Traders Foundation
(the Foundation). In 2021 we continued to support several
global charities and projects. Given the Flow Traders
Foundation was established in 2020, we could build on the
set structure in 2020 but of course we also improved as an
organization.
The Board of the Foundation (Sjoerd Rietberg, former
Co-CEO of Flow Traders) kept his role as rst Chairman.
Also the roles of Jan van Kuijk (treasurer) and Roger
Hodenius (secretary) remained the same.
Flow Traders itself donated €10.0 million – mostly consisting
of Flow Traders shares – to the Foundation in 2020. In the
year 2021, these shares yielded €873.000 in the form of
dividends for the benet of the Foundation. The two founders
as well as members of the Management Board, employees
and former employees have committed to provide further
funding, adding up to a total contribution of €3.25 million
which will be received over a period of ve years. In addition,
the Foundation has received €500.000, in cash from Flow
9. Carbon emissions, material use and waste
Flow Traders considers its overall direct impact on the
environment to be low. Due to the nature of our business,
Flow Traders has a relatively light carbon footprint in relation
to its direct activities. We promote public transport by having
conveniently located ofces and by not offering lease cars
as well as where possible using video-conferencing to limit
travel.
Nevertheless, conscious of the challenges linked to climate
change, the need to reduce greenhouse gas emissions and
to manage natural resources prudently and sparingly,
Flow Traders has sought to integrate environmental issues
into its activities and strategy. In this context, Flow Traders
carried out an analysis for the rst time of its carbon footprint
in 2020 which serves as the baseline. Flow Traders will focus
in the coming years on reducing its carbon footprint. In the
meantime, during 2020 Flow Traders became a Carbon-
Neutral company for our own operations, committing to zero
emissions by offsetting our entire carbon footprint.
By measuring, mitigating and offsetting our remaining
carbon footprint, we aim to do our part in tackling global
climate change, while supporting sustainable development in
local communities.
demonstrates our positive impact to society and ultimately
improve our business. As part of our collaborative strategy,
we are participating in the board of the Dutch Association of
Proprietary Traders (APT) and the Executive Committee of
the European Proprietary Traders Association (FIA-EPTA).
In both trade associations we have representation on several
committees regarding market structure, prudential
regulation, digital assets and DeFi, sustainable nance and
ESG, diversity and well-being. Flow Traders is also
a member of the International Capital Markets Association
(ICMA), Holland Fintech and participates in several other
professional networks.
Our Management Board engages with shareholders,
prospective investors and other stakeholders throughout the
year and had 205 engagement meetings in 2021 either
one-on-one, in market intelligence meetings or at a (virtual)
conference. Notably, the Supervisory Board also engaged
with shareholders, proxy agencies and governance bodies
regarding the remuneration policy for the Management
Board, ESG and corporate governance developments.
In addition, our employees contribute to our engagement
efforts. Together, as a team, we serve society by improving
nancial markets, supporting innovation and inspiring
people.
proposal on capital requirements related to digital assets.
As a consequence the Basel Committee is now considering
a new requirement. Besides the onerous changes in capital
requirements and thresholds, the IFR/IFD implementation
also impacted other internal policies which were discussed
with the national competent authorities. These encounters
and pending issues demonstrate that the review process of
IFR/IFD starting in 2023, will be detrimental in creating
a viable and competitive European regulatory framework that
supports innovation and enables imminent developments
regarding digital assets and decentralized nance.
Furthermore, 2021 was characterized by intensifying
proactive work to position Flow Traders in the discussions
regarding the MiFIR Review, assessing the impact of the
Digital Resilience package (DORA), the new EU Markets in
Crypto Assets (MiCA) rules and responding to the UK
Wholesale Markets Review. The MiFIR review includes
some important topics for proprietary trading rms like the
consolidated tape and a ban on payment for order ow
(PFOF). We have reconrmed our position to robust market
transparency and believe PFOF has a negative effect on
efcient price discovery and harms investors in the long run.
Collaboration
As part of our regulatory strategy and agenda, we
collaborate with other market participants, governments,
regulators, interest groups and trade associations to align on
key issues impacting the industry we operate in.
Flow Traders also through all its activities continuously
strives for fair, transparent and efcient nancial markets.
One of the key pillars of this strategy is to establish open
dialogue with our stakeholders, responding to their views
and concerns to be able to balance competing expectations.
We are always keen to address pressing issues,
Our culture and values
We have always believed that creating a strong and
successful business requires a set of shared values that
everyone can rally around. Values that help shape how
everyone behaves, feels and develops at work. We live by
our values every day - they are at the core of what we do:
■
We make investing cheaper, fairer and more efcient for
end-investors
■
We support markets with liquidity provision under all
circumstances
■
We promote fair, transparent and orderly markets
■
We promote competition on a level playing eld
■
We comply with all rules and regulations
■
We subscribe to fair taxation and transparent reporting
■
We are open, informal and diverse
■
We want colleagues to take ownership,
be entrepreneurial and be team players
■
We reward responsibility, performance and initiatives
that benet the rm as a whole
■
We always give back to society and the communities we
live in
These values are a reection of the things we believe in.
And they shape our culture. We believe that how you
perform is more important than what you wear. So our
employees dress comfortably for work – jeans, t-shirts and
sneakers are common. We believe that what someone says
is more important than who says it. We believe that the
contributions of our team-members are crucial to the
success of the company. We believe that two people know
more than one, and that people can have great ideas even in
areas different to their core expertise. Which is why we
welcome and encourage everyone to share their opinions.
Anyone with a good idea, in their own area of expertise or
Flow Traders’ primary GHG emissions arise from energy use
in its ofces and data centers, from staff travel, and indirectly
from its supply chain (Scope 3). Flow Traders has a direct
grasp only on Scope 1 and 2, which represent only 66% of
the complete GHG emissions. For scope 3, we will need to
initiate a dialogue with our entire value chain (upstream and
downstream) to act on the bulk of these emissions.
In addition, for several years, Flow Traders has taken care to
reduce its consumption of paper and water in its ofces and
data centers as well as reduce its waste to minimize its
ecological footprint. We have stopped using single-use water
bottles and provided employees with reusable water bottles.
This has limited the plastic waste within the company
signicantly. When refurbishing our ofces, we sought to use
more environmentally friendly solutions for lighting and water
consumption. We also offer a full lunch to all our employees,
healthy and free of charge. We work to limit our food waste
as much as possible by responsible purchasing of
ingredients and making sure leftovers are consumed the
next day.
Flow Traders reports its scope 1 & 2 emissions via the
operational control approach. Scope 2 represents
market-based emissions from electricity. For more
information please refer to our Carbon footprint report, which
can be requested from Investor Relations. Flow Traders’
carbon footprint is equivalent to 1,287 tons CO
2
eq (2020:
960 tons CO
2
eq) that may be split as following:
■
scope 1 = 122 tons CO
2
eq representing 9%
of Flow Traders’ global carbon footprint, which are
direct emissions from buildings;
■
scope 2 = 511 tons CO
2
eq representing 40%
of Flow Traders’ global carbon footprint, which
comprise. electricity consumption from buildings;
■
scope 3 = 655 tons CO
2
eq representing 51%
of Flow Traders’ global carbon footprint, which currently
calculated through business ights and the use of
servers but exclude our strategic investments which
have additional carbon footprints.
another, is encouraged to share. This is part of the open,
informal and diverse culture that makes us who we truly are.
Nurturing our culture
Maintaining, preserving and nurturing our culture is
extremely important to everyone across the organization.
This is done by the Management Board through the
organization of rm-wide events and company outings as
well regular all-staff updates. Colleagues themselves also
reinforce the strength of our culture by organizing their own
events, competitions and charitable endeavors.
Outstanding behavior in 2021
There have been many individual examples of outstanding
behavior which has reinforced Flow Traders’ strong culture.
An example which is worth highlighting - various colleagues
continue to give up their valuable spare time to assist with
the ongoing operation of the Flow Traders Foundation.
SDG 4
Ensure inclusive and equitable
quality education and promote
lifelong learning opportunities
for all
Within SDG 4, there is one target that
we are focused on:
■
Substantially increase the number
of youth and adults who have
relevant skills, including technical
and vocational skills,
for employment, decent jobs and
entrepreneurship.
SDG 5
Achieve gender equality and
empower all women and girls
Within SDG 5, there are two targets that
we are focused on:
■
End all forms of discrimination
against all women and girls
everywhere.
■
Ensure women’s full and effective
participation and equal
opportunities for leadership at all
levels of decision-making in
political, economic and public life.
SDG 8
Promote sustained, inclusive and
sustainable economic growth, full
and productive employment and
decent work for all
Within SDG 8, there are ve targets that
we are focused on:
■
Achieve higher levels of economic
productivity through diversication,
technological upgrading and
innovation.
■
Promote decent job creation,
entrepreneurship, creativity and
innovations.
■
Contribute to decent work for
everyone, including young people
and persons with disabilities,
and equal pay for work of equal
value.
■
Promote a safe and secure working
environment for everyone.
■
Strengthen the capacity of
domestic nancial institutions to
encourage and expand access to
banking, insurance and nancial
services for all.
Sustainable Development Goals
The United Nations (UN) has identied 17 SDGs that are
designed to help bring peace and prosperity for people and
the planet as we work collectively towards the 2030 Agenda
for Sustainable Development. In 2020 we performed
a materiality analysis to identify our ESG priorities. Based on
these ESG priorities we analyzed the SDGs on subtarget
level, to identify the three SDGs we (can) have an impact on.
In 2022 we will be developing our ESG strategy to steer
towards more positive impact on these SDGs.
Capital management
The Management Board’s policy is to maintain a strong
capital base well above the required margins in order to
maintain investor, creditor and market condence and
to sustain future development of the business. The
Management Board monitors the return on capital as well as
the level of dividends to shareholders while complying with
prime broker and regulatory capital requirements.
The available capital in the trading companies is monitored
on a daily basis to ensure that requirements are met at all
times and sufcient capital is available to support the
Group’s strategy.
Capital requirements
The Group needs to comply with capital requirements from
its prime brokers, as well as regulatory capital requirements.
Capital is being managed by the Group in order to maintain
net liquidity (which represents the value of our trading
positions, principally long and short positions in equity
securities, plus cash and cash equivalents) in excess of our
various capital requirements at all times, while
simultaneously exceed the regulatory capital requirements.
Prime broker capital requirements
The prime brokers require the Group to maintain certain
minimum capital levels. Prime brokers use various internal
systems to calculate required capital amounts (e.g., the
‘internal haircut model’ and the ‘margin based approach
model’, both intending to ensure sufcient levels of risk
allowances) and have different limits structure, pre-funding
possibilities and cut-off times for wiring capital.
Capital metrics
Own Funds
Requirement
€243
million
2020: €218 million
Excess Capital
€240
million
2020: €221 million
Own Funds Ratio
199%
2020: 202%
Outlook
Our aim is to continue to look for ways to strengthen our
ESG focus and associated disclosure. With this in mind,
we will seek to develop a full ESG and sustainability strategy.
This will include alignment with GRI as well as setting targets
and associated KPIs. We will also develop and adopt
specic policies, including human rights policy,
environmental policy and supply chain policy. Given the EU
Taxonomy is relatively new and contains some signicant
uncertainties around specic implementation, Flow Traders
will continue to assess the eligibility and the extent of the
Taxonomy alignment during the course of 2022. Accordingly,
this may impact the way in which Flow Traders addresses
EU Taxonomy reporting in 2022.
Going concern
Flow Traders, having made appropriate enquiries, consider
that adequate resources exist for the Group to continue in
operational existence for the foreseeable future and that,
therefore, it is appropriate to adopt the going concern basis
in preparing the 2021 nancial statements. In reaching these
conclusions, the Group’s nancial position as at
31 December 2021 and the strong free cash ow of the
Group, the Group’s ability to access capital markets and the
principal risks facing the Group are taken into consideration.
A commentary on the Group’s cash ows, nancial position
and liquidity for the year ended 31 December 2021 is set out
on pages 82 to 122. The Group’s capital position is strong
and therefore the Management Board believes that Flow
Traders is well prepared for the future.
All available capital is CET1, the quality highest capital,
reecting equity and retained earnings. In addition, as set
out in the chapter Remuneration, part of our variable
remuneration is fully discretionary and deferred over multiple
instalments. If the company faces operational losses these
variable compensation elements are reduced or forfeited
entirely to cover for such loss. Although this is an important
additional capital buffer, this is not reected in the regulatory
capital calculations above.
Our Pillar III disclosures pursuant to CRR and IFR/IFD can
be requested through our website www.owtraders.com
around the time the Financial Statements of our Dutch
trading entity, Flow Traders B.V., have been approved and
published, which is expected to be within the next months.
capital requirements and Flow Traders Hong Kong Limited
has a capital requirement in Hong Kong. Failure to comply
with regulatory capital requirements could result in
sanctions, including citations, nes, limits to our trading and
revocation of a regulatory license.
From 31 March 2018 until 25 June 2021, the company met
the regulatory requirements of the EU Capital Requirement
Regulation (CRR), which prescribes capital and reporting
requirements. These regulatory capital requirements are
supervised by the Dutch Central Bank in respect of Flow
Traders B.V. and the company. As of 26 June 2021, the EU’s
new Investment Firm Regulation and Directive (IFR/IFD) has
applied to Flow Traders and is implemented and supervised
by the Dutch Central Bank.
The aggregate capital that the prime brokers require is
signicantly higher than their risk exposure. For example,
we may clear two legs of one transaction through two
different prime brokers. Even when the transaction is fully
hedged (the risk is fully offset), each prime broker will still
require capital for such position as if the risk is not being
offset. The prime brokers cannot establish that the other
prime broker has an offsetting position so they will charge
a full capital requirement. This increases the capital they
require us to maintain beyond what would be necessary.
In addition, margin requirements of prime brokers are
conservatively determined by the sophistication of their
models and the regulatory requirements, which might not
necessarily be efcient in respect of our business model and
trading portfolios.
The following table sets out the capital required to be posted
with our prime brokers and capital available (Net Liquidation
value):
At 31 December
2021 2020
Net liquidity at clearings/
prime brokers 605,642 763,240
Cash at bank 4,949 8,345
Net trading capital 610,591 771,586
Regulatory capital requirements
The company and our subsidiary Flow Traders B.V.
are subject to separate regulatory capital requirements in the
Netherlands and our subsidiary Flow Traders U.S. LLC is
subject to regulatory capital requirements in the United
States. Flow Traders Asia Pte. Ltd. is exempt from regulatory
Management and control
Our global capital position is managed on a daily and
intra-day level by the Risk and Mid-Ofce department.
The Risk and Mid-Ofce department checks our positions
and capital posted at every prime broker for correctness and
compares these numbers with the relevant prime broker or
regulatory requirements. Separately, the Finance
department prepares a rolling 15-month forecast for our
capital positions, every month.
As part of our regulatory capital management cycle, the Risk
and Mid-Ofce departments prepare a daily report that
shows all the group’s positions and capital versus the
regulatory capital requirements. At the end of every quarter
the company and Flow Traders B.V. report their capital
requirements and corresponding coverage to the Dutch
Central Bank.
A nal part of the internal risk management and capital cycle
is the annual Internal Capital and Liquidity Adequacy
Assessment Process (ICLAAP). The ICLAAP comprises
a review of prevalent risks, the capital management
processes, the risk management framework and an
assessment of capital adequacy and liquidity and is reported
to the Dutch Central Bank annually. The Dutch Central Bank
assesses the capital adequacy based on this report.
The RMF helps us to ensure sufcient internal control and
(internal) capital through a consistent, continuous and
careful method for addressing, managing and prioritizing our
key risks in the context of our enterprise-wide strategic
objectives.
Where possible, we identify, assess, monitor, quantify and
document potential risks which are inherent to trading in an
automated environment. In the very dynamic environment of
automated trading we designed our RMF in such a way that
it is robust, efcient and transparent. In the gure below we
summarize our stakeholders to which we are obliged to
deliver such a framework.
Flow Traders’ Risk Management Framework
(RMF) forms the foundation of our approach
to managing risks. The RMF is documented
in Flow Traders’ Risk Management Policy and
is reviewed annually by our Management
Board.
Our risk management
Figure 1.
Risk category Context
BUSINESS AND STRATEGIC RISKS
Strategic risk
Risk that may arise from the pursuit of Flow Traders’s business plan, from strategic changes in the
business environment, and/or from adverse strategic business decisions. Market activity risk is part of this
risk as our NTI and protability are primarily a function of the level of trading activity, or trading volumes, in
the nancial instruments in which we trade.
Concentration risk Probability of loss arising from heavily lopsided exposure to a particular group of counterparties or
products. Concentration risk also includes supplier dependency risks.
Project risk The risk of inaccurate project management leading to inadequate realization of project objectives.
COMPLIANCE AND ETHICS RISKS
External fraud
Acts intended to defraud, misappropriate assets, deceive or circumvent regulations or the law, attempted
or perpetrated against the entity by a party without a direct relationship to the entity, without the
involvement of an employee or afliate of the entity.
Internal fraud Acts intended to defraud, misappropriate assets, deceive or circumvent regulations, the law or company
policies, attempted or perpetrated against the entity by an internal party, including instances where an
employee or afliate is acting in collusion with external parties.
Conduct Failure to act in accordance with internal and external stakeholders’ and society's best interests, fair
market practices, and codes of conduct.
Financial crime The risk of money laundering, sanctions violations, bribery and corruption, and Know Your Customer
(KYC) failure.
Regulatory
compliance risk
Failure to comply with any legal or regulatory obligations that are not captured through other risks.
Reputation risk The reputation risk is the risk of loss resulting from negative exposure to stakeholders.
FINANCIAL RISKS
Capital and Liquidity
risk
The risk the entity is not able to cover the cumulative net cash outow or available capital (e.g. needed
trading capital or regulatory capital) over a certain period.
Market risk Market risk is the risk to an institution resulting from movements in market prices; in particular, changes in
interest rates, foreign exchange rates, and equity and commodity prices. ESG risks are also having an
increasing impact here.
Credit risk Credit risk is the risk of a counterparty and/or issuing institution involved in trading in or issuing a nancial
instrument defaulting on an obligation. ESG risks are also having an increasing impact here.
Enterprise Risk Management
We aim for a good balance between our business activities,
return on capital and related risks. Flow Traders’ Risk
Management adopts its Enterprise Risk Management (ERM)
approach to ensure that our risk appetite and prole are
integrated in our day-to-day operations and strategic, tactical
and operational objective setting and decision making.
Every year, our Management Board derives its business
targets after determining its strategic goals. Based on these
targets and objectives, the Management Board formulates
its risk appetite. The targets, objectives and risk appetite
give direction to the various departments within the company
and are used to derive our strategic risks.
We implement our Risk Management cycle to ensure that the
residual risk prole is (and remains) in line with the set risk
appetite. In order to achieve this, we perform risk control
self-assessments (RCSA) to assess current risks and
identify risks that have newly arisen. Following the RCSAs,
the Management Board decides on the appropriate risk
response.
Risk categories
We identify three general risk categories - Strategic risks,
Operational risks and Financial risks - each with their own
specic risks areas:
OPERATIONAL RISKS
Business continuity
risk
The risk of failure to provide and maintain appropriate business continuity management (BCM), including
inadequate business continuity plans.
Trading execution
risk
The risk of losses due to errors in the execution.
People risk The risk that the entity is not able to develop, retain and attract the necessary skills/talents and diverse
workforce to realize strategic objectives.
Model risk The risk of incorrect model design, improper implementation of a correct model, or inappropriate
application of a correct model.
Legal risk The risk that applicability, enforceability and interpretation of contracts, laws and regulations and
uncertainty about the outcome of legal actions against or initiated by the entity.
Reporting risk The risk of not being able to report adequately to stakeholders (e.g. annual nancial report, regulatory
reporting).
Tax risk The risk of unexpected tax charges, including interest and penalties including tax related events resulting
in for example a damaged reputation with the tax authorities, investors, employees and the public at large.
Third party risk The risk of failing to manage third party relationships and risks appropriately.
Trade settlement risk The risk of ineffective trading leading to nancial performance variability and non-compliance with internal
and external regulation.
Physical security The risk of damage to the organisation's physical assets or harming of employees at the workplace.
TECHNOLOGY RISKS
Technology strategy
risk
The risk that the IT strategy is not described, unclear or incomplete and thereby not sufcient contributes
to IT and business objectives. This includes the risk of the strategy not being properly executed.
Technology system
risk
Risk of loss of information caused by failure, loss of condentiality, integrity and/or availability of
information and/or systems.
Data mangement risk The risk of failing to appropriately manage and maintain data, including all types of data, for example,
client data, employee data, and the organisation’s proprietary data.
Project risk The risk of inaccurate project management leading to inadequate realization of project objectives.
Category Denition Risk Appetite
Business and strategic risk
Risk that may arise from the pursuit of Flow Trader’s business
plan, from strategic changes in the business environment,
and/or from adverse strategic business decisions.
Flow Traders is prepared to take risk in a responsible way which: (i) takes our stakeholders’
interests into account and (ii) is consistent with our business objectives.
Compliance and ethics risk Compliance risk lies in Flow Traders’s potential exposure to
legal nes, nancial penalties and substantial loss, resulting
from its failure to act according to industry laws and
regulations, internal policies or industry best practices. Ethics
risk refers to dealing with the negative consequence of acting
unethically.
Considering the advance notice regulated rms get from their regulators about new regulations,
Flow Traders has a low risk appetite to this risk since our Compliance department keeps abreast on
an ongoing basis with the latest regulations and ensure we are compliant on Day One.
We hold ourselves, as well as our employees, responsible for acting with honesty, integrity and
respect, including complying with our Code of Conduct, applicable laws and regulations everywhere
we do business.
Financial risk Risk relating to positions in our Trading Book, including risks
primarily related to Market Risk, Liquidity Risk and Credit
Risk.
The rm manages Financial risk carefully by applying a strict set of criteria in its dealings with
counterparties, issuers and other relevant nancial institutions. In addition we manage our nancial
positions through sound risk management principles.
Operational risk The risk of loss resulting from inadequate or failed internal
processes, people and systems or from external events. This
denition includes legal risk, but excludes strategic and
reputational risk.
Flow Traders is inevitably exposed to Operational Risk, as a result of conducting its business
operations at operational, tactical and strategic levels. The rm does not aim to completely eliminate
this risk as this would signicantly impair its ability to achieve its business objectives.
Technology risk Risk to technology or data or applications that negatively
impact Flow Traders’ operations.
About 40% of our employees work in our Technology Department. Technology is the backbone of
Flow Traders and lies in one of its main competitive advantages. As a result, our risk appetite is
moderate due to the complexity and intricacies of the trading venues we trade at. But we do spend
a lot of time and effort to mitigate this risk to a minimum.
Figure 2. Flow Traders’ defence model.
Risk Management Governance
The effectiveness of risk management is unavoidably linked
to commitment and integrity. It is therefore crucial that the
Management Board, the global and local department heads,
and all Flow Traders employees are aware of the company’s
risk exposure and their own responsibilities in managing it
efciently.
Our risk management is embedded in the organization in line
with the three lines model.
The rst line of defense is formed by Trading, Technology
and Operations. These departments are critical for the core
processes within Flow Traders and are responsible for
incorporating preventive and detective controls in the day to
day trading and IT processes and for the continuous
monitoring of Flow Traders’ systems and trading controls.
The second line of defense is responsible for oversight and
monitoring of risks, rules and requirements.
Risk Management, Compliance and Finance manage risks
through a combination of preventive and detective controls.
Together they are responsible for the continuous risk
management of Flow Traders.
The third line of defense is formed by Flow Traders’ Internal
Audit Function (IAF). They provide independent and objective
assurance and advice on the adequacy and effectiveness of
governance, risk management and control systems.
It achieves this through the competent application of
systematic and disciplined processes, expertise, and insight.
It reports its ndings to management and the governing body
to promote and facilitate continuous improvement. The IAF
carries out its audit work in accordance with the approved
and implemented Group Internal Audit Charter.
enable it to perform its function effectively and in
accordance with the relevant professional standards.
The Risk Committee shall also keep under review that
the function has the adequate independence and is free
from management and other restrictions;
■
Prepare reports, recommendations and deliberations on
its ndings regarding the company’s internal risk
management for purposes of the meetings of the
Supervisory Board or the Audit Committee;
■
Review, and where applicable monitor, the Management
Board´s responsiveness to the reports, ndings and
recommendations of the Chief Risk Ofcer.
The role of the Audit Committee of the Supervisory Board is
to:
■
Supervise the Management Board with respect to
discussing the effectiveness of the design and operation
of the internal risk management and control systems.
The Management Board is responsible for:
■
Setting companywide objectives;
■
Setting boundaries for risk taking by communicating our
risk appetite;
■
Successfully promoting, sponsoring and coordinating
the development of a risk management culture
throughout the company;
■
Guiding the inclusion of risk management practices in
all strategic and operational decision making;
■
Maintaining and monitoring the effectiveness of the
framework to manage, monitor and report risk;
■
Identifying and evaluating the signicant risks related to
Flow Traders’ strategy;
■
Discussing current risk developments with the standing
risk committee of the Management Board.
■
Monitoring the operation of the internal risk
management and control systems and carrying out a
systematic assessment of their design and
effectiveness at least once a year. Where necessary,
improvements should be made to internal risk
management and control systems;
■
Accounting for the effectiveness of the design and the
operation of the internal risk management and control
systems referred to in best practice provisions 1.2.1 to
1.2.3 of the Dutch Corporate Governance Code
together with the Audit Committee.
■
Advise, and where applicable supervise,
the Management Board with respect to:
■
the company’s overall risk appetite, tolerance and
strategy;
■
the current risk exposures and future risk strategy;
■
the intended appointment and/or removal of the Chief
Risk Ofcer.
■
Review, in relation to the company’s internal risk
management and control systems:
■
the company’s overall risk assessment processes
that inform the Management Board’s decision
making, ensuring both qualitative and quantitative
metrics are used;
■
on an annual basis, the parameters used for these
processes and the methodology adopted;
■
the accurate and timely monitoring of certain risk
types of high importance;
■
the company’s capability to identify and manage new
risk types;
■
reports on any material breaches of risk limits and the
adequacy of proposed action.
■
Monitor the manner in which the company’s risk
management function is provided with adequate
resources and appropriate access to information to
Enterprise Risk Management roles and
responsibilities
The role of the Risk Committee of the Supervisory Board is
to:
■
Supervise the Management Board with respect to:
■
Identifying and analyzing the risks associated with
the strategy and activities of the company and its
afliated enterprise;
■
Establishing the risk appetite, and putting in place the
measures in order to counter the risks being taken;
■
Designing, implementing and maintaining adequate
internal risk management and control systems;
Flow Traders’ employees are responsible for:
■
Giving input to annual risk self-assessments to identify,
asses and document existing and new risks and their
impact on proposed plans;
■
Identifying areas where risk management practices
should be adopted and are to advise their supervisors
accordingly.
The below gure shows the ERM cycle of Flow Traders:
Flow Traders’ Risk Department is responsible for:
■
Monitoring, improving and controlling the ERM;
■
Triggering risk self-assessments for all departments;
■
Gathering the necessary information and creating risk
reports for internal stakeholders and the Management
Board.
Flow Traders’ Internal Audit Function is responsible for:
■
Evaluating risk exposure relating to achievement of the
organization’s strategic objectives;
■
Monitoring and evaluating the effectiveness of Flow
Traders Group’s risk management processes.
The Management Board invites stakeholders within the
rm to report on new and existing risk exposures;
■
Reporting on the outcomes of the risk management
activities to the Risk Committee of the Supervisory
Board.
Flow Traders’ Managing Directors are responsible for:
■
Setting local department targets and objectives in line
with companywide objectives together with the Global
Heads;
■
Supporting the company in the identication, handling,
monitoring of risks related to its objectives;
■
Identifying and evaluating the signicant risks related to
our objectives and operations;
■
Managing the risk self-assessment cycle (non-trading
Managing Directors);
■
Monitoring of risks related to our objectives;
■
Providing advice and follow-up on risk mitigating
measures;
■
Reporting on risks and risk management towards the
Management Board.
Flow Traders’ Global/Local Heads are responsible for:
■
Setting global/local department targets and objectives
in line with companywide objectives;
■
Performing annual risk self-assessments to identify
assess and document existing and new risks and their
impact on proposed plans;
■
The adoption of risk management practices;
■
Awareness and training on risk management;
■
The results of risk management activities, relevant to
their area of responsibility;
■
Reporting on risks and risk management towards the
Risk Department, the local Managing Directors and/or
(Global) Head.
1 Strategic
target and
objective setting
2 Formulating
risk appetite
3.1 Risk
identification
and assessment
3.3 Risk monitoring
3.4 Risk reporting 3.2 Risk response
3 Risk Management
Figure 3. Flow Traders’ Enterprise Risk Management cycle.
Figure 4.
Every year the Management Board sets its business targets
following the strategic goals. The strategic goals are
generally formulated in November/December.
The Supervisory Board, together with the Management
Board, approves the strategic goals and business targets.
Additionally, the Supervisory Board is involved in the
strategy setting exercise. Based on these long-term goals,
short-term targets are determined. These targets are then
translated into annual companywide, departmental and
individual goals and discussed in an annual meeting with the
Management Board and all Managing Directors.
Based on the targets and objectives, the Management Board
formulates the risk appetite of the company. The targets,
objectives and risk appetite give direction to the various
departments within Flow Traders and are used to derive the
company’s strategic risks.
Flow Traders’ Risk Management cycle is implemented to
ensure that the net risk prole is and stays in line with the set
risk appetite. To do so, we perform Risk Self Assessments to
identify and assess current and newly arisen risks. Following
the Risk Self Assessments, department heads in
cooperation with the Management Board will decide on the
appropriate risk response. The effects of the chosen risk
responses will be monitored and every year the actual net
risk prole will be mapped versus the appetite.
Risk reporting
We have a standing Risk Committee that continuously
assesses the risks we face in our business, and is composed
of our Global Head of Risk and the Management Board.
Aside from ongoing ad-hoc communication, there is
a monthly meeting set up in which they discuss all risk
assessments and risk proposals related to position limits,
The annual risk management cycle follows the below risk management framework:
are not too dependent on the levels of market activity in one
asset class or product category.
Operational risk
Operational risk is dened as the risk of loss arising from
inadequate or failed internal processes, people, systems or
external events. Operational risk management is an integral
part of Flow Traders’ risk and control systems. As our
operational risks are concentrated in technology related
events at exchanges and clearing members, our investment
in technology is important to mitigate those associated risks.
We operate an integrated, in-house developed,
high-performance and customized technology platform with
frequent and controlled deployments of new hardware and
software. Our infrastructure has a modular design which
allows us to rapidly test and implement improvements in both
hardware and software on an ongoing basis. Controlled
releases of hardware and software enhancements provide
for minimal disruption to our business.
The environment in which our trading software (or updates of
our trading software) is being developed is strictly separated
from the environment in which such trading software
operates in production. Access to the source code is strictly
controlled and limited. Prior to releasing our trading
software, or an update into the production environment,
any element of our trading software is subjected to a review
of its code, testing in an environment that is separate from
our production environment, validation in limited production
(processing a strictly limited number of trades) on one
trading desk in respect of trading a single nancial
instrument, followed by more extensive testing across
multiple desks and/or trading multiple nancial instruments.
Each step is appropriately documented.
the Supervisory Board, as all members of the Supervisory
Board are members of the Risk Committee. For more
information, please refer to the chapter Report of the
Supervisory Board.
Key risks
Market risk
Market risk is the risk of loss resulting from unfavorable
market movements in various drivers of a security’s price that
may result in a nancial loss for its holder. For
illustration, the value of a nancial instrument may uctuate
because of changes in factors such as equity prices,
currency rates, future dividend expectations, interest rates
and volatilities. Our hedging strategies (a combination of
underlying securities and vanilla derivatives) along with our
continuous monitoring of the positions aim to minimize this
risk. Our trading philosophy is that we hedge our positions as
perfectly as possible and therefore minimize exposures.
Market activity risk (business risk)
Our NTI and protability are primarily a function of the level
of trading activity, or trading volumes, in the nancial
instruments in which we trade, and the bid-ask spreads
(which largely determine the prot on the trade, or margins,
we capture). Trading volumes in securities, derivatives,
currencies, commodities, digital assets and other nancial
instruments on exchanges and in other trading venues
worldwide are directly affected by factors beyond our control,
including economic and political conditions, broad trends in
business and nance, regulatory requirements, actions by
central banks, and changes in the markets in which such
transactions occur.
To cope with periods of little market activity, we diversify our
trading in products and markets. This is to safeguard that we
strategies, procedures, capital requirements and other
requirements from prime brokers and market developments.
Any major changes to our risk systems, strategies and limit
setting must subsequently be approved by the Management
Board.
In addition to the standing Risk Committee, the company has
a Risk Committee of the Supervisory Board. All members of
the Supervisory Board are members of this Risk Committee.
The Management Board informs the Risk Committee of the
Supervisory Board about the effectiveness of the internal
risk management and control systems. This includes the
reasonable assurance that the aforementioned systems do
not contain any material inaccuracies. In addition, the tasks
of the Risk Committee of the Supervisory Board includes
supervision and monitoring, as well as advising the
Management Board on the operation of the company’s
internal risk management and control systems. The Risk
Committee is also responsible for providing advice to the
Management Board on the company’s development,
performance, and sustainability of its trading strategies,
as well as reviewing the risk of the company. It maintains
regular contact with the company’s Trading and Risk and
Operations departments. For more information on the
responsibilities of our Risk Committee, please see the
chapter Our governance.
Following a review of the company’s risk assessment
processes, the monitoring of the company’s internal risk
management and control systems has been identied as
a priority and as a joint responsibility of the Supervisory
Board and its committees. All risks relevant to each of the
committees of the Supervisory Board are monitored in the
Risk Committee of the Supervisory Board. This means that
the relevant items set out in best practice provision 1.4.1 of
the Corporate Governance Code have been discussed by
Our Compliance department assists management and
operations at group and local level by identifying, advising
on, reviewing and reporting on regulations. It also seeks to
maintain a compliant business environment through training
and monitoring in order to ensure and enhance the group’s
conformance with its regulatory obligations.
Compliance together with Public Affairs monitors and
assesses upcoming regulations. During 2021 and 2022 this
included amongst others:
■
The European Central Securities Depositories
Regulation which became effective on February 1st,
2022. The regulation introduces a new settlement
regime for securities cleared by European central
securities depositories. Most notably it introduces cash
penalties for late settlement of transactions.
Flow Traders has been preparing for this regulation
throughout 2021, and will continue to monitor its impact
after implementation and adapt as needed.
■
The MiFID/MiFIR review that was announced by ESMA
in 2021. The review aims to further improve the
framework introduced by MiFID II. Flow Traders is
engaging with regulators and various stakeholders to
continue our push for transparency in all markets we are
active in.
■
Over the course of 2021, implementing IFR/IFD was a
key theme for Flow Traders. We held dialogues with
regulators, trade associations and our peers to be able
to match the best practices in the market. These
conversations will continue in 2022 as the nal aspects
of implementation still need to be set.
■
Digital Assets and related forthcoming regulations are a
global phenomenon that attract a lot of attention.
Governments and regulators are taking quite different
approaches to this emerging and quickly developing
We use risk-based onboarding procedures before we start
trading on any new platforms, including platforms designated
for trading digital assets. While many of these platforms
remain unregulated, many have strongly improved their own
onboarding procedures and counterparty identication
procedures. While we believe our own procedures are
strong, the unregulated status of these platforms and their
location in emerging economies makes them inherently less
institutionalized and supervised than regulated platforms in
developed economies.
Regulatory risk
While we do not have clients and do not provide investment
services or ancillary services to third parties, our markets
and nearly all aspects of our business are heavily regulated.
Where applicable, entities forming part of our group have
obtained the regulatory licenses and approvals needed to
operate their regulated businesses.
Flow Traders’ trading operations are established in four
international jurisdictions and with branch ofces established
in London, Milan and Paris. As a group we currently trade on
more than 180 venues worldwide. In addition, we operate on
various venues through brokers. As we have to comply with
our home regulations, local regulations and trading rules of
all venues on which we trade, our regulatory landscape is
vast. Legislators and regulators worldwide strengthen their
supervision within our environment, demanding
a professional and well-structured compliance organization.
During 2022 we plan to migrate the activities of our branch
ofce in London to a new legal entity expected to be licensed
by the Financial Conduct Authority (“FCA”) in the UK.
The authorisation process with the FCA is currently ongoing
and we anticipate that the transition will be completed by the
end of 2022.
We have a monitoring system in place to control undisrupted
trading activities in real time. Multilayer monitoring is
employed to avoid errors. But when these occur the relevant
teams are immediately notied via multiple notication
channels. We rely on multiple third party service providers
for business and market data.
Our risk management system is fully integrated with our
proprietary technology platform, analyzing real-time pricing
data, and is designed to ensure that our order activity is
conducted within strict pre-determined trading and position
limits. For example, our pre-trade risk controls are designed
to prevent the trading engines from sending quotes which
deviate from our pre-dened risk parameters, such as price
and volume limits set by the Risk Management department,
which keeps our ordering, trading and positions well within
tolerance levels. Our monitoring tools reconcile trades,
prices and positions against those of our exchanges and
prime brokers.
Our IT systems are regularly subjected to penetration tests
by external experts. We have a comprehensive IT security
system that is designed to protect us from attacks both from
inside and outside the platform. Where we have a technical
interface with institutions like our prime brokers and
exchanges, the integrity of the connection between the
systems and the data that is being exchanged is subject to
prior conformance testing and continuous monitoring.
Unexpected deviations are agged and investigated.
We also have a disaster recovery plan in place which,
we continuously review to ensure it adequately captures
relevant scenarios. As a result of the ongoing COVID-19
global pandemic we have made substantial changes to our
back up site management.
manage the outcome of such inquiries, although we aim to
be as transparent and cooperative as possible given the
circumstances.
Information on the remuneration of the Management Board
members and the Supervisory Board members can be found
in the chapter Remuneration.
Environmental risk
While Flow Traders considers its overall impact on the
environment to be low, we have nonetheless identied
certain environmental risks to our business:
■
Physical environmental risks such as earthquakes,
forest  res and oods could negatively impact our
physical infrastructure. This is particularly relevant to
our server locations which are distributed globally.
Climate change will likely lead an increase in extreme
weather events in the future. We mitigate this risk by
having a widely distributed server infrastructure high
degree of system redundancy. In addition, recent forest
 res in South East Asia have led to the closure of our
Singapore ofce. This was mitigated by activities
transferring to other ofce ce locations.
■
Regulation may affect Flow Traders nancially by
putting a price on CO
2
and other greenhouse gas
emissions, In addition, CO
2
pricing may have an impact
on how seek to offset our carbon footprint in the coming
years.
External risk
Given the highly interconnected nature of the nancial
markets ecosystem we are a part of, we recognize that
should any of the risks referenced within this section
materialize, there could be a negative impact on various
external third parties. Specically, market and operational
asset class. As a liquidity provider we are following
these developments closely and are an active
contributor to regulatory consultations. We anticipate
the regulatory uncertainty will continue for most of
2022We are engaging with regulators on a global and
local level to push for a clear regulatory framework.
We anticipate that a clear regulatory framework will lead
to a mature ecosystem with sustainable institutional
growth for digital assets.
The Compliance, Risk and Operations departments have
promulgated and implemented risk controls, internal rules
and regulations that were developed following regulatory
requirements, guidelines from market authorities, industry
best practices and our own best practices. Laws and
regulations, including tax laws, are subject to change or can
be interpreted differently in practice over time.
Actual or alleged non-compliance with applicable laws or
regulatory requirements could adversely affect our
reputation, protability and prospects. This may also be the
case for differences in interpretation or lack of timely or
complete implementation of regulatory requirements.
Sanctions could include nes, penalties, disgorgements and
censures, suspension or expulsion from trading venues or
the revocation or limitation of licenses. We aim to minimize
such risks by focusing considerable management attention,
employing highly-qualied compliance and risk
professionals, deploying training, monitoring and reporting
systems, and continuously evaluating and implementing
current and upcoming regulation on our operations.
Notwithstanding such efforts, given the highly regulated
nature of our business, we are regularly subject to routine
(and sometimes more targeted) inquiries and audits from
regulators and trading venues. It is difcult to predict or
Our assessment showed no impact to our business model
and a very limited impact to a very few of our contracts which
were successfully renegotiated with the concerned
counterparties.
Compliance and transparency
Focus on anti-bribery, anti-corruption and
anti-money laundering
Flow Traders is a strong proponent of effective, efcient and
equal regulation and contributes to the regulatory dialogue in
our key jurisdictions as we want markets to be fair,
transparent and functioning in an orderly fashion. We commit
to complying with all relevant laws and regulations that apply
to us, wherever we operate, including in respect of
anti-corruption, anti-bribery and anti-money laundering laws.
Integrity and transparency is central to the way we run our
business, from our Management Board and Supervisory
Board to all our staff, regardless of their role. The company
encourages an open culture within its organization and
expects its employees to comply with applicable laws,
regulations and internal policies. Each employee is
responsible for ensuring an honest and ethical conduct of
business within the company. We have issued a Code of
Conduct, which forms part of our employment
documentation. Ensuring compliance with the Code of
Conduct is the responsibility of the Management Board.
Any reported potential breaches are investigated fully by the
Management Board and other members of our senior
management team in accordance with existing clearly laid
out procedures and policies. This Code of Conduct can be
found on our website www.owtraders.com.
risk events could negatively impact key parties within our
value chain; namely counterparties and prime brokers. There
could be a risk to our counterparties’ ability to trade with us
or settlement trades effectively on a timely basis. Moreover,
the various prime brokers we work closely with could also be
exposed to risk.
IBOR Transition
Hundreds of trillions of US dollars of various types of
nancial products use Interbank offered rates (‘Ibors’) for
pricing, risk measurement and benchmarking purposes.
In July 2017, the UK’s Financial Conduct Authority (‘FCA’)
announced that it will discontinue administrating the London
interbank offered rate (‘Libor’) after 2021. On 8 June 2016,
the European Parliament and Council released Regulation
2016/1011 on indices used as benchmarks in nancial
instruments and nancial contracts to safeguard the
accurateness, robustness and integrity of interest rate
benchmarks.
As a result of the scheduled termination of the London
interbank offered rates (‘Libor’), Euro Overnight Index
Average (‘Eonia’) and other Ibors, we conducted a thorough
analysis of the nancial (potential reduction in funding due to
counterparties’ reluctance to transition their positions) and
non-nancial (difculty to negotiate fallbacks with certain
counterparties, implementation of fallback provision and
operational impairments due to the transition) risks to our
business model and contracts. We ensured that nancial
instruments and contracts impacted by the transition
contained appropriate fallback language or are being
amended through bilateral negotiation or leveraging
industry-wide protocols.
or any reasonable suspicions. All employees are required to
participate in an online course on the Whistleblower Policy,
as part of the Flow Academy, to create awareness and
guidance on how to deal with misconducts and incidents
described in Flow Traders whistleblower policy.
Circumstances may arise that cause an employee to feel
insecure or unsafe to the extent that they may not want to
use the usual reporting lines. The company provides
employees with a safe way of reporting suspected
misconducts within its organization and offers adequate
protection. The Whistleblower Policy has wide applications,
including in respect of topics such as fraud, market abuse,
corruption, anti-money laundering, theft, bribery, dishonoring
Flow Traders Global tax policy and any other structural
misconduct that threatens the integrity and proper business
conduct of Flow Traders. The Whistleblower Policy provides
whistleblowers with anonymity, condentiality, and the
company will not impose sanctions on disclosure (or affect
an employee’s legal position) when the employee reports
a suspected misconduct in good faith, unless the employee
is involved in the issue that is being reported. We respect
a non-retaliation policy when a suspected misconduct is
reported. Flow Traders’ Whistleblower Policy can be found
on our website
www.owtraders.com.
Internal audit
The Internal Audit Function seeks to enhance and protect
organizational value by providing risk-based and objective
assurance, advice, and insight. An efcient and effective
Internal Audit Function contributes to strong internal controls
and to a robust corporate governance structure, which can
address signicant risks. The scope of internal audit work
includes the examination and evaluation of the adequacy
We have anti-bribery, anti-corruption and anti-money
laundering (AML) policies in place that apply to all our staff.
We expect our counterparties, business partners,
intermediaries, contractors and subcontractors to adhere to
the same standards. We believe that the risk of bribery or
corruption is very limited as we do not hold or manage client
money or assets. We trade nancial instruments for our own
account and own risk only. We do not maintain production
facilities or source raw materials. Nevertheless, staff
receives training in anti-bribery, anti-corruption and AML
practices, as the Management Board underlines the
importance of these trainings.
Key to our anti-bribery and anti-corruption policy is that
ofcials or counterparties may never be placed in an
uncomfortable position. No gifts nor favors may lead (or
have the appearance to lead) to obligations or embarrass
any recipient, and no gifts nor favors of any substantial value
may be given to authorities. Facilitation payments are not
permitted. We provide clear and recurring guidance in that
respect. As part of our constant monitoring, all expenses and
gifts relating to external parties are checked by senior
managers and employees must state the purpose and
recipient of an expense.
We have zero tolerance towards bribery and corruption and
we actively ensure that no such behavior occurs. No cases
of bribery or corruption were reported in 2021.
Whistleblowers
In addition to our very strong culture of openness,
transparency and participation, we also have an elaborate
Whistleblower Policy in place for all staff and relevant
contractors, approved by the Management Board and
Supervisory Board. Employees are free to raise issues and
have the responsibility to report misconduct and incidents,
and effectiveness of Flow Traders’ risk management, control
and governance processes. Audit work includes also
assessments of the quality of performance in carrying out
assigned responsibilities to achieve Flow Traders’ stated
goals and objectives.
Our Group Internal Audit Charter denes the Internal Audit
Function’s purpose, authority, responsibility and position
within Flow Traders. This charter is aligned with the
Corporate Governance Code and with guidance provided by
the Institute of Internal Auditors.
The Internal Audit Function is an integral part of our
reporting cycle. The Internal Audit Function reports to the
Audit Committee and to the CEO. It aligns its efforts with the
external auditor and reports its audit results to the
Management Board, the essence of its audit results to the
Audit Committee and informs the external auditor.
The Management Board assesses the way in which the
Internal Audit Function fulls its responsibility annually and
takes the opinion of the Audit Committee into account.
Our governance is reected in our internal rules and
regulations, including our Articles of Association,
Management Board By-Laws, Supervisory Board By-Laws,
the Terms of Reference of our Supervisory Board
committees and our Code of Conduct. These, together with
our policies, can be found on our website.
Flow Traders remains focused on long-term value creation,
culture and risk management while balancing the interests of
our many stakeholders, such as shareholders, senior
management executives, counterparties, suppliers,
investors, employees, regulators and the community.
Our board structure is organized as a
two-tier governance structure, consisting of
a Management Board (composed of 5
executive members) and a Supervisory Board
(composed of 6 non-executive members).
The Management Board is responsible for
the day-to-day management of the company,
formulating strategies and policies, and
setting and achieving our objectives
including our ESG priorities. The Supervisory
Board supervises and advises the
Management Board. Each board is
accountable to the General Meeting for the
performance of its duties.
Governance
Composition of the Management Board
Dennis Dijkstra
Age: 50 (1971)
Gender: male
Dennis Dijkstra was reappointed as a
member of the Management Board and
CEO in May 2019. He joined Flow
Traders as Chief Financial Ofcer in
2009 and was rst appointed Co-CEO
in January 2014. Dennis leads our
Institutional Trading, HR and
Recruitment departments. He
additionally focuses on strategy, internal
audit, organizational structure and
relationships with issuers, investors,
and regulators. Prior to joining Flow
Traders, Dennis held various positions
at Arthur Andersen, Faxtor Securities,
NIBC and Sparck. He currently serves
as a board member (treasurer) of APT,
the Association of Proprietary Traders
in the Netherlands. Furthermore,
Dennis is a supervisory director of DMF
Investment Management B.V.
Dennis Dijkstra is a Dutch national who
holds a Master’s degree in Business
Economics from the University of
Amsterdam.
Britta Achmann
Age: 50 (1971)
Gender: female
Britta Achmann was appointed as a
member of the Management Board and
Chief Risk Ofcer (CRO) on 24 June
2020. She joined Flow Traders on
1 February 2020. Prior to joining Flow
Traders, Britta gained over 15 years of
relevant risk and control experience at
major US and UK nancial institutions
and held the position of Head of
Business Implementation, Market Risk
at Deutsche Bank in London.
Previously, she also held senior risk
positions at RBS and held various
derivative structuring and trading roles
at JPMorgan. Britta is responsible for
Legal, Compliance and Risk
departments.
Britta Achmann is a German national
who holds a MBA from Carnegie Mellon
University (Pittsburgh, USA), a Master
of Science, Probability and Statistics
degree from Syracuse University
(Syracuse, USA) and a Diploma in
Mathematics from the Technische
Universität Berlin (Germany).
Folkert Joling
Age: 42 (1979)
Gender: male
Folkert Joling was appointed as a
member of the Management Board and
Chief Trading Ofcer in April 2018. He
joined Flow Traders in 2006 as a trader
and was named Head of Trading in 2011
and Global Head of Trading in 2016. As
Chief Trading Ofcer, Folkert Joling has
responsibility for the development and
realization of our trading strategies,
business development, trading
processes and our daily trading
operations.
Folkert Joling is a Dutch national who
holds a Master’s degree in Applied
Mathematics from Twente University.
Mike Kuehnel
Age: 44 (1977)
Gender: male
Mike Kuehnel was appointed as a
member of the Management Board and
Chief Financial Ofcer (CFO) on
10 September 2021. He joined Flow
Traders on 1 August 2021. Mike is
responsible for overseeing Finance &
Tax alongside Strategy, M&A and
Investor Relations. Mike has over twenty
years of investment banking and strategy
consulting experience in the global
nancial market infrastructure space.
Immediately prior to joining Flow
Traders, Mike served as a partner at
Bain & Company leading the Investment
Banking and Financial Markets
Infrastructure practice for EMEA. Before
that, he worked at Goldman Sachs,
where he was responsible for advising
on large-scale equity and M&A
transactions in the European banking,
insurance, asset management, private
wealth and exchanges sectors.
Mike Kuehnel is a German national who
holds a MBA in Accounting and Finance
from the University of Chicago. Prior to
that, he obtained his Bachelor in
Business Administration (BBA), majoring
in Banking & Finance, from the Frankfurt
School of Finance & Management.
Thomas Wolff
Age: 42 (1979)
Gender: male
Thomas Wolff was appointed as a
member of the Management Board and
Chief Technology Ofcer in April 2018.
He joined Flow Traders in 2009 as a
senior system administrator. He was
promoted to Global Head of IT in 2013
and Global Head of Technology in 2016,
leading the development, quality
assurance and the technology
operations departments. Prior to joining
Flow Traders, Thomas worked for nine
years at an independent trading
software vendor.
Thomas Wolff is a German national who
holds a diploma from the FOM
Hochschule Frankfurt am Main.
Management Board
Flow Traders has a highly experienced Management Board
and a unique team-driven culture. As at 31 December 2021,
our Management Board consists of Dennis Dijkstra (Chief
Executive Ofcer), Britta Achmann (Chief Risk Ofcer),
Folkert Joling (Chief Trading Ofcer), Thomas Wolff (Chief
Technology Ofcer) and Mike Kuehnel (Chief Financial Ofcer).
In the Extraordinary General Meeting held in 2021,
the general meeting of shareholders approved the proposal
to appoint Mike Kuehnel as member of the Management
Board and CFO for the maximum term of four years.
The General Meeting can suspend or remove a member of
the Management Board upon a proposal by the Supervisory
Board with an absolute majority of the votes cast. If votes
within the Supervisory Board meeting tie on a proposed
nomination, suspension, or dismissal, the General Meeting
shall decide. Suspension or removal of a Management
Board member, not proposed by the Supervisory Board,
requires an absolute majority of the votes cast at the General
Meeting, representing at least 50 percent of the issued
capital of the company.
The functioning of the Management Board as a whole and
the functioning of its members individually is evaluated
several times per year. A succession plan for the
Management Board is in place and discussed regularly.
Moreover, we have a transparent procedure in place for the
(re)appointment of Management Board members.
Management Board members are appointed for a term of
four years and may be reappointed for a term of a maximum
of four years at a time. The Equal Opportunity Policy will be
taken into account at each (re)appointment. In accordance
with legislation effective per 1 January 2022, we will have
appropriate and ambitious objectives regarding diversity for
our Management Board, ‘sub-top’ (i.e. categories of
employees in managerial positions to be determined by the
company) and Supervisory Board and have a plan on how to
achieve such objectives.
place. Moreover, the Management Board takes account of
the effectiveness of the design and the operation of the
internal risk management and control systems. The Internal
Audit Function is the responsibility of Management.
Management maintains regular contact with the Global Head
of Internal Audit, responsible for the Internal Audit Function.
Before the Management Board can approve any resolutions
entailing a signicant change in the identity or nature of the
company, it must obtain the approval of the General Meeting.
The Management Board also has to obtain the approval of
the Supervisory Board for a number of resolutions specied
in the Management Board By-Laws.
Appointing and dismissing Management Board
members
As set out in more detail in our Articles of Association and
the Management Board By-Laws, the Supervisory Board
makes a non-binding nomination or proposal to appoint,
suspend or remove a Management Board member.
Following a nomination by the Supervisory Board,
the General Meeting can appoint members of the
Management Board by an absolute majority of the votes
cast, representing more than one third of the issued capital
of the company. Appointment of a different candidate than
the one proposed by the Supervisory Board requires an
absolute majority of the votes cast at the General Meeting,
representing at least 50 percent of the issued capital of the
company. Management Board members are appointed for
a maximum term of four years at a time. According to the
Dutch Corporate Governance Code, there is no limitation in
the duration of their entire service. Any (re)appointment of
a member of the Management Board must be approved by
the Dutch Central Bank (DNB).
General
The Management Board is responsible for the continuity of
the company and is guided by the interests of the company
and its business, taking into consideration the company’s
long-term value creation and the interests of the company’s
stakeholders, including our employees and our shareholders.
This ensures decisions are made in a balanced manner.
The Management Board is charged with managing the
company, subject to the limitations set out in the Articles of
Association and the Management Board By-Laws.
Two board members can jointly represent the company,
reecting the four-eyes principle we operate across the
company: two persons must sign off on business decisions.
The Management Board has formulated a strategy in line
with its vision on long-term value creation. Subsequently,
the Management Board is responsible for creating a culture
that entails long-term value creation for the company.
The Management Board is alert to indications of misconduct
or irregularities and reviews related policies regularly.
In accordance with the Dutch Corporate Governance Code,
the Management Board has also taken measures to avoid
conicts of interest.
The members of the Management Board are eager to keep
their knowledge and skills up to date and spend sufcient
time on their duties and responsibilities. The Management
Board is accountable to the Supervisory Board and to the
AGM.
The Management Board is also responsible for identifying
and managing risks associated with the company’s strategy
and activities. Management ensures that the company has
adequate internal risk management and control systems in
Rudolf Ferscha, Chairman
Gender: male
Age: 60 (1961)
Nationality: Austrian
Second term (2021 - 2023)
Rudolf was rst appointed as a
member of the Supervisory Board
on 9 July 2015. In 2018, Rudolf was
reappointed for a second term and in
2021 he was reappointed for a third
term, which expires in 2023. He was
appointed Chair of the Supervisory
Board on 11 March 2021. He is a
member of the Remuneration and
Appointment Committee, the Trading
andTechnology Committee, the
Audit Committee and the Risk
Committee. Originally a corporate
nance and capital markets lawyer,
he has over 25 years’ board-level
experience at international nancial
institutions, including executive roles
on the management boards of
Goldman Sachs Bank in Frankfurt
and of Deutsche Börse AG.
For more than a decade, he held
direct oversight responsibility for
FSA and BaFin regulated derivatives
and securities trading businesses.
Between 2000 and 2005, Rudolf
served as CEO of Eurex, and from
2003 to 2005 Rudolf was Chairman
of the Management Board of the
Frankfurt Stock Exchange. He is
currently a partner at Gledhow
Capital Partners and Chairman of
the Advisory Board at Mainberg
Asset Management GmbH.
Jan van Kuijk, Vice-Chairman
Gender: male
Age: 55 (1966)
Nationality: Dutch
Second term (2018 - 2022)
Jan was appointed Vice-Chairman
of the Supervisory Board on 9 July
2015. In 2018, Jan was reappointed
for a second, four-year term,
expiring in 2022. The Supervisory
Board will propose the
reappointment of Jan at the AGM
2022. Jan is Chair of the Trading
and Technology Committee, and is
a member of the Audit Committee,
the Risk Committee and the
Remuneration and Appointment
Committee. Jan is one of the
co-founders of Flow Traders and
served as its Co-CEO from its
inception in 2004 until January
2014. Until 1996, Jan served as a
partner at Optiver, a proprietary
trading rm, and was involved in
setting up its rst electronic trading
activities at Deutsche Börse in
1993. In 1997 he co-founded
Newtrade Financial Group, an
options market-making rm which
discontinued after he co-founded
Flow Traders in 2004.
Olivier Bisserier
Gender: male
Age: 54 (1967)
Nationality: French
Second term (2019 - 2022)
Olivier was appointed member of
the Supervisory Board on 9 July
2015. In 2019, he was reappointed
for a second, three-year term,
expiring in 2022. The Supervisory
Board will propose the
reappointment of Olivier at the
AGM 2022. Olivier is Chair of the
Audit Committee and the Risk and
Compliance Committee, and
serves as member on the Trading
and Technology Committee.
He has over 25 years of experience
in international nancial roles.
He was a senior manager for PwC
until 2000, then had nance
director roles and served as
European CFO of TNS, an
LSE-listed market research group.
Until March 2019, Olivier was CFO
of Booking.com.
Roger Hodenius
Gender: male
Age: 49 (1972)
Nationality: Dutch
Second term (2019 - 2023)
Roger was appointed member of
the Supervisory Board on 9 July
2015. In 2019, Roger was
reappointed for a second, four-year
term, expiring in 2023. He is a
member of the Risk & Compliance
Committee, the Trading and
Technology Committee and the
Remuneration and Appointment
Committee. Roger is one of the
co-founders of Flow Traders and
served as its Co-CEO from its
inception in 2004 until January
2014. Roger was responsible for
developing Flow Traders’ vision
and culture, the trading strategies
and the trading oor.
Ilonka Jankovich
Gender: female
Age: 58 (1963)
Nationality: Dutch
First term (2021 - 2025)
Ilonka was appointed member of
the Supervisory Board on 23 April
2021. Her rst four year term will
expire in 2025. She is a member of
the Audit Committee, the Risk
Committee and Trading and
Technology Committee. Ilonka is
trained as an M&A lawyer with 10
years of M&A experience with an
international law rm and has
owned her own law rm. She has
transformed herself into a serial
entrepreneur - building and selling
several HR companies - and after
that into a venture capital investor.
Ilonka is currently a venture partner
at Rubio Impact Ventures and a
venture partner at Randstad
Innovation Fund. She serves as a
supervisory board member of
Exact, and of Crunchr, Brazen and
Shiftboard.
Linda Hovius
Gender: female
Age: 60 (1961)
Nationality: Dutch
First term (2021 - 2025)
Linda was appointed member of
the Supervisory Board on 23 April
2021. Her rst four year term will
expire in 2025. She is Chair of the
Remuneration and Appointment
Committee and is a member of the
Risk Committee and the Trading
and Technology Committee. Linda
has more than 30 years of
experience in managing
professional organizations, setting
strategic direction and
implementing change. After 20
years with McKinsey & Company,
she founded in 2012 Aberkyn –
Change Leadership Partners, with
its head ofce in the Netherlands,
to serve top teams of multinationals
in the transformation of their
leadership and organizations.
She is currently a Supervisory
Board member of Royal Flora
Holland and of Triple Jump Impact
Investment, and serves as an
Advisory Board member of
Vereniging Rembrandt and Karmijn
Capital. She is vice-Chair of the
Board of the Koninklijke
Hollandsche Maatschappij der
Wetenschappen. Linda is currently
the owner of Hovius Consultancy,
specializing in boardroom
consultancy.
Our Supervisory Board
Composition of the Supervisory Board
As at 31 December 2021, the Supervisory Board consists of
six members: Rudolf Ferscha (Chairman), Jan van Kuijk
(Vice-Chairman), Olivier Bisserier, Roger Hodenius, Linda
Hovius and Ilonka Jankovic. Eric Drok, the former Chairman
of the Supervisory Board chose not to seek reappointment
and therefore his term of appointment ended at the end of
the 2021 AGM, held on 23 April 2021. In anticipation of his
mandate ending, Eric stepped down from his Chairmanship
in March. The Supervisory Board unanimously appointed
Rudolf Ferscha as Chairman of the Supervisory Board.
Both Ilonka Jankovich and Linda Hovius were appointed as
members of the Supervisory Board during the 2021 AGM.
For more information, please refer to the chapter Report of
the Supervisory Board and the Supervisory Board Rotation
schedule as published on our website.
Appointing and dismissing Supervisory Board
members
Supervisory Board members are appointed for a term of
a maximum of four years and may be reappointed for
a second term of a maximum of four years. After having
served two terms, a Supervisory Board member may then
be reappointed for a term of maximum two years, which may
be extended by at most two years. The Supervisory Board
Prole and the Equal Opportunity Policy will be taken into
account at each (re)appointment. With respect to gender,
as of 1 January 2022 Dutch law stipulates that Supervisory
Boards of large Dutch public companies, such as Flow
Traders, are deemed to have a balanced composition if they
consist of at least one-third female and one-third male
members. The current composition of the Supervisory Board
complies with that requirement as there are two female and
four male members.
When a member of the Supervisory Board is to be
appointed, suspended or removed, the Supervisory Board
of a conict of interest, the Supervisory Board is responsible
for the decision-making on how to handle conicts of
interest. In 2021, there have been no cases of conicts of
interest, transactions between the company and members of
the Management Board or Supervisory Board,
or transactions with shareholders holding at least 10% of the
shares of Flow Traders.
The functioning of the Supervisory Board as a whole and the
functioning of its members individually is evaluated at least
once a year. A succession plan for the Supervisory Board is
in place, with the Supervisory Board Prole and the Equal
Opportunity Policy taken into account. We also have
a transparent procedure in place for the (re)appointment of
Supervisory Board members.
General
The Supervisory Board supervises the Management Board
and the general course of affairs of the company and its
business. The Supervisory Board supervises the company’s
focus on long-term value creation and the way in which this
is implemented in the company’s strategy and culture.
The Supervisory Board considers the organizational
structure of the company as a whole, as well as general and
nancial risks and the internal risk management and control
systems. In performing its duties, the Supervisory Board
acts in accordance with the interests of the company and
takes the relevant interests of the company’s stakeholders
into account. The Supervisory Board is alert to indications of
misconduct or irregularities. It supervises the Management
Board when appropriate follow-up actions are taken. In case
Remuneration and Appointment Committee
At Flow Traders, the remuneration and selection and
appointment committees have been merged into one.
It proposes the remuneration of the individual members of the
Management Board to the Supervisory Board, proposes the
Management Board’s remuneration policy to the general
meeting and reviews the proposal of the Management Board
of the annual remuneration and variable compensations of all
employees. It is also responsible for carrying out annual
assessments of the individual members of the Supervisory
Board and the Management Board and the composition and
size of the respective Boards. Where necessary,
the Remuneration and Appointment Committee drafts
proposals for (re)appointments, drafts selection criteria and
appointment procedures for the Supervisory Board and
Management Board. The committee draws up a plan for the
succession of Management Board and Supervisory Board
members. It also supervises the Management Board
regarding the selection criteria and appointment procedures
for senior management. The Remuneration and Appointment
Committee takes note of the individual Management Board
members’ view regarding the amount and structure of their
own remuneration.
The Management Board sets values contributing to the
long-term value creation. The Remuneration and
Appointment Committee discusses these values, focusing
on the strategy and business model, the environment and
the existing culture within the company.
Depending on the topics discussed, the Management Board
members, relevant Global Heads or relevant others are
present at the Remuneration and Appointment Committee
meetings.
and relevant others having a standing invitation for each
committee meeting. ESG matters are addressed, where
relevant, in each Board committee.
Audit Committee
The Audit Committee discusses the annual, half-yearly and
quarterly results and supervises the provision of the
company’s nancial information. It also advises the
Supervisory Board on the nomination of the external auditor,
who is appointed by the General Meeting. The Audit
Committee is in regular contact with the Internal Audit
Function and the external auditor, monitors the auditor’s
independence and discusses the audit plans and
recommendations of the internal and external auditor.
In addition to advising the Management Board on nancing,
tax policy and tax risk framework, the Audit Committee is
also responsible for supervising relevant (tax) legislation and
regulations and the Code of Conduct. The design and
operation of the internal risk management and control
systems are discussed in the Risk Committee in more detail,
as well as in the Audit Committee.
In addition to the Management Board members, the Global
Head of Finance, the Global Head of Internal Audit and
relevant others were invited to Audit Committee meetings.
The Audit Committee is not chaired by the Chair of the
Supervisory Board or a former member of the Management
Board. More than half of its members is independent.
The Chair of the Audit Committee, Olivier Bisserier,
has extensive experience of preparing and auditing nancial
statements from his time at PwC.
makes a non-binding nomination or proposal. Following
a nomination by the Supervisory Board, the General Meeting
may appoint a Supervisory Board member by an absolute
majority of the votes cast, representing more than one third
of the issued capital of the company. Appointment of
a different candidate than the one proposed by the
Supervisory Board requires an absolute majority of the votes
cast at the General Meeting, representing at least 50 percent
of the issued capital of the company. If votes within the
Supervisory Board meeting tie on the proposed nomination,
the General Meeting decides. Any appointment of a member
of the Supervisory Board must be approved by the Dutch
Central Bank (DNB). The DNB needs to be notied in writing
in case of reappointments of members of the Supervisory
Board.
Following a proposal by the Supervisory Board the General
Meeting may suspend or remove members of the Supervisory
Board by an absolute majority of the votes cast. The
suspension or removal of a Supervisory Board member
without a proposal by the Supervisory Board requires an
absolute majority of the votes cast at the General Meeting,
representing at least 50 percent of the issued capital of the
company.
Internal organization
Committees
The Supervisory Board has an Audit Committee,
Remuneration and Appointment Committee, Risk Committee
and Trading and Technology Committee. Each of the
committees has a preparatory and/or advisory role to the
Supervisory Board. They each report their ndings to the
Supervisory Board, which is ultimately responsible for all
decision-making. Terms of Reference apply for each
committee and the relevant Management Board members
independently from Management. The Risk Committee also
undertakes preparatory work for the Supervisory Board’s
decision-making regarding the supervision of the integrity
and quality of the effectiveness of the company’s internal risk
management and control systems. Subsequently,
the effectiveness of the design and operation of the internal
risk management and control systems are discussed with
the Management Board, and reported to the Supervisory
Board.
The committee maintains regular contact with the company’s
Chief Risk Ofcer. In addition to the Management Board
members, relevant Global Heads or others may, from time to
time, be invited to attend the Risk Committee meetings.
Compliant with the Corporate Governance Code provision
2.3.4, the Remuneration and Appointment Committee is not
chaired by the Chair of the Supervisory Board or a former
member of the Management Board.
Risk Committee
The duties of the Risk Committee include supervising and
monitoring the operation of our internal risk management
and control systems, and advising the Management Board
on these operations. It reviews the company’s risk
assessment processes and control systems, at least
annually. The committee also monitors the manner in which
the company’s risk management function is provided with
adequate resources and appropriate access to information,
bearing in mind that it should be able to function sufciently
Trading and Technology Committee
The Trading and Technology Committee is responsible for
providing advice to the Management Board on the
company’s development, performance and sustainability of
its trading strategies. It is also responsible for reviewing the
company’s technology budget, supervising the operation of
the company’s security systems, and assessing the state of
the company’s technology in terms of competitiveness and
functionality at least once a year. The committee supervises
the Management Board on the operations of the company’s
security systems and related risks. It maintains regular
contact with our trading and technology departments.
The Management Board members and relevant others may,
from time to time, be invited to the Trading and Technology
Committee meetings.
Diversity
The Supervisory Board has drawn up and adopted an Equal
Opportunity Policy (Diversity Policy). In this policy we explain
our objective to treat everyone equally during the hiring
process and throughout their careers at Flow Traders.
We are committed to being a truly equal opportunity
employer, by recruiting, retaining and promoting people
based on merit, and merit alone. We are a rm believer in
the benets of a diverse workplace and we do not make any
concessions to quality. Our objective is to provide equal
employment opportunities to all qualied job applicants and
equal career perspectives for all of our employees, provided
they perform highly. In addition, we have provided
unconscious bias training to all employees during the course
of 2021. When positions become available, we actively
encourage all candidates to apply and ensure that the
selection and retention processes are truly equal for all
In 2021, the AGM was held virtually due to the COVID-19
measures. During this AGM held on 23 April 2021,
shareholders voted, inter alia, in favor of adopting the 2020
annual accounts, determining the total dividend at €6.50 per
share, the remuneration policy for the Supervisory Board,
discharging members of the Management Board and
Supervisory Board from liability, granting the authority to
issue shares and the authority to restrict or exclude
pre-emptive rights (see below for more detail), granting the
authority to acquire own shares and the authority to cancel
own shares (see below) and reappointing EY as our external
auditor. A positive advisory vote was cast on the
remuneration report over the year 2020. The General
Meeting and the Management Board discussed the results,
dividend policy and governance structure of the company.
The General Meeting voted against the Remuneration Policy
for the members of the Management Board.
Extraordinary General Meetings will be held if the
Management Board or the Supervisory Board is requested
to that effect in writing by one or more holders of shares (or
holders of rights in rem (beperkte rechten) who also hold the
voting rights in relation to those shares) individually or jointly
representing ten percent or more of the issued share capital,
specifying the details to be discussed.
The company held an Extraordinary General Meeting on
10 September 2021 for the proposed appointment of Mike
Kuehnel as member of the Management Board and CFO.
The EGM adopted the appointment with 99.4% of the
registered votes. Our next AGM is scheduled to be held on
29 April 2022. More information will become available on our
website in due course.
and on distributions of prots, any proposal to distribute
prots, (re)appointment of the external auditor, substantial
changes in the governance structure of the company and in
compliance with the Corporate Governance Code, material
changes to the Articles of Association, lling vacancies on
the Management Board and/or Supervisory Board,
proposals placed on the agenda by the Management Board,
and the release from liability of the members of the
Management Board and the Supervisory Board for their
performance during the previous nancial year.
In accordance with the Shareholders Rights Directive,
the remuneration report and, every four years,
the remuneration policy is on the agenda for the AGM.
General Meetings can be held as often as the Management
Board or the Supervisory Board deem necessary. A General
Meeting is also convened in case of a decision entailing
a signicant change in the identity or character of the
company or its business.
One or more shareholders representing at least the statutory
threshold of three percent of the voting rights may request
that the Management Board places items on the agenda of
a General Meeting. The Management Board must honor
such a request provided that the request is received in
writing at least 60 days before the date of such a meeting.
Each shareholder is entitled – either in person or via proxy –
to attend the AGM and to vote during the AGM. The AGM is
the perfect place for shareholders and the Management
Board and Supervisory Board to interact. At an AGM,
shareholders can ask questions directly to the Management
Board and/or the Supervisory Board. Our Management
Board and Supervisory Board strongly encourage
shareholders to interact.
applicants and employees. We aim to provide an inclusive
work environment for all employees. This also holds for our
Management Board and Supervisory Board. When it comes
to diversity in the Supervisory Board and the Management
Board, we adhere to the same principles of equal opportunity
as set out above. Our current Supervisory Board, as a result
of the Equal Opportunity Policy, is diverse in terms of, inter
alia, age, education, nationality, and professional
backgrounds. This diverse composition entails constructive
dialogues and shared responsibility, resulting in an effective
and efcient Supervisory Board. Our Equal Opportunity
Policy can be found on our website: www.owtraders.com.
General Meeting, shares and
shareholders
Flow Traders highly encourages shareholder participation in
the decision-making of the General Meeting. It is of great
importance to the company that its shareholders have an
actual say in the Annual General Meeting (AGM), and the
company therefore encourages an open dialogue.
Flow Traders ensures that the General Meeting is adequately
provided with information.
Agenda items of the AGM that need to be handled as
separate agenda items on the basis of the Corporate
Governance Code, the Dutch Civil Code or the Articles of
Association will be handled as such.
Flow Traders holds an AGM within six months following the
end of the nancial year. The agenda for this meeting
includes the adoption of the annual accounts, the content of
the annual report covering the previous year’s nancial
business, the policy of the company on additions to reserves
“In order to align our
employees’ interests
with those of our
shareholders, the
company awards
100 shares in the
company to most
employees with a
tenure of over two
years.”
Voting rights
Each share carries one vote at the AGM. Subject to certain
exceptions provided by Dutch law or the Articles of
Association, resolutions of the General Meeting are passed
by an absolute majority of votes cast. Votes can be cast at
the AGM either in person or by proxy. These proxies can be
granted electronically or in writing to the company or to
independent third parties, such as a civil-law notary.
Following the prolongment of the Temporary Act COVID-19
(Tijdelijke Wet COVID-19) and the circumstances as a result
of the pandemic, holding a physical AGM was not feasible
this year and votes could not be cast in person.
Amendment to the Articles of Association
The General Meeting may pass a resolution to amend the
Articles of Association or to wind up the company with an
absolute majority of the votes cast. This can only be done if
the Management Board has proposed to amend the Articles
of Association or wind up the company. Such proposal has
to be approved by the Supervisory Board.
When a proposal to amend the Articles of Association or to
wind up the company is made to the General Meeting,
the intention to propose such resolution must be stated in
the relevant notice convening the General Meeting. If it
concerns an amendment to the Articles of Association,
a copy of the proposal in which the proposed amendment is
quoted verbatim must at the same time be deposited at the
company’s ofce and this copy shall be made available for
inspection by the shareholders until the end of the General
Meeting.
Issue of shares
Shares are issued by a decision of the Management Board.
This decision must be approved by the Supervisory Board.
During the 2021 AGM, our shareholders renewed the
authority of the Management Board, subject to the
Supervisory Board’s approval, to issue ordinary shares or to
grant rights to subscribe for ordinary shares up to and
including 23 October 2022 for up to ten percent of the total
number of shares issued at the time of the General Meeting
for any purposes. Any issuance exceeding this limit needs
approval by the General Meeting.
In addition, the General Meeting renewed the authority of the
Management Board, subject to the Supervisory Board’s
approval, to restrict or exclude applicable pre-emptive rights
when issuing ordinary shares or granting rights to subscribe
for ordinary shares up to and including 23 October 2022.
At our next AGM, scheduled to be held on 29 April 2022,
the Management Board intends to request that the General
Meeting renews its authorization to issue shares for up to ten
percent of the total number of shares issued at the time of
the AGM for any purposes.
Repurchase and purchase of shares
Shares may be repurchased by the company by a decision
of the Management Board. This decision must be approved
by the Supervisory Board. During the 2021 AGM, our
shareholders renewed the authority of the Management
Board to, subject to the Supervisory Board’s approval,
acquire shares in the capital of the company, either through
purchase on a stock exchange or otherwise. The authority
applies up to and including 23 October 2022, under the
following conditions: the repurchase (i) may constitute up to
ten percent of the total number of shares issued at the time
of the General Meeting; (ii) provided that the company will
not hold more shares in stock than ten percent of the issued
share capital; and (iii) at a price (excluding expenses) not
less than the nominal value of the shares and not higher
than the opening price on Euronext Amsterdam on the day of
repurchase plus ten percent. Any repurchases exceeding
these limits need approval by the General Meeting.
Flow Traders announced one share repurchase plan in 2021.
Several share buy backs were conducted during the course
of 2021 to satisfy the requirements of various employee
incentive plans as launched on 23 July 2021 and completed
in November 2021 in connection with its employee incentive
plans.
In order to align our employees’ interests with those of our
shareholders, the company awards 100 shares in the
company to most employees with a tenure of over two years.
The company purchased part of such shares under the
authority granted by the General Meeting over the course of
2018, 2019, 2020 and 2021.
At the 2021 AGM the Management Board will propose to the
General Meeting to (i) renew its authorization to repurchase
shares in the company, and (ii) cancel shares in the share
capital of the Company held or repurchased by the Company
under the aforementioned authorization to repurchase
shares in the Company.
Cancelation of shares
Shares may be canceled by the company by a decision of
the Management Board. This decision must be approved by
the Supervisory Board. During the 2021 AGM,
our shareholders voted for the authorization of the
Management Board to, subject to the Supervisory Board’s
approval, cancel shares in the share capital of the company.
The number of shares that can be canceled, shall be
determined by the Management Board, but may not exceed
ten percent of the issued share capital at 24 April 2021, i.e.
up to 4,653,450 shares can be canceled. The cancelation
may be executed in one or more parts.
Major shareholders
The following shareholders led their interests in the capital
of the company exceeding 3% to be included in the AFM’s
register of substantial holdings and gross short positions as
published on the website www.afm.nl (data as published on
31 December 2021). A shareholder must le or update its
holdings if its interest exceeds, or drops below, 3%, 5%,
10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95%.
Based on the publications in two of the public AFM
Registers: the Register on substantial holdings and gross
short positions; and the Register on notications by directors
and members of the supervisory board, the table below
shows the most accurate formation. For further details on
individual shareholdings please refer to the AFM’s registers.
Information which is relevant to our shareholders and which
is required to publish or submit pursuant to the provisions of
company law and securities law, is posted in a separate
section of our website www.owtraders.com. Our Bilateral
Contacts Policy can also be found on our website.
SHAREHOLDINGS ON 31 DECEMBER 2021
Filing /
notication date
J.T.A.G. van Kuijk
(Javak Investments B.V.) 12.22% 2 May 2018
R. Hodenius
(Avalon Holding B.V.) 10.07% 7 December 2018
Flow Traders N.V. 7.51% 31 December 2021
Invesco 3.15% 2 November 2021
The shares indirectly held by Roger Hodenius (Avalon
Holding B.V.) and Jan van Kuijk (Javak Investments B.V.) are
long-term investments. The shares held in treasury by Flow
Traders are from the share repurchases conducted in 2020
and 2021 predominantly connected with various employee
incentive plans.
Relationship agreement and shareholders
agreement
Avalon Holding B.V. and Javak Investments B.V. entered into
a relationship agreement with the company and
a shareholders’ agreement (amongst each other).
The relationship agreement is a Dutch law-governed
agreement that contains certain arrangements regarding the
relationship between the parties thereto. The agreement
currently grants each of Avalon Holding B.V. and Javak
Investments B.V. a specic right to nominate or designate
one Supervisory Board member for appointment (and
replacement). This right expires, in respect of each relevant
party, if such party ceases to, directly or indirectly, hold more
than ve percent of the shares in the company provided that
and for as long as, in aggregate, Avalon Holding B.V.
and Javak Investments B.V. together continue to, directly or
indirectly, hold more than ve percent of the company’s
shares, Avalon Holding B.V. and Javak Investments B.V.
shall be entitled to jointly designate one Supervisory Board
member for appointment. The
relationship agreement also governs the composition of the
Supervisory Board committees. The agreement terminates
in respect of each of the shareholders, if such party’s
aggregate shareholding in the company (be it direct, indirect
or together with a permitted transferee) falls below ve
percent of the company’s outstanding share capital. In case
of, among other things, the company becoming subject to
insolvency procedures, liquidation, delisting, a merger or
a spin-off (with the company as disappearing entity),
the agreement automatically terminates.
Under the shareholders’ agreement governed by Dutch law,
Avalon Holding B.V. and Javak Investments B.V. have agreed
on certain arrangements in respect of their shareholding in
the company. These arrangements include an obligation for
each of the parties to vote in favor of the appointment of any
individual designated by any of them as a member of the
Supervisory Board in accordance with the terms of the
relationship agreement (as described above). Furthermore,
the parties agreed to reserve the right to consult with each
other and coordinate the exercise of their voting rights
attached to their respective shares in the company.
The shareholders’ agreement terminates for any party if
such party’s aggregate shareholding in the company (be it
direct or indirect) falls below three percent of the company’s
outstanding share capital and in case of, among other things,
the company becoming subject to insolvency procedures,
liquidation, delisting, a merger or spin-off (with the company
as disappearing entity).
No dedicated take-over protection structures
Flow Traders does not employ any of the following dedicated
take-over protection structures: preference shares,
depositary receipts or call options issued to vehicles
conducive to protecting the company’s interest or
independence.
Compliance with the Corporate Governance Code
The Corporate Governance Code denes a company as
a long-term form of collaboration between the principal
corporate bodies of a company. For Flow Traders, these
corporate bodies include the Management Board,
the Supervisory Board and the General Meeting.
The Management Board values and considers the interests
of the various stakeholders involved. Good corporate
governance results in effective decision-making in a manner
which enhances shareholder value and enables a company
to maintain a culture of integrity, transparency, and trust.
The company has a long standing focus on a long-term
value creation strategy, culture and risk. We acknowledge
the importance of good corporate governance and endeavor
to comply in general with the provisions of the Corporate
Governance Code and comply fully with it, with the exception
of the following provisions:
■
Equal Opportunity Policy (Diversity Policy)
Best practice provision 2.1.5 provides that the
Supervisory Board should draw up a diversity policy for
the composition of the Management Board and
Supervisory Board. The policy should address the
concrete targets relating to diversity. Flow Traders
deviates from best practice provision 2.1.5 and 2.1.6 as
no concrete targets are set on diversity within the
company. However, the Supervisory Board has drawn
up and adopted an Equal Opportunity Policy addressing
the diversity aspects of the composition of the
Management Board and Supervisory Board. We believe
that this policy also attains the purpose of best practice
provision 2.1.5. In our view, the policy contributes to
good governance, as it reects our objective to treat
everyone equally during the hiring process and
throughout their careers at Flow Traders. Flow Traders
is committed to being a truly equal opportunity
employer, by recruiting, retaining and promoting people
based on merit, and merit alone. The company is a rm
believer in the benets of a diverse workplace and does
not make any concessions to quality. The objective is to
provide equal employment opportunities to all qualied
job applicants and equal career perspectives for all
employees, provided they perform highly.
When positions become available, Flow Traders actively
encourages all candidates to apply and ensure that the
selection and retention processes are truly equal for all
applicants and employees. This also holds for the
Management Board and Supervisory Board. When it
comes to diversity in the Supervisory Board and the
Management Board, Flow Traders adheres to the same
principle of equal opportunity as set out above.
The Management Board comprises 20% (1 out of 5
members) female members and our Supervisory Board
comprises 33.3% (2 out of 6 members) female
members. As a result, our current Supervisory Board is
diverse in terms of, inter alia, age, education, nationality,
and professional backgrounds.
■
Independence of Supervisory Board members
Best practice provision 2.1.7 provides that any one of
the criteria referred to in best practice provision 2.1.8
(i.-v.) should be applicable to at most one Supervisory
Board member and that the total number of Supervisory
Board members to whom the criteria referred to in best
practice provision 2.1.8 are applicable, should account
for less than half of the total number of Supervisory
Board Members. Jan van Kuijk and Roger Hodenius,
as founders of the company, were attracted to their role
as Supervisory Board members because of their
specic business-related expertise. They do not qualify
as independent under the provisions of the Corporate
Governance Code as they are former members of the
Management Board of the company prior to its
conversion and because they represent shareholders of
the company owning an interest of over ten percent.
Deviation from this provision is likely to continue until
Roger Hodenius and Jan van Kuijk cease to be
members of the Supervisory Board.
■
Independence of committee members
As Jan van Kuijk and Roger Hodenius do not qualify as
independent Supervisory Board members as set out
above, this also affects two Supervisory Board
committees of which they are members. Best practice
provision 2.3.4 provides that more than half of the
members of the Audit Committee and the Remuneration
& Appointment Committee should be independent.
Both Jan van Kuijk and Roger Hodenius are members
of the Remuneration & Appointment Committee,
implying that half (and not more than half) of its
members are independent. Deviation from this provision
is likely to continue until Roger Hodenius and Jan van
Kuijk cease to be members of the Supervisory Board.
■
Analyses carried out in respect of variable
compensation
Best practice provision 3.2.1 of the Corporate
Governance Code provides that the Remuneration &
Appointment Committee should submit a proposal to the
Supervisory Board concerning the remuneration of
individual members of the Management Board.
The proposal is drawn up in accordance with the
Remuneration Policy that has been established and will,
in any event, cover the remuneration structure,
the amount of the xed and variable remuneration
components, the performance criteria used, the scenario
analyses that are carried out and the pay ratios within
the company and its afliated enterprises. We do not
fully comply with the scenario analyses that are carried
out as the variable remuneration for the members of the
Management Board is contingent upon a future,
unknown, metric: the accrued rm-wide variable
remuneration pool which itself depends on operating
result for the given nancial year. Because of the nature
of our business activities and the fast paced industry in
which we operate, the Supervisory Board tracks actual
performance of the Management Board members and
eligibility for variable compensation throughout the year,
rather than performing a more hypothetical scenario
analysis prior to a nancial year while performing
a single, one-off assessment at the end of the year as
set out in the best practice provisions. Semi-annual
discussions take place between the Management Board
members and the Remuneration & Appointment
Committee for this purpose. In this manner,
the Supervisory Board regularly assesses the
performance indicators and the potential resulting
variable compensation for the Management Board
members. Targets are set for each individual
Management Board member and the Management
Board as a whole. Signicant underperformance or
overperformance in respect of these targets can result in
reductions or increases of the prot share that is
awarded to a Management Board member.
■
Quorum
Best practice provision 4.3.3 provides that the General
Meeting of a company that is not subject to the statutory
large company regime (structuurregime) may adopt
a resolution to cancel the binding nature of a nomination
for the appointment of a member of the Management
Board or of the Supervisory Board and/or a resolution to
remove a member of the Management Board or of the
Supervisory Board by an absolute majority of the votes
cast. According to the Corporate Governance Code,
it may be provided that this majority should represent
a given proportion of the issued capital, which
proportion may not exceed one-third. If this proportion
of the capital is not represented at the meeting, but an
absolute majority of the votes cast is in favor of
a resolution to cancel the binding nature of a nomination
or to remove a board member, a new meeting may be
convened at which the resolution may be passed by an
absolute majority of the votes cast, regardless of the
proportion of the capital represented at the meeting.
In deviation of this best practice provision,
the company’s Articles of Association provide that the
General Meeting may pass a resolution to cancel the
binding nature of a nomination for the appointment of
a member of the Management Board or of the
impact on the results of Flow Traders N.V. that come forth
from these identied risks. The design and functioning of the
internal risk management and control systems is based on
the Flow Traders Risk Management Framework (RFM).
The framework explained in detail in the Risk Management
section, combine various nancial and non-nancial risk
disciplines into a single converged approach and provide the
businesses with an overview on their risks and the way these
are managed. The Risk and Mid-Ofce department and
Internal Audit Function assessed the controls in this process
and reported its ndings to the Management Board. These
ndings have been evaluated by the Management Board and
by the Supervisory Board. This view allows the Executive
Board and senior management to form an opinion on the
adequacy of internal risk management and control systems
regarding the risks they face while pursuing the Management
Board’s strategy.
On the basis of the above, and in accordance with best
practice provision 1.4.3 of the Corporate Governance Code,
and with due observance of the limitations stated below,
we conrm that to the best of our knowledge:
■
The annual report provides sufcient insights into any
failings in the effectiveness of the internal risk
management and control systems (see chapter Our
governance);
■
The aforementioned systems provide reasonable
assurance that the nancial and tax reporting does not
contain any material inaccuracies (see chapter Our
governance);
■
Based on the current state of affairs and initial
prognoses, it is justied that the nancial reporting is
prepared on a going concern basis (see chapters Value
creation and strategy, Our performance and Financial
statements); and
■
the diversity policy regarding the composition of the
Management Board and the Supervisory Board
including its aims, how it is being effected and the
results can be found in the chapters Our governance
and the Supervisory Board Report (section 3a sub d of
the Decree); and
■
the disclosure of the information required by the Decree
on Section 10 EU Takeover Directive can be found in
the chapter Our governance (section 3b of the Decree).
Management Board In Control
Statement
In accordance with best practice provision 1.4.3 of the 2016
Dutch Corporate Governance Code, Management Board of
Flow Traders N.V.. states that it is responsible for the design,
implementation and functioning of Flow Traders’s internal
risk management and control systems. Flow Traders’ internal
risk management and control is a process, effectuated by
the Management Board, senior management, and other
personnel. It is designed to mitigate risks and provide
reasonable assurance regarding the achievement of
objectives in the following categories:
■
Effectiveness and efciency of operations;
■
Reliability of nancial and non-nancial information;
■
Compliance with laws, regulations and internal policies,
■
Safeguarding of assets, identication and management
of liabilities; and
■
Strategic goals of the Flow Traders group.
The Risk Management section as part of the Report of the
Management Board elaborates on Flow Traders’ identied
nancial and non-nancial risks and how these risks are
managed. These chapters provide insight into the potential
Supervisory Board and/or a resolution to remove
a member of the Management Board or of the
Supervisory Board by an absolute majority of the votes
cast, representing more than 50 percent of the
company’s issued capital. In addition, the company’s
Articles of Association provide that if this quorum is not
present or represented at the meeting, such resolution
cannot be adopted and in order for such a resolution to
be adopted, a new meeting should be convened in
which more than 50 percent of the company’s issued
capital is represented and an absolute majority of the
votes are cast in favor of such resolution.
Corporate governance statements
Dutch decree on the content of the Management
Board report
(besluit inhoud bestuursverslag)
The information required by section 2a of the Decree is
included in the chapters Our governance and Supervisory
Board Report:
■
our compliance with the Corporate Governance Code
can be found in the chapter Our governance;
■
the main features of our internal risk management and
control systems relating to the nancial reporting
process can be found in the chapter Our governance;
■
the functioning of our General Meeting and the authority
and rights of our shareholders can be found in the
chapter Our governance;
■
the composition and functioning of our Management
Board, the Supervisory Board and its Committees can
be found in the chapters Supervisory Board Report and
Our governance;
As required by section 5:25c paragraph 2(c) of the Dutch
Financial Supervision Act, each of the signatories hereby
conrms that to the best of his knowledge:
■
The Flow Traders N.V. 2021 Annual Accounts give a
true and fair view of the assets, liabilities, nancial
position and prot or loss of Flow Traders N.V. and the
enterprises included in the consolidation taken as a
whole; and
■
the Flow Traders N.V. 2021 Annual Report gives a true
and fair view of the position at the balance sheet date,
the development and performance of the business
during the nancial year 2021 of Flow Traders N.V.
and the enterprises included in the consolidation taken
as a whole, together with a description of the principal
risks Flow Traders N.V. is being confronted with.
Amsterdam, 3 March 2022
Management Board
Dennis Dijkstra, Chief Executive Ofcer
Mike Kuehnel, Chief Financial Ofcer
Britta Achmann, Chief Risk Ofcer
Folkert Joling, Chief Trading Ofcer
Thomas Wolff, Chief Technology Ofcer
Conformity statement
The Management Board is required to prepare the Annual
Accounts and the Annual Report of Flow Traders NV.
for each nancial year in accordance with applicable Dutch
law and those International Financial Reporting Standards
(IFRS) that were endorsed by the European Union.
Conformity statement pursuant to section 5:25c
paragraph 2(c) of the Dutch Financial Supervision
Act (Wet op het financieel toezicht).
The Management Board is responsible for maintaining
proper accounting records, for safeguarding assets and for
taking reasonable steps to prevent and detect fraud and
other irregularities. It is responsible for selecting suitable
accounting policies and applying them on a consistent basis,
making judgements and estimates that are prudent and
reasonable. It is also responsible for establishing and
maintaining internal procedures which ensure that all major
nancial information is known to the Management Board,
so that the timeliness, completeness and correctness of the
external nancial reporting are assured.
■
The report states those material risks and uncertainties
that are relevant to the expectation of the company’s
continuity for the period of twelve months after the
preparation of the report (see chapters Value creation
and strategy, Our performance, Our governance and
Financial statements).
It should be noted that the above does not imply that these
systems and procedures provide absolute assurance to Flow
Traders N.V. as to the realisation of nancial and strategic
business objectives, or that internal risk management and
control systems can prevent or detect all misstatements,
inaccuracies, errors, fraud and non-compliances with
legislation, rules and regulations.
Amsterdam, 3 March 2022
Management Board
Dennis Dijkstra, Chief Executive Ofcer
Mike Kuehnel, Chief Financial Ofcer
Britta Achmann, Chief Risk Ofcer
Folkert Joling, Chief Trading Ofcer
Thomas Wolff, Chief Technology Ofcer
How has COVID-19 impacted the credit
markets?
Jasper: “We have seen a signicant
increase in the number of tickets traded
electronically over the past year; in €
investment grade (IG), for example,
electronic trading is well above 40%.
And while high-yield (HY) and emerging
market debt (EMD) have a much lower
electronic execution rate, we have still seen
an uptick in electronication in these areas
and expect it to continue to increase.
The size of individual electronic trades is
also growing; where in the past tickets of
€250k-€500k were predominantly executed
electronically, now it is not uncommon to
see RFQs of €1 million or more.”
What do you think is the future of credit
trading?
Ramon: “While in the past credit markets
could not be compared to other asset
classes, this seems to be changing as
a consequence of electronication and
algorithmic trading driven mainly by market
regulation and the penetration of non-bank
liquidity providers such as Flow Traders.
What has become clear is that we are close
to the inection point of electronication,
resulting in more efcient and transparent
execution. Looking at the technology
developments we have seen over the past
10-15 years in other classes, such as equity
index products or FX, we can expect to see
similar developments in bond markets.
Once we are past the inection point, we
expect to see electronic trading volumes
developing by at least a multiplier of three,
or higher”
What do you think will be the impact of
algo trading on credit markets?
Matheus: “Applying our advanced algorithms
in bond trading has enabled us to absorb all
available market information and arrive at
the most competitive price. Additionally, it
allows us to quote on average within ve
seconds, leading to more efcient execution.
If algo trading continues to increase at this
pace, this will lead to a market equilibrium
where information is immediately reected
in the price, leading to the best price for the
investor.”
The size of
individual
electronic
trades is
growing
Name: Ramon Baljé
Position: Head of Fixed Income, EMEA
Name: Matheus Haserick-Lara
Position: Managing Director, Head of Trading, US
Name: Jasper Jansen
Position: Head of Fixed Income Trading
What do you think will be the main driver for dealer
selection in the future?
Ramon: “We foresee that rm/live pricing markets will
dominate the credit market. With rm prices being updated
virtually every second, we can provide certainty to the
investor that ‘what you see is what you get’ and that this is
the best possible price reecting the current market.
The buy-side already uses rm prices as a factor but it will
become increasingly more important for decision making.”
What is your view on the type of protocols that will be
used in the future?
Jasper: “We believe all protocols that promote pre-trade
transparency and cost efciencies – such as rm prices,
requests for two-way markets, and CLOBs – will increase in
volume and importance. We think that two-way markets will
also solve some of the concerns the buy-side has around
information leakage just as we have seen in ETF markets.
Additionally, we believe PT will continue to be an important
protocol.”
Do you think there is room in the market for new bond
venues?
Matheus: “We believe that competition among venues and
new platforms has a positive impact on the market in
general. It drives innovation, which leads to new trading
protocols, an increase in electronic execution rates, and
a rise in more sophisticated auto-execution mechanisms, as
well as driving down direct and indirect execution costs.”
What are the major benets of portfolio trading?
Jasper: “The benets of PT are certainty of execution, cost
savings, and transparency. PT allows end investors to
receive a fair and competitive price for all their bonds,
including their illiquid ones. In our opinion, the all-or-nothing
protocol is one of the more important and innovative
concepts in PT. Increasingly, other asset classes within
Fixed Income are being used for PT, such as £ credit, as
well as large mixed portfolios consisting of rates and credit
products. The ETF ecosystem will also add additional
liquidity to the credit markets, as a lot of bonds are traded
by ETF market makers on the back of their Authorized
Participant (AP) activities. As ETFs are used as hedging
tools for PTs and they are traded without going to the bond
market, such as on exchanges, this means liquidity can also
enter the bond market in this way.”
What are the portfolio trading market developments in
Europe and the US?
Ramon / Matheus: “According to our estimates, PT in
Europe has grown from virtually nothing to around €16bn of
executed volumes per month in just two years, representing
around 6% of total trading in European credit markets.
This growth was already evident in the US, and we expect
that the increase in executed volumes will continue to grow
in both regions to at least 10% of the total market.
PT trading is still dominated by IG, but we also see fast
growth in HY and EM. We also embrace the initiatives of the
venues to automate trading processes. Where in the past
PTs were predominantly priced via sheets and negotiated in
chats, we now see a clear trend towards electronic methods
ways of execution. Additionally, the size of trades has also
increased and it is now not uncommon to see trades above
€500 million.”
The Central Securities Depositories Regulation (CSDR)
implementation is on everyone’s agenda. How do you
think this regulation will impact the market?
Ramon: “We expect that CSDR will affect liquidity,
especially on the offer side. This will increase the
importance of dealers, who are providing constant liquidity
and who have substantial bond inventories from axes.
Past settlement performance and dealer relationships will
increase in value for buy-side investors, as the penalties for
failing settlements and buy-in risks will be very costly.”
78 Message of the Supervisory Board
80 Supervisory Board Report
Report of the
Supervisory Board
Message of the Chairman
The primary focus of the Supervisory Board in 2021 was to
guide and help prepare the company for signicant growth
and further extensive development of the business, with the
aim of the Company playing a more pro-active role in its
expanding ecosystem and leveraging the rapidly-evolving
opportunities within the nancial-markets landscape.
Record new talent recruitment
This ambition led to the planning and implementation of
successful hiring initiatives at all levels of the organization,
and across all regions in which Flow Traders operates.
In 2021, Flow Traders recruited a record number of new
team members, with more than 160 hires and multi talent
cycles for our Trading Graduate and Technology Graduates,
as part of our ambition to continue to foster up and coming
talent.
Experienced new board members
We are delighted to have been welcoming two new and
highly experienced additions to Flow Traders’ Supervisory
Board, Linda Hovius and Ilonka Jankovich. Their collective
experience is a real asset to the Supervisory Board as we
deepen our expertise and bring in a dynamic mindset to help
support the business as it continues to grow.
Importantly, the Management Board was also further
strengthened in 2021, with Mike Kuehnel joining as Chief
Financial Ofcer. Mike’s broad skill set and extensive
professional experience will help the team as it pursues and
executes an accelerated strategic agenda.
Open dialogue at all levels:
Throughout the year the Supervisory Board focused on
direct engagement and open dialogue with our people,
holding a series of meetings where employees could share
their feedback and insights. This included a signicant
number of sessions held separately from formal Supervisory
Board meetings.
These engagement sessions, which were facilitated by
several Supervisory Board Members, enabled us to discuss
priorities and aspirations with employees from all parts and
levels of the organization. The Supervisory Board found the
discussions to be extremely useful, and we view them as
powerful opportunities to support the business. We want to
thank everyone who participated for their open and
productive feedback. We are committed to continuing this
dialogue, as we believe such opportunities of direct
involvement benet the whole organization and help inform
the shaping of our roles on the Supervisory Board.
The Supervisory Board in 2021
During 2021, the Supervisory Board held a total of 37
meetings across the year. The Supervisory Board held 14
plenary meetings and 20 through its four committees: The
Audit committee, the Remuneration and Appointment
committee, the Trading and Technology committee, and the
Risk committee. The Supervisory Board and its committees
continue to operate effectively with competent and diligent
members, who bring extensive and broadly diversied
experience to the table and ensure we have progressive
dialogues on all our key topics.
Message of the Supervisory Board
Rudolf Ferscha
Chairman of the Supervisory Board
Looking ahead
Looking ahead, the Supervisory Board aims to intensify its
dialogue with key stakeholders and to continue to engage in
the timely evaluation of important themes related to the
business. It will remain connected to main regulatory,
talent, ESG and technology developments to ensure the
Supervisory Board can continue to support the business with
impact. One important focus area will be the continued
development of the company’s ESG propositions, as we
believe this will improve Flow Traders’ relationship with
stakeholders and lead to greater transparency.
Other important areas of attention will be supporting the
business as it executes the strategy, taking advantage of
new opportunities, both organic as well as non-organic,
and in building the team which will take Flow Traders to the
next level. We will also support the entire organization
during the planned investor day in 2022.
On behalf of the Supervisory Board I would like to
compliment the Flow Traders team for their exceptional
efforts and achievements in 2021. Our gratitude goes out to
everyone on our team for their tremendous contributions
during a second year operating under highly challenging
conditions.
Throughout the year, the Supervisory Board discussed
a wide range of topics including the performance, evaluation
and targets of Management Board members,
the Supervisory Board’s own performance, the remuneration
of Management Board members as well as the proposal for
a new remuneration policy, strategic investments and
projects, succession planning and the talent pipeline on key
positions.
The Supervisory Board also sought opportunities to engage
with various shareholders, representing a wide range of
holding sizes. In addition, several Supervisory Board
members undertook direct engagement with proxy advisors
in 2021, to engage in open and proactive dialogue on
a range of topics, including our talent retention and
remuneration philosophy.
During the year the Supervisory Board continued to discuss
steps the company is taking to strengthen its environmental,
social and governance (ESG) efforts. This includes social
responsibility towards the workforce and enabling equal
opportunities for all. Flow Traders also carried out the
necessary assessments to determine its CO
2
footprint and
ensure it remains carbon neutral.
Our culture of informal collaboration, effective
communication and rapid innovation, our strengthened
leadership team and the tremendous energy and
extraordinary talent of our people will allow us to aim even
higher in 2022, as we continue to pursue our ambitious
goals. This will enable the company to achieve sustainable
returns for all of our stakeholders.
With best regards,
Rudolf Ferscha
Chairman of the Supervisory Board
3 March 2022
regulation. This includes the revision of the European
capital and remuneration requirements set out in the EU
Investment Firm Regulation and EU Investment Firm
Directive and the implementation of the Shareholders
Rights Directive II. During the Supervisory Board
meetings, there were regular updates on specic
projects and the company’s regulatory capital
requirements under CRR and other prime broker capital
requirements. The Supervisory Board is fully aligned with
the Management Board in continuing to advocate for
a level playing eld in terms of capital requirements
across our global ecosystem.
■
Financial results
The Supervisory Board was updated on the company’s
nancial, legal and compliance risks through the Audit
Committee and the Risk Committee. Other topics
discussed were the annual, half-yearly and quarterly
results.
■
The company’s governance structure and related
documentation
Each year the Supervisory Board assesses all of the
company’s policies, By-Laws and Terms of Reference of
each of the committees. In 2021 the By-Laws of the
Management Board were reviewed, amended and
re-adopted as well as the Terms of Reference of the
Audit Committee. The By-Laws of the Supervisory Board
and the terms of reference of the Remuneration and
Appointment Committee were amended and re-adopted
in 2020, the terms of reference of the Risk and Trading &
Technology Committee were amended and re-adopted in
2019.
controls in place to address these risks, and the
Management Board’s views on such risks.
■
Succession planning and diversity
The term of Rudolf Ferscha, as Supervisory Board
member, expired in 2021. Eric Drok choose not to opt for
reappointment during the 2021 AGM, hence succession
planning of the Supervisory Board formed an important
topic of discussion during the Supervisory Board and
Remuneration & Appointment Committee meetings. Eric
Drok stepped down from his Chairmanship in March,
and the Supervisory Board unanimously appointed
Rudolf Ferscha as Chair of the Supervisory Board.
Both Ilonka Jankovich and Linda Hovius were appointed
as members of the Supervisory Board during the 2021
AGM held on 23 April 2021. Following the transition from
four Management Board members to ve Management
Board members during 2021, the succession planning of
the Management Board was also discussed.
When discussing succession planning, the company’s
Equal Opportunity Policy is always taken into account.
■
Culture and core values
Culture has always and will always form a very important
role within Flow Traders, especially with most employees
working from home during 2021 as a result of COVID-19.
Culture and the company’s core values have been
regularly discussed during the Remuneration &
Appointment Committee meetings and the Supervisory
Board meetings. The Whistleblower Policy and the
company’s Code of Conduct and the awareness of
employees thereof have been discussed during the year.
■
New legislation and regulation
The Supervisory Board was regularly updated on and
discussed upcoming regulation and implementation of
Meetings of the Supervisory Board
In 2021 the Supervisory Board members met 13 times to
hold formal Supervisory Board meetings and met several
times without holding a formal meeting. Examples of
meetings without holding a formal meeting include
a preparation session for the AGM, education and strategy
days and the self-assessment day. During these meetings
a number of topics, including the following, were discussed:
■
The company’s strategy
The Management Board focuses on the long-term value
creation of the company and has involved the
Supervisory Board in translating this long-term value
creation into the company’s strategy. The Supervisory
Board regularly discusses the strategy,
the implementation of the strategy, and any associated
risks. During the year, starting in February 2021,
the Supervisory Board and the Management Board
together discussed the company’s strategic direction.
Input was also provided into the detailed and thorough
review of Flow Traders’ capital structure being
undertaken by the Management Board which
commenced in the latter part of the year.
The Supervisory Board agreed on nancial and
non-nancial KPIs of the Management Board, these KPIs
are further explained in the chapter on Governance.
■
Strategy-associated risks
Reviewing the company’s risk assessment processes
and the monitoring of the company’s internal risk
management and control systems remain a priority and
joint responsibility of the Supervisory Board and all
committees. The assessment comprises an overview of
all relevant risks the company is exposed to, the internal
Supervisory Board report
in 2021 was led by Rudolf Ferscha as independent Chair of
the Supervisory Board and Linda Hovius as independent
Chair of the Remuneration and Appointment Committee.
Following the assessment, the Supervisory Board conrmed
the independence of the board members Olivier Bisserier,
Rudolf Ferscha and Linda Hovius and Ilonka Jankovich.
Roger Hodenius and Jan van Kuijk were considered
non-independent Supervisory Board members. For
additional information, please refer to the chapter
Our governance.
Evaluation of the Management Board
The performance of the CEO is discussed at least two times
a year between two Supervisory Board members.
The performance of the CRO, CTrO, CFO and the CTO are
discussed at least twice a year between a Supervisory
Board member and the CEO. During performance
discussions, the representatives speak with the
Management Board members individually and with the
Management Board as a whole. Guiding structures for these
conversations include the Management Board KPI overview,
the strategic project goals set for 2021, culture and team
Supervisory
Board
Audit
Committee
Remuneration
& Appointment
Committee
Risk
Committee
Trading &
Technology
Committee
Eric Drok* 10/10 4/4 4/4 2/2 2/2
Olivier Bisserier 14/14 6/6 – 4/4 3/3
Rudolf Ferscha 14/14 2/2 7/7 4/4 3/3
Roger Hodenius 13/14 – 7/7 4/4 3/3
Jan van Kuijk 14/14 6/6 7/7 4/4 3/3
Linda Hovius** 4/4 3/3 2/2 1/1
Ilonka Jankovich** 4/4 1/1 – 2/2 1/1
* Eric Drok chose not to stand for reappointment during the AGM held on 23 April 2021.
** Linda Hovius and Ilonka Jankovich were appointed in the AGM held on 23 April 2021 and started to attend the meetings thereafter.
■
Industry-related updates
Relevant updates and educations sessions were
provided by the heads of specic departments and
external advisors. This included updates and education
sessions about cybersecurity and new asset classes.
■
Large investments
The Management Board explained and discussed any
large investments with the Supervisory Board.
■
Remuneration and variable compensation of
Management Board and employees
The Remuneration & Appointment Committee updated
the Supervisory Board on remuneration and variable
compensation plans for both employees and the
Management Board. Succession planning for both the
Management Board and the Supervisory Board was
regularly discussed during the meetings.
■
The Internal Audit Function
The recommendations of the Internal Audit Function,
the functioning of the Internal Audit Function and the
progress on the Internal Audit Plan 2021 have been
discussed and followed up during 2021.
■
Attendance Supervisory Board
The table on the right shows the attendance record of
the Supervisory Board members of the Supervisory
Board Meetings and the various committee meetings.
The attendance is shown as number of meetings
attended out of the total number of meetings held.
The Management Board also attended each meeting in
full or in part. Due to the COVID-19 measures and the
corresponding travel restrictions, most of the meetings
were held via conference call. The Supervisory Board
meetings achieved an average attendance rate of 96
percent.
Evaluation of the Supervisory Board
The Supervisory Board discussed the outcome of the
self-assessment of 2020, and the follow-up on conclusions
of that self-assessment. As a result of the conclusions of the
assessment, the Supervisory Board continued the initiative
launched in 2018 to host a dedicated Strategy Day,
even though the set-up has changed during the COVID-19
pandemic. Additionally, the Supervisory Board ensured
a clear link between the company KPI’s and its strategy.
In 2021, the Supervisory Board also reviewed its own
performance using a combination of an electronic survey
and a group discussion. Using the same questionnaire year
over year enabled comparisons with last year’s results.
Compared to 2021, the Supervisory Board concluded that it
has continued to function well. Specic items for follow up
that arose this year included continued focus on strategy,
the composition of the Supervisory Board and in-depth
knowledge of the business of Flow Traders and its regulatory
environment.
The Supervisory Board’s self-assessment includes an
independence-assessment. The independence assessment
education, nationality, and professional backgrounds.
Our Equal Opportunity Policy can be found on our website
www.owtraders.com.
Succession planning
Until 10 September 2021, the Management Board consisted
of four members. During the EGM held on 10 September
2021, shareholders voted in favor of the appointment of Mike
Kuehnel as member of the Management Board and Chief
Financial Ofcer of the company. The full size and
composition of the Management Board was discussed
regularly during 2021. Our Equal Opportunity Policy was an
important topic during these discussions. Eric Drok choose
not to opt for reappointment after the end of his mandate in
2021 and Rudolf Ferscha replaced him as Chair of the
Supervisory Board and was reappointed at the AGM in 2021
together with the appointments of Linda Hovius and Ilonka
Jankovich. The gure in the middle column shows the terms
of (re)appointment for all Supervisory Board members.
Equal Opportunity Policy (Diversity Policy)
The company has an Equal Opportunity Policy in place.
In this policy we explain our objective to treat everyone
equally during the hiring process and throughout their
careers at Flow Traders. We are committed to being a truly
equal opportunity employer, by recruiting, retaining and
promoting people based on merit, and merit alone. We are
a rm believer in the benets of a diverse workplace and we
do not make any concessions to quality. Our objective is to
provide equal employment opportunities to all qualied job
applicants and equal career perspectives for all of our
employees, provided they perform highly. When positions
become available, we actively encourage all candidates to
apply and ensure that the selection and retention processes
are truly equal for all applicants and employees. This also
holds for our Management Board and Supervisory Board.
When it comes to diversity in the Supervisory Board and the
Management Board, we adhere to the same principles of
equal opportunity as set out above. As a result, our current
Supervisory Board is diverse in terms of, inter alia, age,
performance. Based on these discussions the Remuneration
and Appointment Committee provides feedback regarding its
view on the Management Board’s performance to the
Supervisory Board, to guide year-end discussions on
variable rewards.
Profile of the Supervisory Board
The Supervisory Board Prole provides that the
qualications of a particular candidate and t with the
company’s needs shall always prevail when lling a position.
When selecting members, the Supervisory Board aims for
a balance in nationality, gender, age, experience, and active
or retired backgrounds. In addition, balance in the
experience and afnity with the nature and culture of the
business of the company will be sought. The Supervisory
Board strives to realize a diverse composition in the
nomination and appointment process for vacancies, while
taking into account the overall prole and selection criteria
for appointments of suitable candidates to the Supervisory
Board. As such, diversity, including gender-related, is an
important consideration in the selection process for the (re)
appointment of Supervisory Board members. The
Supervisory Board Prole can be found on our website:
www.owtraders.com.
Training and Induction
Our new Supervisory Board members, Linda Hovius and
Ilonka Jankovich, were provided with an induction program,
including presentations from Management Board and Global
Heads. The training also included modules that are part of
the Flow Academy and available for all employees, such as
trading for non-traders. The Supervisory Board members are
trained on a regular basis on the landscape that Flow
Traders operate in. In 2021, the education day held for the
Supervisory Board focused on the various aspects of Digital
Asset trading.
changed to reect the new appointments. The supervisory
board resolved to amend the composition of the committees
as follows with effect from 1 September 2021:
With Erik Drok stepping down as a supervisory board
member as of the AGM on 23 April 2021 and the subsequent
appointments of Linda Hovius and Ilonka Jankovich as new
supervisory board members, the committees were also
Independence of the Supervisory Board
The Chair of the Supervisory Board is not a former member
of the company’s Management Board and is independent
within the meaning of best practice provision 2.1.8 of the
Corporate Governance Code. Supervisory Board members
Jan van Kuijk and Roger Hodenius do not qualify as
independent under the provisions of the Corporate
Governance Code as they, as founders of Flow Traders,
are former members of the company’s Management Board
and represent shareholders of the company.
Committees
The Supervisory Board has four committees: the Audit
Committee, the Remuneration & Appointment Committee,
the Trading & Technology Committee, and the Risk
Committee. Each committee has a preparatory and/or
advisory role to the Supervisory Board and reports to the
Supervisory Board accordingly. The Chairs of the Audit
Committee, Remuneration & Appointment Committee and
the Risk Committee all qualify as independent under the
provisions of the Corporate Governance Code. The Trading
& Technology Committee and the Risk Committee were
established to cater for the monitoring of and advising on
specic business related topics and reect our business
model of focusing on pricing, cutting-edge technology
platform and risk management. The Trading & Technology
Committee is chaired by the one of the founders and former
Management Board member of the company. For more
information on the responsibilities of our committees, please
refer to the chapter Governance.
Audit Committee
Remuneration &
Appointment Committee Risk Committee
Trading & Technology
Committee
Olivier Bisserier (Chair) Linda Hovius (Chair) Olivier Bisserier (Chair) Jan van Kuijk (Chair)
Rudolf Ferscha Rudolf Ferscha Rudolf Ferscha Rudolf Ferscha
Jan van Kuijk Jan van Kuijk Jan van Kuijk Olivier Bisserier
Ilonka Jankovich Roger Hodenius Roger Hodenius Roger Hodenius
Ilonka Jankovich Ilonka Jankovich
Linda Hovius Linda Hovius
The committees report to the Supervisory Board by sharing
their advice and recommendations during the Supervisory
Board meetings and by providing an update of the
deliberations during the Supervisory Board meetings.
Audit Committee
The Audit Committee met six times in 2021, with each
meeting fully attended. Other attendees included the CEO,
the CFO and other members of the Finance team, the Global
Head of Internal Audit, who had a standing invitation to each
meeting, and the external auditor.
During these meetings, the Audit Committee discussed the
annual results, the half-yearly results and the quarterly
results and shared the items discussed with the Supervisory
Board Other topics discussed reviewing signicant new and
proposed legislative initiatives related to accounting, auditing
and nancial reporting, tax planning, tax strategy and
monitoring, assessing whether there were signicant
deciencies and material weaknesses in internal control over
nancial reporting, the company’s nancing strategy and
capital management policy (including dividend proposals),
assessing the company’s compliance with rules and
regulations (including among others, CRR and IFR/IFD),
the company’s Code of Conduct and the methods used to
assess the effectiveness of the internal and external audit
processes. The company’s external auditor, Ernst & Young
Accountants LLP (EY), attended all meetings. Topics
discussed with the external auditor included the nancial
statements over the nancial year 2020, recommendations
on the basis of the annual report, their audit plan for the
nancial year 2021 and their interim review report. The Audit
Committee reviewed the management letter and
recommendations included in the auditor’s report, as issued
by the external auditor and discussed the actions taken by
management to address any recommendations and
observations. The Audit Committee evaluates the
performance of the external auditor and discusses this with
the Supervisory Board and subsequently with the external
auditor. In light of this, the Audit Committee advised the
ongoing internal audit items being conducted. More
information can be found in the chapter Governance.
Remuneration & Appointment Committee
The Remuneration & Appointment Committee met seven
times in 2021, with each meeting fully attended. Other
attendees to the meetings included the CEO and the Global
Head of HRM & Recruitment. During the meetings the
Remuneration & Appointment Committee discussed the
company’s culture in general including feedback on an
employee engagement survey, the General Remuneration
Policy, and drafted proposals to the Supervisory Board for
the remuneration practices to be pursued for the
Management Board and staff of the company. It also
discussed and further outlined proposals for the
remuneration of the individual members of the Management
Board for adoption by the Supervisory Board. The size,
composition,functioning and succession planning of the
Supervisory Board and Management Board was reviewed
and ndings reported to the Supervisory Board. Other duties
included the monitoring of developments of the Corporate
Governance Code and regulations in relation to
remuneration policies and the preparation of the
Remuneration Report.
Before determining the remuneration of the Management
Board members, the Remuneration & Appointment
Committee took note of the individual Management Board
members’ views with regard to the amount and structure of
their own remuneration.
Trading & Technology Committee
The Trading & Technology Committee met three times in
2021, with each meeting fully attended. As the core business
of the company is discussed in this committee, all of the
External auditor
The Audit Committee and the Management Board reported
to the Supervisory Board on EY’s functioning as the external
auditor, the company’s relationship with the external auditor,
on its fees, as well as on other audit and non-audit services
it provided to the company. EY performed a review of the
company’s interim nancial statements and issued an
unqualied review report. The Audit Committee evaluated
the qualications, performance and independence of EY,
taking into account the opinions of the Management Board.
The Audit Committee also obtained a report from the
external auditor regarding, among other topics, its internal
quality control procedures. EY conrmed its independence
from Flow Traders in accordance with the professional
standards applicable to it. Based on the information provided
by the Audit Committee, the Supervisory Board nominated
EY as external auditor at the company’s General Meeting in
2021. Subsequently, EY was reappointed by the General
Meeting as external auditor for the nancial year 2021.
Internal audit function
The Internal Audit Function (IAF) executed audits that form
part of the internal audit plan, approved by the Supervisory
Board. On 25 January 2021, a new Global Head of Internal
Audit started his role at Flow Traders. Focus areas in this
audit plan of 2021 included, the resilience of our trading
systems and controls, IT tools and adherence to regulatory
requirements, among others. The Audit Committee and the
Global Head of Internal Audit discussed the audit results
from 2020 (ndings, observations, recommendations,
management feedback and follow-up). The IAF also
delivered an updated Internal Audit Charter as well as an
updated audit plan for 2022 The Audit Committee maintains
regular dialogue with the IAF, particularly in relation to
Supervisory Board about the reappointment of the external
auditor, before the Supervisory Board determines its
nomination for the appointment of the external auditor to the
General Meeting 0f 2021. Given the nature of our business,
the application of information and communication technology
by the company, including risks relating to cyber security,
are discussed in detail in the Trading & Technology
Committee. Subsequently, key items in respect of these
items are also discussed in the Audit Committee.
Thank you
Finally, the Supervisory Board would like to thank the
members of the Management Board and all of Flow Traders’
employees for their tireless efforts and exceptional exibility
during the past year.
Amsterdam, 3 March 2022
Rudolf Ferscha
Jan van Kuijk
Olivier Bisserier
Roger Hodenius
Linda Hovius
Ilonka Jankovich
Financial statements and dividend
The 2021 nancial statements were prepared by the
Management Board. They were discussed both with the
Audit Committee and the Supervisory Board, in attendance
of EY. The nancial statements were audited by EY,
who issued an unqualied auditor’s report. Reference is
made to the auditor’s report on page 125 of the nancial
statements. The Supervisory Board approved the nancial
statements as audited by EY, including the company’s
dividend proposal. We invite the General Meeting to:
■
adopt the nancial statements for 2021;
■
adopt the dividend proposal as proposed by the
Management Board and approved by the Supervisory
Board; and
■
discharge the Management Board for their management
and the Supervisory Board for its supervision of the
company in the nancial year under review.
Information on the remuneration of the Management Board
members can be found in the chapter Remuneration.
Supervisory Board members are members of the Trading &
Technology Committee. The committee addresses trading
topics such as, but not limited to, the general market
conditions, the (relative) performance of the trading desks
across the various regions Flow Traders operates in,
Flow Traders’ focus areas and growth strategies.
Competitiveness, infrastructure and trading relationships,
innovation and (cyber-) security were the main technology
topics discussed during the year.
Risk Committee
The Risk Committee met four times in 2021, with each
meeting fully attended. Invitees of the meeting were the
Management Board members, a new global head of Risk
and relevant others. The main focus in the meetings was the
Management Board’s risk assessment. The attendees
discussed in detail the relevant risks the company is
exposed to, the internal controls in place to address these
risks, the Management Board’s views on such risks, as well
as the effectiveness of the design and operation of the
internal risk management and control system. The
committee has discussed the way material risks and
uncertainties have been analyzed and discussed, the ICAAP
and the Capital Requirement Regulation as well as the IFR/
IFD regulation were also topics of discussion. More
information can be found in the chapter Governance.
87 The Remuneration & Appointment
Committee
88 Letter from the Chairman of the
Remuneration & Appointment Committee
91 Flow Traders’ approach to remuneration
Remuneration report
Chair
Linda Hovius
Members
Rudolf Ferscha
Jan van Kuijk
Roger Hodenius
The Remuneration & Appointment
Committee
The key objective of the Remuneration
Committee is to advise the Supervisory
Board on the design and execution of the
remuneration policy and to ensure that the
decision making is in line with the
remuneration policy, Flow Traders
performance and strategic priorities.
Further, during the year, the Committee
engaged in a comprehensive consultation
with stakeholders regarding the current
remuneration policy. Based on this
consultation, an updated remuneration policy
will be submitted for shareholder approval at
our 2022 AGM.
Remuneration report
The committee held 6 formal meetings in 2021 and each
meeting had full attendance.
Responsibilities
■
Determining, on behalf of the Supervisory Board,
the company’s remuneration policy for the Management
Board
■
Proposing the remuneration of the individual members
of the Management Board to the Supervisory Board
■
Reviewing the proposal of the Management Board for
the remuneration and variable remuneration for all
employees
■
Assessing performance of the members of the
Management Board in 2021 and establishing their
individual key performance indicators for 2022
■
Preparing the annual remuneration report
Remuneration in 2021
The Supervisory Board, in close consultation with,
and supported by, the Management Board has decided that
the 2021 rm-wide variable remuneration pool will be €88.3
million, corresponding to 35% of the operating result in 2021.
The Supervisory Board has also determined the 2021
variable remuneration awards to the members of the
Management Board, upon the proposal of the Remuneration
Committee, in accordance with the remuneration policy
adopted at the 2016 AGM, while also considering the new
policy proposed at the 2022 AGM. The performance of the
Management Board has been reviewed against their
individual KPI scorecards, which cover both quantitative and
qualitative targets. Following extensive considerations and
thorough review of the performance of each member of the
Management Board, we have decided that 6.1% of the
variable remuneration pool shall be allocated to the
Management Board. This is what we believe is a fair
allocation and aligns with our long-standing company
philosophy of sharing our prots and creating equal
opportunities to share in both success and risk, followed
since we were founded and has contributed to the success
Flow Traders has achieved. This approach provides
a relatively modest base salary, no benets and a prot
share that directly reects company performance - therefore
varying considerably in successful and less successful
nancial years.
In addition, we feel it is important to highlight a number of
balancing elements:
■
We believe in rewarding for performance. If Flow
Traders is less successful, there is a corresponding
downwards impact on variable remuneration levels
without any smoothing actions
Company performance and progress
Market conditions in 2021 were more stable compared to
2020. Volatility, as measured by the VIX index, averaged at
19.88 (2020: 29.49), with a high of 37.51 (2020: 85.47).
Nevertheless, 2021 was a successful year for Flow Traders.
Total value traded in 2021 amounted to €5.7 trillion (2020:
€5.2 trillion); of which, €1.54 trillion was traded in ETPs
(2020: €1.52 trillion). In terms of Net Traded Income (NTI),
we experienced a highly successful year with NTI reaching
€384 million. This is the second highest NTI result in Flow
Traders’ history after 2020.
On the cost side, we continued to maintain a rm discipline
with xed operating expenses amounting to €122.1 million in
2021 (2020: €118.6 million), which is within the cost guidance
provided in the beginning of 2021. We saw an increase in
FTEs to 613 as of 31 December 2021 compared to 554 on
31 December 2020. Despite this increase, variable employee
expenses saw a signicant decrease to €102.5 million in
2021 (2020: €228.1 million), reecting the reduced variable
remuneration pool. In light of the reduced top line compared
to 2020 and, as a result, reduced operational leverage,
net prot amounted to €114.9 million (2020: €464.5 million),
while EBITDA achieved in 2021 is €159.4 million (2020:
€586.6 million), with an EBITDA margin of 41%.
The wellbeing of our people has continued to be a point of
focus throughout 2021. We have continued to facilitate
working from home for the majority of our staff. As the
pandemic evolved, we welcomed many of our colleagues
back into our ofces, with many adopting a hybrid working
model. Further, Flow Traders opened a new ofce in Paris
during 2021.
Letter from the Chairman of the
Remuneration & Appointment
Committee
Dear shareholder,
On behalf of the Remuneration & Appointment Committee,
I am pleased to present our 2021 Remuneration Report.
This report includes a summary of our remuneration policy
currently in place, as approved at the 2016 AGM, and the
remuneration paid out in 2021 in accordance with this policy.
The full remuneration policy has been published on our
website www.owtraders.com. The remuneration report
reects the reporting requirements originating from the
updated EU Shareholder Rights Directive and the Dutch
implementation of this Directive.
In addition, this report details our proposed updates to our
policy we will submit to the 2022 AGM. As a growing
organization, Flow Traders’ revised policy has been
proposed following an extensive dialogue with various
stakeholders, peer analysis and the need to create a policy
to continue to be able to retain and attract talent of the
highest caliber.
Activities of the Committee in 2021
In 2021, we put forward our revised remuneration policies for
both the Management Board and Supervisory Board
(binding vote) and our 2020 remuneration report (advisory
vote) for the AGM’s approval. The remuneration policy for the
Supervisory Board was approved by over 97% of
shareholders, while 66% of shareholders voted in favor of
the remuneration report. The revised policy for the
Management Board was approved by 67% of our
shareholders and therefore did not obtain the required 75%
majority vote from the AGM. Therefore, we continued to
operate under the Remuneration Policy as approved in 2016.
Stakeholder engagement
We take our stakeholder’s views very seriously and welcome
an open dialogue with them on all aspects of remuneration.
As the remuneration policy for the Management Board did
not receive the required 75% vote at the 2021 AGM and
a minority of shareholders voted against our remuneration
report at the 2021 AGM, the Committee conducted
consultations with those shareholders and proxy advisors to
see whether we could further align our remuneration
practices to shareholder expectations.
We recognize the evolution of the corporate governance
landscape in recent years. We believe that the principles that
underlie our approach remain relevant. We align employee
pay, including the Management Board, with the interests of
shareholders and our nancial performance. We aim to pay
levels of total pay that are competitive with our predominantly
international, and in many cases privately-owned,
competitors and design our remuneration structures to
encourage all our employees to stay with us for the longer
term. To summarize, in light of the feedback we have
■
At the same time, we defer a signicant portion of the
variable remuneration granted, and this deferred
remuneration remains at risk until vesting. If Flow
Traders were to make a loss in upcoming years,
any outstanding deferred variable compensation from
previous years will be forfeited and used to cover this
loss.
■
We share our prots fairly with our shareholders and
employees. Although individual award levels for
members of the Management Board may be considered
substantial, the other employees are paid from the
same variable remuneration pool and equally benet
from the company’s performance.
“We take our
stakeholder’s views
very seriously
and welcome an
open dialogue with
on all aspects of
remuneration. ”
received, we have enhanced the disclosure around individual
KPIs and vesting schedule of deferred awards in our 2021
remuneration report, and we have further discussed the
Management Board’s remuneration policy proposed at the
2021 AGM to see where we can further align with
shareholders expectations. We summarize the main
feedback provided, and how we have acted upon this
feedback in the table below.
Main feedback from stakeholders How we have acted upon this feedback
The policy appears to have a short-term focus
■
Long-term value creation and share ownership are cornerstones of our remuneration philosophy. We propose to further align
our remuneration policy with our philosophy and to defer a signicant part of any variable remuneration award (62.5%) for a
multi-year period (up to 4 years). A signicant part (50%) of the variable remuneration is paid out in equity and subject to a
holding period of one year after vesting.
■
In addition to operating above market standards clawback provisions, we propose to update our remuneration policy and
introduce post-termination vesting restrictions.
■
We propose to update our remuneration policy and encourage our Management Board members to retain 50% of the shares
granted as part of remuneration (after tax) until end of employment.
■
We have further enhanced our disclosure practices in the 2021 remuneration report , with the aim to better explain the design
of our remuneration policy and in particular the working of our variable remuneration plan, including better disclosure around
individual KPI scorecards, and deferral and vesting schedule for each member of the Management Board.
Variable compensation is uncapped
■
It is in our corporate DNA to share our prots fairly with our shareholders and employees, and we have done so since we were
founded. The total variable remuneration pool available for all employees (including the Management Board) is capped at a
maximum of 35% of operating result. In addition to this proposed change at the 2021 AGM, we propose to also introduce hard
cap on Management Board individual variable remuneration award levels of 20 times versus the average employee variable
remuneration awards levels.
■
This translates to a hard cap of €4,066,000 on variable remuneration for each member of the Management Board in 2021. The
total remuneration of each member of the Management Board was well within this limit.
■
We have restructured our remuneration report, with the aim to better explain the design of our remuneration policy and in
particular the working of our variable remuneration plan.
Transparency and disclosure on pay-for-performance
can be improved
■
Following shareholder feedback, we will propose to introduce a KPI scorecard for each member of the Management Board
with both nancial and non-nancial performance measures. The nancial measures will ensure that any remuneration
awarded considers multiple aspects of nancial performance and not just operating prot, while non-nancial measures will
be selected to ensure sustained long-term performance.
■
We have restructured our remuneration report, with the aim to better explain the working of our variable remuneration plan.
We have included more details on the working, dynamics, key performance indicators and performance outcomes of the
Management Board member’s individual KPIs.
■
We believe that these changes will increase transparency and certainty for shareholders and the Management Board.
On behalf of the Committee, I thank all shareholders for the constructive feedback and are looking forward to continuing our dialogue in 2022.
Linda Hovius
Chair of the Remuneration & Appointment Committee
3 March 2022
Application of our remuneration principles
At Flow Traders, we provide our members of the
Management Board a remuneration package that consists of
xed remuneration, in the form of base salary, and variable
remuneration:
■
The long-standing foundation of our policy is a relatively
modest base salary and variable remuneration that is
aligned with company performance – therefore varying
considerably in successful and less successful
(nancial) years.
■
The design of our remuneration policy reects our
mission, corporate identity, core values & culture,
is aligned with our long-term interests and is
underpinned by deep risk-awareness.
Our values and culture
We strongly believe that creating a strong and successful
business requires a set of shared values that everyone can
rally around. Values that help shape how everyone behaves,
feels and develops at work every day. That is why we have
identied the core values that are the essence of Flow
Traders:
■
Open, informal and diverse
■
Taking ownership
■
Entrepreneurial
■
Team player
These values reect the things we believe in. And they
shape our unique, one-team driven, culture. A culture that is
underpinned by disciplined risk awareness at every level of
the organization.
Our remuneration principles
We believe in sharing our prots with all relevant
stakeholders, including our employees. Given good
performance, employees from any role and ofce are
entitled to receive variable compensation relative to their
contribution to the rm as a whole. We are transparent about
how we pay our people and how much we pay them,
including management. We have a straightforward
remuneration policy that permits variable remuneration only
when a prot is made. And because variable remuneration
is, to a large extent, deferred, it remains at risk of forfeiture if
we sustain a loss. We believe this is the strongest incentive
for sustainable, risk-aware behavior for all our staff.
Flow Traders’ approach to
remuneration
Our Management Board remuneration policy aims to attract,
motivate and retain Management Board members to lead
Flow Traders and sustainably execute Flow Traders’
strategy. The remuneration policy reects of our mission,
corporate identity and values. The remuneration policy
fosters our unique Flow Traders culture.
Our mission and corporate identity
We are a leading global-technology enabled liquidity
provider, specialized in Exchange Traded Products.
As a technology company operating in a nancial
environment, we focus on providing liquidity in nancial
products both on- and off-exchange. As a result, market
participants benet from higher execution quality and lower
overall trading costs, while the markets benet from greater
efciency and more transparency. The liquidity we provide in
volatile markets helps ensure that nancial markets keep
functioning under all circumstances. Flow Traders helps
absorb market shocks by absorbing a sudden surge in
trading which helps stabilize markets, ensures accurate
pricing and reduces volatility.
We are an ambitious, international company, with an
increasing role in the nancial ecosystem in the world’s
largest nancial markets. We operate in a fast moving,
complex and highly competitive environment, at the
intersection of trading, nancial services and technology.
As only the very best companies in this market will survive,
we aim to attract and retain the very best people at every
level in the organization.
These principles are also reected in our Management Board remuneration policy:
Principle Application
Sharing
■
Given good performance, employees from any role and ofce are entitled to receive variable remuneration relative to their
contribution to the rm as a whole.
■
If we make no prot, we do not pay-out variable remuneration.
Operating a single & straightforward policy
■
We reward all our employees, including the Management Board, based on the same remuneration policy.
■
We share one singular rm-wide variable remuneration pool.
■
The Management Board does not receive material ancillary benets beyond variable remuneration.
■
As permitted by the remuneration policy, variable remuneration of Management Board members is voluntarily capped at a
multiple of the average employee variable remuneration.
Rewarding for exceptional performance
■
Remuneration consists of a relatively modest base salary and variable remuneration linked directly to performance.
■
The pay-mix is skewed towards variable remuneration in good (nancial) years. At the same time, we do not pay-out any
variable remuneration – and reclaim outstanding deferrals, if we sustain a loss.
Guarding long-term interests & stimulating
risk awareness
■
We operate an integrated short-term and long-term variable remuneration plan.
■
We defer a signicant portion of variable remuneration pay-outs for a multi-year period.
■
A signicant part of any variable remuneration award is made in equity.
■
If the company incurs a loss, any outstanding deferred variable remuneration is reduced or forfeited entirely to cover
that loss.
■
Our clawback provisions are comprehensive, irreversible and substantially exceed industry standards and regulatory
requirements.
Stimulating share ownership
■
A signicant part of any variable remuneration award is made in equity.
■
We encourage our Management Board members to retain a substantial part of equity granted as part of remuneration.
These principles guide the Remuneration and Nomination Committee when making decisions on the remuneration policy and its implementation.
Policy at a glance
Our global remuneration model reects our key principles
achieved through the practical implementation of the current
General Remuneration Policy (as approved by the General
Meeting on 19 May 2016 and published on our website, the
‘General Remuneration Policy’), the Dutch Act on
Remuneration Policy of Financial Undertakings (Wet
Beloningsbeleid Financiële Ondernemingen, the
‘Remuneration Act’), and the related laws and regulations in
a manner that is tailored to the size of our enterprise and the
way it is organized, as well as the nature, scope and
complexity of our business activities.
The table below provides insight into the main elements of
our existing remuneration policy and those of our proposed
remuneration policy (subject to shareholder approval at the
2022 AGM). We have highlighted the main changes. The full
proposed policy will be published in combination with our
2022 AGM convening notice on our website.
Our contribution to society
We are committed to our broader responsibility to society
over and above our provision of liquidity and market
making services globally (ensuring global markets keep
functioning under all circumstances) and are vocal
proponents of fair markets and fair taxation. With this in
mind, we have always steered clear of (re-) structuring
any of our operations for the objective of tax optimization.
In 2021, Flow Traders’ equity with a value of €2.0 million
(2020: €6.0 million) and a cash donation €0.5 million were
transferred to the Foundation. These transfers have
already been accrued for in 2020. Further, we have
committed to donate a further €0.4 million in 2022.
In addition, in 2021, we contributed a total value of
€0.6 million (2020: €0.2 million) to the Flow Traders
Foundation in relation to the right to appoint charities
which the Foundation supports.
FIXED REMUNERATION
Element Current policy (2016) Proposed policy (subject to 2022 AGM approval) Rationale for change
Base salary
Relatively modest base salary Relatively modest base salary No proposed changes
VARIABLE REMUNERATION
Element Current policy (2016) Proposed policy (subject to 2022 AGM approval) Rationale for change
Maximum variable pay
■
Management Board members may
be awarded a variable remuneration
entitlement in the form of a portion of
the rm-wide variable remuneration
pool
■
No variable remuneration pool will
exist if Flow Traders was not
protable in the performance year
■
40% of Flow Traders’ operating prot
- minus applicable adjustments -
over the performance year is
available for variable remuneration
■
Management Board members may be awarded a variable
remuneration entitlement in the form of a portion of the
rm-wide variable remuneration pool
■
No variable remuneration pool will exist if Flow Traders was
not protable in the performance year
■
35% of Flow Traders’ operating prot - minus applicable
adjustments - over the performance year is available for
variable remuneration
Further to shareholder feedback, we have
reduced the maximum pool size from 40% to
35% of Flow Traders’ operational prot
Management Board
variable pay cap
■
The total variable remuneration pool
available for all employees (including
the Management Board) is set at a
maximum of 40% of the operating
prot
■
The total variable remuneration pool available for all
employees (including the Management Board) is capped at a
maximum of 35% of the operating prot
■
Variable remuneration for any Management Board member is
capped at 20 times the average employee variable
remuneration. Any amount above this cap is forfeited. The
remuneration of each Management Board member and
average employee will be calculated in accordance with the
recommendations of the Dutch Monitoring Commission. In
accordance with the aforementioned, the hard cap on variable
remuneration for each Management Board member in 2021
corresponds to €4,066,000.
It is in our corporate DNA to share our prots
fairly with our shareholders and employees,
and we have done so since we were founded.
We have now reected shareholders concerns
in our policy by introducing a hard cap on
individual variable remuneration pay-outs of
Management Board members versus the
average employee.
The proposed cap ensures that our total
remuneration levels are competitive with the
industry we operate in, while addressing
shareholder concerns around uncapped
variable remuneration approach.
VARIABLE REMUNERATION
Element Current policy (2016) Proposed policy (subject to 2022 AGM approval) Rationale for change
Performance
measurement
■
Performance is measured over a
one-year performance period
■
Variable remuneration awards are
predominantly based on Flow
Traders’ result on operating prot
■
Management Board member’s
individual performance on individual
KPIs can have an upwards or
downwards impact on the award size
in case of overperformance or
underperformance
■
Performance is measured over a one-year performance period
■
Variable remuneration awards are predominantly based on
Flow Traders’ result on operating prot
■
Management Board members’ individual performance will be
assessed against a KPI scorecard with both short-term and
long-term targets. The KPI scorecard along with performance
against targets will be disclosed in the annual remuneration
report
■
Management Board member’s individual performance on
individual KPIs can have an upwards or downwards impact on
the award size in case of overperformance or
underperformance
To further align our remuneration policy with
shareholder expectations, we will assess each
Management Board member’s individual
performance against a specic KPI scorecard
and disclose their performance against these
in the annual remuneration report.
The proposed change is a further
enhancement of what we proposed in 2021.
Deferral and vesting
■
Variable remuneration is paid out
fully in cash
■
Above a certain threshold, variable
remuneration is paid out in at least
two instalments
■
50% of variable remuneration is paid out in equity
■
62.5% of variable remuneration is deferred over a period up to
four years
■
The cash component of the variable remuneration will vest on
a pro-rata basis over a two-year period, whereby the rst
tranche will vest at date of award
■
The equity component of the variable remuneration will vest
over a 4-year period on a pro-rata basis, whereby the rst
tranche will vest at date of award
■
All equity awards that vest are subject to a holding period of
one year
We have further aligned our policy with our
guiding principles for remuneration
The proposed policy changes put more
emphasis on the long-term character of our
variable remuneration plan. The signicant
deferral in combination with a substantial
pay-out in equity will lead to further alignment
of Management Board interests and those of
our stakeholders
Furthermore, the deferral provisions are
designed to encourage retention as deferred
awards do not give rise to any immediate
entitlement.
VARIABLE REMUNERATION
Element Current policy (2016) Proposed policy (subject to 2022 AGM approval) Rationale for change
Risk management
■
Any potential award under our variable
remuneration plan is subject to a
thorough risk assessment both before
and after the date of award
■
We only provide a variable
remuneration award if Flow Traders’
operating prot is positive
■
All previously awarded and outstanding
variable remuneration acts as a rst
loss tranche to compensate any
operating loss
■
All variable remuneration is subject to
extensive malus and clawback
provisions
■
Any potential award under our variable remuneration plan is
subject to a thorough risk assessment both before and after
the date of award.
■
We only provide a variable remuneration award if Flow
Traders’ operating prot is positive
■
All previously awarded and outstanding variable remuneration
acts as a rst loss tranche to compensate any operating loss
■
All variable remuneration is subject to extensive malus and
clawback provisions
No proposed changes, however, we have
claried the risk mitigating provisions in our
policy
BENEFITS
Element Current policy (2016) Proposed policy (subject to 2022 AGM approval) Rationale for change
Ancillary benets
No ancillary benets are provided to our
Management Board members
No ancillary benets are provided to our Management Board
members
No proposed changes
OTHER
Element Current policy (2016) Proposed policy (subject to 2022 AGM approval) Rationale for change
Encouragement of
share ownership
■
No share ownership guidelines in
place
■
We encourage our Management Board members to retain 50%
of the shares granted as part of the remuneration (after tax)
until end of employment, equaling 25% of total variable
remuneration granted
Long-term value creation and share ownership
are cornerstones of our remuneration
philosophy. This guideline further aligns our
policy with our guiding principles for
remuneration and promotes alignment to the
long-term interests of Flow Traders and its
shareholders
To further emphasize condence in the
strategy and performance of Flow Traders,
we have enhanced our proposed policy in 2021
by introducing shareholding guidelines for the
Management Board
Malus and Clawback
■
Malus and clawback provisions in
place that are comprehensive,
irreversible and substantially exceed
regulatory requirements
■
Malus and clawback provisions in place that are
comprehensive, irreversible and substantially exceed
regulatory requirements
Claried that triggers apply to vested and/or
unvested equity
Post-termination
transfer restrictions
■
No restrictions in place
■
Upon termination, Management Board members are not
allowed to sell more than 50% of their equity within the rst 12
months after termination
We further enhanced our corporate
governance standards. The introduction of
post-termination transfer restrictions increases
alignment between our remuneration policy
and stakeholders’ long-term interests
Change of control
■
Not covered by policy
■
“Double-trigger” change of control clause We further enhanced our corporate
governance standards
Governance
■
Not covered by policy
■
Guidelines around procedure, annual review and deviations
from the policy
We further enhanced our corporate
governance standards
between the Management Board members and the
Remuneration & Appointment Committee for this purpose.
Key performance indicators are set for each individual
Management Board member and the Management Board as
a whole. Signicant underperformance or overperformance
in respect of these KPIs can result in reductions or increases
of the prot share that is awarded to a Management Board
member.
Use of external market data
We monitor market developments to ensure that the
remuneration package remains competitive. However, as our
company prole is unique, and we are operating in a niche
industry with a remuneration policy that is specically
tailored to unique dynamics, market comparisons are
predominantly used as a second reference.
Scenario analyses carried out in respect of
variable remuneration
The variable remuneration of the members of the
Management Board is predominantly contingent upon
a future, unknown, metric: the accrued rm-wide variable
remuneration pool which itself depends on the operating
result for the given nancial year.
Because of the nature of our business activities and the
fast-paced industry in which we operate, the Supervisory
Board tracks actual performance of the Management Board
members and eligibility for variable remuneration throughout
the year, rather than performing a more hypothetical
scenario analysis prior to a nancial year while performing
a single, one-off, assessment at the end of the year as set
out in the best practice provisions of the Corporate
Governance Code. Half-yearly discussions take place
Remuneration for the Management
Board
Introduction
The remuneration of, and other agreements with,
the members of the Management Board are determined by
the Supervisory Board (following a proposal by the
Remuneration & Appointment Committee). The Supervisory
Board has assessed the remuneration of our Management
Board members based on their performance - both individual
and as a team- and the company performance in 2021.
Total remuneration
The table below shows the total remuneration awarded to
the individual members of the Management Board in 2021.
TOTAL REMUNERATION OF MEMBERS OF THE MANAGEMENT BOARD in thousands of euro
Fixed remuneration Variable remuneration
Extraordinary
items
Pension
scheme
Total
remuneration
Proportional
split (%) of
remuneration in
xed/variable
Name of Director,
position (start/end) Base salary (€) Fees Other benets Cash
Company
share-like
instruments
1
Variable
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
Dennis Dijkstra, CEO (2014 -
) 95 95 – – – – 725 3,850 725 3,850 – – – – 1,545 7,795 6%:94% 1%:99%
Folkert Joling, CTrO (2018 - ) 95 95 – – – – 725 3,850 725 3,850 8
2
8
2
– – 1,553 7, 803 6%:94% 1%:99%
Thomas Wolff, CTO (2018 - ) 95 95 – – – – 400 1,925 400 1,925 8
2
8
2
– – 903 3,953 10%:90% 2%:98%
Britta Achmann, CRO (2020 -) 200 183
3
– – – – 188 963 188 963 97
4
175
4
– – 672 2,283 30%:70% 8%:92%
Mike Kuehnel, CFO (2021 -)
5
40 – – – – – 500 – 500 – – – – – 1,040 – 4%:96% –
1
As shareholders have not approved to award actual shares, members of the Management Board receive share-like instruments.
2
Prior to their appointment into the Management Board, Chief Trading Ofcer Folkert Joling and Chief Technology Ofcer Thomas Wolff had participated in the Flow Traders Cash Incentive Plan 2017 (FCIP 2017). Under the FCIP plan rules
they were offered the opportunity to buy Company shares and receive an annual cash incentive over a ve-year period. The right to these incentives would have been forfeited due to ceasing to be an employee and becoming a member of the
Management Board in April 2018. However, special permission has been granted to both Management Board members to remain entitled to the incentive rights under the FCIP plan rules in respect of the shares bought under the FCIP at the
time they were an employee of Flow Traders rather than a member of the Management Board. As a result, they have both received €8,000 annual cash incentive.
3
Britta Achmann joined the Flow Traders on 1 February, 2020.
4
Expense recognized in respective years for sign-on share award awarded to Britta Achmann in 2020. The share award will vest over a four-year period. No additional award was made in 2021.
5
Mike Kuehnel was appointed to the Management Board as CFO on 10 September 2021 and joined Flow Traders on 1 August 2021. His base salary for 2021 is pro-rated for time served.
■
The more normalized market conditions and reduced
operational prot translated into a signicantly smaller
variable remuneration pool in 2021 compared to 2020.
The rm-wide variable remuneration pool in 2021 is
35% of the operating prot. The Management Board
has been awarded 6.1% of the variable remuneration
pool in 2021.
■
In line with the proposed cap on variable remuneration
in the 2022 remuneration policy, the hard cap on
variable remuneration for each Management Board
member in 2021 is €4,066,000. The cap is based on
average employee pay of €203,300, calculated
according to the recommendation of the Dutch
Monitoring Commission.
As shown below, variable remuneration for the Management
Board saw a signicant reduction in 2021 in comparison to
2020. Despite the reduction, performance-based variable
remuneration continues to be the key driver of compensation
for the Management Board.
results. While this structure is uncommon among listed
companies, it is in line with the practice in our industry
among both listed and non-listed peer companies,
and necessary to be able to attract, retain and motivate
individuals of highest caliber.
Total Management Board Remuneration
■
The more normalized conditions led to lower top line in
2021 than 2020. We maintained a disciplined approach
towards the cost side with the costs remaining within
the guidance provided at the beginning of 2021. As a
result, we achieved a strong EBITDA in 2021 of €159.4
million (2020: €586.6 million). While we saw a reduction
in the operational prot, 2021 was a successful year for
Flow Traders. The Net Trading Income (NTI) achieved
was the second highest in our history and we made
signicant progress in terms of executing our strategic
growth agenda with the expansion into single bond
market, broadening and deepening our digital assets
and completing several strategic investments.
Base salary
None of the current members of the Management Board
received any base salary increases during 2021. As such,
the Chief Executive Ofcer, Chief Trading Ofcer and Chief
Technology Ofcer continue to receive an annual base
salary of €94,608, while the Chief Risk Ofcer receives an
annual base salary of €200,000. Mike Kuehnel was
appointed as the Chief Financial Ofcer on 10 September
2021 with an annual base salary of €94,608.
Variable remuneration
The design of our variable remuneration reects our
remuneration principles. We operate a single incentive plan
that drives and rewards both annual and long-term
performance with a signicant focus on the long-term
through the multi-year pay-out mechanism and half of the
award being paid in Flow Traders equity.
In line with our guiding principles, the members of the
Management Board share in the same rm-wide variable
remuneration pool as all other employees. This pool of
variable remuneration is primarily a function of operating
TOTAL REMUNERATION OF DIRECTORS
Name of Director
Total
cash award
2021 (€)
Total share-
based award
2021(€)
Cash to
be paid
in 2022 (€)
Share-like
instruments to
vest in 2022 (€)
Cash to
be paid
in 2023 (€)
Share-like
instruments to
vest in 2023 (€)
Share-like
instruments to
vest in 2024 (€)
Share-like
instruments to
vest in 2025 (€)
Share-like
instruments to
vest in 2026 (€)
Dennis Dijkstra, CEO 725,000 725,000 362,500 - 362,500 181,250 181,250 181,250 181,250
Folkert Joling, CTrO 725,000 725,000 362,500 - 362,500 181,250 181,250 181,250 181,250
Thomas Wolff, CTO 400,000 400,000 200,000 - 200,000 100,000 100,000 100,000 100,000
Britta Achmann, CRO
2
187,5 00 187,5 00 93,750 - 93,750 46,875 46,875 46,875 46,875
Mike Kuehnel, CFO
1
500,000 500,000 250,000 - 250,000 125,000 125,000 125,000 125,000
Total 2,537,500 2,537,500 1,268,750 1,268,750 634,375 634,375 634,375 634,375
1
The above award includes the minimum rst year guaranteed variable compensation with the award terms outlined in the 2021 EGM Convening Notice and approved by shareholders at the 2021 EGM.
2
The variable remuneration award does not include the portion of the sign-on bonus awarded in 2020 that vested in 2021.
Individual performance assessment
To determine individual variable remuneration awards,
the Supervisory Board conducts a holistic assessment of the
performance of each individual Management Board member
and the Management Board as a whole. In this holistic
performance assessment, the Supervisory Board takes into
account performance on individual targets, which includes
both nancial and non-nancial key performance indicators
(KPIs). Objectives for these KPIs are set prior to the
beginning of the year. Objectives are set for each individual
Management Board member and the Management Board as
a whole.
Although performance on the KPIs is an important element
of the holistic performance assessment, there is no formulaic
relationship between performance on these KPIs and the
variable remuneration award. However, signicant
underperformance or outperformance in respect of these
objectives results in reductions or increases of the prot
share that is awarded to a Management Board member.
Deferral and vesting
To ensure that the variable remuneration award of the
Management Board is aligned with long-term value creation
and shareholder experience, the Supervisory Board has
decided to defer 50% of the 2021 award of the Management
Board into share-like instruments. The remaining 50% is
settled in cash, paid in 2022 and 2023. As shareholders
have not approved awarding Flow Traders’ equity as part of
the Management Board’s remuneration, we have utilized
share-like instruments for the equity portion, which will be
settled in cash at time of vesting. The value of these
instruments is directly linked to Flow Traders’ share price
development from time of grant to vesting. Further,
any outstanding variable remuneration (deferred or
unvested) is at risk of being reduced or forfeited if Flow
Traders incurs an operating loss. All equity-based awards
are subject to a holding period of one year after vesting.
1. Individual KPIs
■
Individual KPIs were set for the Management Board
members, tailored to their specic role and
responsibilities.
■
These included amongst others nancial KPIs on Net
Trading Income, product diversication and P/E ratio,
and non-nancial but quantiable KPIs on operational
performance, strategic agenda setting, organization
development and role modeling desired leadership
behaviors.
2. Assessing performance
■
Performance was assessed throughout the year by
monitoring KPIs and discussions with the
Management Board members themselves and the
people they work with.
■
Please see the following pages for the KPIs for each
of the individual Management Board members.
3. Determining variable remuneration
■
Based on the nancial results of the company,
the resulting size of the pool available for the
Management Board and the performance of the
Management Board, both as individuals and as a
team, the Supervisory Board has decided on this
year’s variable remuneration.
FOLKERT JOLING, CHIEF TRADING OFFICER
Age: 42
Education: Masters degree in Applied Mathematics
from Twente University
Flow Traders Tenure: 16
As Chief Trading Ofcer, Folkert is responsible for the development and realization of the Flow
Traders’ trading strategies, business development, trading processes and our daily trading
operations.
In determining his variable remuneration, the Remuneration & Appointment Committee took into
account Folkert’s continued dedication and focus on further advancing the rm’s diversication
strategy across all existing and emerging asset classes and geographies. He has introduced an
increased rigor and structure to the trading operation, which has signicantly helped to further
excel on the execution of all underlying business plans, thereby building out the rm’s foundation
for continued growth. Moreover, he contributed strongly to overall strategy development and is
a highly valued leader for the trading organization.
Below are the Key Performance Indicators against which Folkert is assessed throughout the year.
As we consider the actual scores on these metrics market sensitive information, we refrain from
sharing these.
KPIs Description/measurement
Role modeling Team building, continuous improvement, drive, integrity,
accountability
Strategy Development Input to company strategic agenda and delivering
on strategic trading milestones
New Trading Strategies Development and successful deployment
of new trading strategies
Business Performance Capturing market opportunities / improving market position
Product Diversication Increasing non-ETF trading in e.g. FI and Crypto
Continuous improvement Optimizing set up and trading organization
Performance assessment
DENNIS DIJKSTRA, CHIEF EXECUTIVE OFFICER
Age: 50
Education: Masters degree in Business Economics
from the University of Amsterdam
Flow Traders Tenure: 13
As the CEO, Dennis Dijkstra plays a pivotal role in shaping the company’s strategy. He also leads
our Institutional Trading, HR, Recruitment and Corporate Staff departments. He additionally
focuses on internal audit, organizational structure and relationships with issuers, investors and
regulators.
In determining his variable remuneration, the Remuneration & Appointment Committee took into
account Dennis’ strong leadership in further dening and progressing on the rm’s strategic
agenda in light of growing opportunities across the broader global nancial market infrastructure
ecosystem. In this context, Dennis has made valuable contributions in advancing with an
improved structure for a transparent monitoring and an accelerated execution of the rm’s
strategy. Moreover, he performed strongly in developing and maintaining external relationships
and in inspiring the organization with his passion and drive for excellence.
Below are the Key Performance Indicators against which Dennis is assessed throughout the year.
As we consider the actual scores on these metrics market sensitive information, we refrain from
sharing these.
KPIs Description/measurement
Role modeling Drive for excellence, accountability, teamwork, integrity
Leadership Building high performance MB and GMT, inspiring organization
Strategy Leadership Driving and communicating the strategic agenda
Financial performance Maximizing trading results given market circumstances
External Relationships
■
Growing number of counterparties and quoting for issuers
■
Quality of relationships with regulators and other important
stakeholders
Shareholder Value Creation Outperforming P/E ratio of (selected) peer group
Employee Engagement Employee satisfaction, measured by a global survey
Efcient Use of Resources Awareness, efciency and control of people and cash deployed
BRITTA ACHMANN, CHIEF RISK OFFICER
Age: 50
Education: MBA from Carnegie Mellon University Pittsburg
Flow Traders Tenure: 2
As Chief Risk Ofcer, Britta leads the Risk, Operations and Legal teams.
In determining her variable remuneration, the Remuneration & Appointment Committee took into
account Britta’s continued contributions in further dening and implementing a dedicated risk
control framework across the rm. In this context, Britta also continued to focus on building her
global team, particularly through additional senior hires to systematically strengthen the rm’s risk
and compliance capabilities across all regions.
Below are the Key Performance Indicators against which Britta is assessed throughout the year.
As we consider the actual scores on these metrics market sensitive information, we refrain from
sharing these.
KPIs Description/measurement
Role modeling Team building, continuous improvement, drive, integrity,
accountability
Strategy Development Input to company strategic agenda and delivering on strategic
control framework milestones
Control Framework Continue to build and improve strategic control framework
Prime Brokers Prime broker coverage and relationships
Operational and
Organizational efciency
Automation, settlement rates, stafng
Regulatory adherence Compliance to relevant regulation, incident management
THOMAS WOLFF, CHIEF TECHNOLOGY OFFICER
Age: 42
Education: Applied science degree
from FOM Hochschule Frankfurt a.M.
Flow Traders Tenure: 13
As Chief Technology Ofcer, Thomas leads the Product Development, Quality Assurance and
Technology Operations departments.
In determining his variable remuneration, the Remuneration & Appointment Committee took into
account Thomas’ continued focus on further building the rm’s Technology suite and operations,
thereby also improving the rm’s resilience and reliability across all key systems and applications
globally. Thomas’ contributions have also signicantly helped the organization to align on the
rm’s most relevant mid- to long-term priorities as a basis for a dedicated Technology
development roadmap that will support the growth of the company going forward. Moreover, he is
highly valued for his deep expertise and committed leadership.
Below are the Key Performance Indicators against which Thomas is assessed throughout the
year. As we consider the actual scores on these metrics market sensitive information, we refrain
from sharing these.
KPIs Description/measurement
Role modeling Team building, continuous improvement, drive, integrity,
accountability
Strategy Development Input to company strategic agenda and delivering
on strategic technology milestones
Exchange competitiveness Low latency
Innovation Automation and new technologies
Security and incidents Minimized security risks and no gaps identied during audits
Reliability of planning Timely delivery of Technology projects
MIKE KUEHNEL, CHIEF FINANCIAL OFFICER
Age: 44
Education: MBA in Accounting and Finance from University
of Chicago
Flow Traders Tenure: 1
Mike is responsible for overseeing Finance & Tax alongside Strategy, M&A and Investor Relations.
In determining his variable remuneration, the Remuneration & Appointment Committee took into
account Mike’s dedication and focus on assessing and advancing on the formulation of the rm’s
existing strategy and related broader ecosystem approach. Mike’s experiences helped the rm to
also advance on its equity story and the related communication towards external stakeholders.
In this context, Mike’s contributions helped to accelerate the rm’s execution of its strategic
priorities to further spur the company’s growth and the Committee is pleased to recognize Mike’s
demonstrated ability to integrate effectively into the business quickly. He is highly valued for his
inspiring leadership and drive for excellence.
Below are the Key Performance Indicators against which Mike is assessed throughout the year.
As we consider the actual scores on these metrics market sensitive information, we refrain from
sharing these.
KPIs Description/measurement
Role modeling Team building, continuous improvement, drive, integrity,
accountability
Strategy Leadership Driving and communicating the strategic agenda
Shareholder Engagement Equity Story development
M&A Agenda Development of processes and capabilities
Company performance Cost development, Balance sheet management, P/E ratio
Diligent cycle of evaluation, KPI setting and variable remuneration allocation
April
■
Supervisory Board discusses remuneration report
with stakeholders
May
■
Remuneration & Appointment Committee prepares
mid-year evaluation of Management Board
June
■
Mid-year evaluation of Management Board
by Supervisory Board
December
■
Year-end evaluation of Management Board
by Supervisory Board
■
Management Board determines company-wide
variable remuneration pool
■
Remuneration & Appointment Committee
proposes variable remuneration taking into
account
Management Board view on structure and extent
■
Supervisory Board sets Management Board
variable remuneration based on performance
evaluation
and relative to employee pool (circa. Top 50)
November
■
Management Board performs self-evaluation
■
Remuneration & Appointment Committee
prepares year-end evaluation of Management
Board
Q4
Year evaluation
& variable
remuneration
allocation
Q3
Market
evaluation &
benchmarking
Q1
Scorecard
setting &
reporting
Q2
Discussion with
stakeholders
and half-year
evaluation
January
■
Supervisory Board sends written feedback on
performance and communicates variable remuneration
to Management Board
■
Management Board input on scorecard for current year
■
Remuneration & Appointment Committee prepares
scorecard
■
Supervisory Board denes scorecard for
Management Board
■
Chair of the Supervisory Board and Chair of the
Remuneration & Appointment Committee discuss
scorecards with each Management Board
February
■
Remuneration & Appointment Committee prepares
remuneration report
■
Supervisory Board discusses remuneration report
and evaluates remuneration policy
March
■
Remuneration policy updates to AGM, if any
September
■
Remuneration & Appointment Committee
discusses stakeholder feedback and
performs market and benchmarking analysis
Shares held by employees and
Management Board members
We have a long-standing philosophy of encouraging
management and employee share ownership, thus aligning
the company’s long-term success to their personal nancial
circumstances. Since IPO, we have utilized a number of
SHARES HELD BY MEMBERS OF THE MANAGEMENT BOARD
(31 December 2021)
Total number
of shares
% of
outstanding
total shares
Dennis Dijkstra (CEO) 1,075,000 2.31%
Mike Kuehnel (CFO) - -%
Britta Achmann (CRO) 7,50 0 0.02%
Folkert Joling (CTrO) 414,817 0.89%
Thomas Wolff (CTO) 31,000 0.07%
Total 1,528,317 3.28%
share schemes. Around the time of the IPO, our CEO and
a signicant number of current and former employees
invested in Flow Traders. Subsequently, the Flow Traders
Cash Incentive Plan (FCIP) and Flow Traders Loyalty
Incentive Plan (FLIP) were introduced. The FCIP was
replaced in 2020 by a new share plan which provides the
award up to 50% of variable remuneration in shares (or
share-like instruments).
Comparative overview of company performance
and remuneration
The long-standing foundation of our policy is a relatively
modest base salary and variable remuneration that is
aligned with company performance – therefore varying
considerably in successful and less successful (nancial)
years. This is clearly illustrated in the table below which
shows the development of the company performance and
the average (full-time) remuneration of executives and
employees since Flow Traders’ IPO in 2015.
COMPARATIVE TABLE ON THE CHANGE OF REMUNERATION AND COMPANY PERFORMANCE OVER THE LAST FIVE REPORTED FINANCIAL YEARS
Annual change (numbers in thousands) 2017 2018 2019 2020 2021
Director’s Remuneration (€)
Dennis Dijkstra, (co-)CEO (2014 – ) Actual level 521,251 3,015,148 694,608 7,79 4, 6 08 1,544,608
Sjoerd Rietberg, co-CEO (2014 – 5/2019) Actual level 521,251 3,015,148 189,240 – –
Marcel Jongmans, CFO (10/2016 – 12/2018) Actual level 478,587 1,294,608 – – –
Folkert Joling, CTrO (4/2018 – ) Actual level 2,9 6 5,148 694,608 7,802,608 1,552,608
Thomas Wolff, CTO (4/2018 – ) Actual level 2,091,628 544,608 3,952,608 902,608
Britta Achmann, CRO (6/2020 –) Actual level 2,282,839 672,337
Mike Kuehnel, CFO (9/2021 –) Actual level 1,039,750
Company’s performance 2018 vs 2017 2019 vs 2018 2020 vs 2019 2021 vs 2020 2021
Net Trading Income (NTI) € million Actual change 217. 5 (167.0) 716.9 (546.8) 384.0
Relative change 131% (44%) 331% (59%)
EBITDA margin Actual change 18.30% (15.60%) 26.40% (22%) 41%
Relative change 54% (30%) 72% (35%)
Basic and fully diluted earnings per share Actual change 2.61 (2.31) 9.11 ( 7.63) 2.63
Relative change 307% (67%) 792% (74%)
Average remuneration on a full-time equivalent
basis of employees
Employees of the company Actual change 132,380 (128,600) 366,900 (246,800) 269,400
Relative change 91% (46%) 246% (648%)
Supervisory Board Remuneration
The remuneration policy for the members of the Supervisory
Board was adopted by the AGM on 23 April 2021 and
applied from that date onwards. The table below shows the
total xed compensation awarded to the individual members
of the Supervisory Board. As approved by the 2021 AGM,
committee members and committee chairs received
separate fees for additional responsibilities and time
commitment required for committee work in 2021. As such,
the aggregate fees paid in 2021 have increased compared to
previous years.
2021. We have not reserved nor accrued any amounts to
cover pension claims or retirement claims. We do not provide
any other ancillary benets for any member of the
Management Board.
Clawback variable remuneration
No variable remuneration has been clawed back during
2021.
Temporary deviations from the remuneration
policies
No temporary deviations took place from the respective
policies in 2021.
Internal pay ratios
The 2021 pay ratio (CEO total pay vs average total employee
pay) is 5.73 compared to 15.1 in 2020. While 2021 was
a strong year for Flow Traders, the decrease is due to
reduced operating prot in 2021 compared to 2020, driven
by net trading income in 2021.
No pensions, loans and other benefits
In 2021, no personal loans, guarantees or the like were
granted by the company to the members of the Management
Board as part of their compensation package. No loans,
guarantees or similar instruments to the members of the
Management Board were outstanding on 31 December
REMUNERATION OF THE SUPERVISORY BOARD Committee fees, annualized (€)
Board fee (€) Audit
Remuneration &
Appointment Risk
Trading & Technol-
ogy
Total annualized fees
(€)
Actual fees paid,
2021
1
(€)
Rudolf Ferscha 100,000 7,50 0 7,50 0 7,50 0 7,5 0 0 130,000 105,354
Jan van Kuijk 70,000 7,50 0 7,50 0 7,50 0 10,000 (C) 102,500 88,863
Olivier Bisserier 70,000 15,000 (C) 10,000 (C) 7,50 0 102,500 86,193
Roger Hodenius 70,000 7,50 0 7,50 0 7,5 0 0 92,500 79,299
Ilonka Jankovich 70,000 7, 5 00 7,50 0 7,50 0 92,500 55,757
Linda Hovius 70,000 15,000 (C) 7, 5 00 7, 5 00 100,000 58,257
Total 2021 450,000 37,500 37,500 47,500 47,500 620,000 473,723
1
Former Chair, Erik Drok, invoiced Flow Traders €45,688 for his services to the Supervisory Board until his resignation at the 2021 AGM.
2
(C) chair of the respective committee
FIVE-YEAR OVERVIEW OF TOTAL REMUNERATION, SUPERVISORY BOARD 2021 2020 2019 2018 2017
Annualized fee (€) Annualized fee (€) Annualized fee (€) Annualized fee (€) Annualized fee
1
(€)
Rudolf Ferscha, Chair SVB (2015)
2
130,000 50,000 50,000 50,000 50,000
Jan van Kuijk, Vice Chair (2015) 102,500 50,000 50,000 50,000 50,000
Olivier Bisserier, SVB Member (2015) 102,500 50,000 50,000 50,000 50,000
Roger Hodenius, SVB Member (2015) 92,500 50,000 50,000 50,000 50,000
Ilonka Jankovich, SVB Member (2021) 92,500
Linda Hovius, SVB Member (2021) 100,000
Total current members 620,000 200,000 200,000 200,000 200,000
Erik Drok, Former Chair SVB (2015-2021)
3
75,000 75,000 75,000 75,000 75,000
Han Sikkens, Former SVB Member (2015-2020)
3
50,000 50,000 50,000 50,000
Total former members 75,000 125,000 125,000 125,000 125,000
1
Presented as if a Supervisory Board member for the full year.
2
Appointed chair of the Supervisory Board in 2021.
3
Presented as if a Supervisory Board member for the full year.
No variable remuneration shares, pensions, loans
and other benefits
The members of the Supervisory Board did not receive
variable remuneration for their work as members of the
Supervisory Board or any share-based remuneration, and no
personal loans, guarantees or the like were granted by the
company to the members of the Supervisory Board as part
of their compensation package. We have not reserved nor
accrued any amounts to cover pension claims or retirement
claims. We do not provide any other ancillary benets for any
member of the Supervisory Board.
The co-founders of Flow Traders, Roger Hodenius and Jan
van Kuijk, are currently members of the Supervisory Board.
The table below provides an overview of the shares
indirectly held by them on 31 December 2021 as also
reected in the relevant AFM register.
SHARES INDIRECTLY HELD BY MEMBERS
OF THE SUPERVISORY BOARD
(31 December 2021)
% of
outstanding
total shares
R. Hodenius
(Avalon Holding B.V.)
4,686,825 10.07
J.T.A.G. van Kuijk
(Javak Investments B.V.)
5,686,826 12.22
Total 10,373,651 22.29
We are also maintaining our FLIP (Flow Loyalty Incentive
Plan) program, whereby we award company shares to
employees marking their two-year anniversary with the
company. Shares awarded under the FLIP are subject to
a lock-up period and remain with the employee regardless of
the termination of his or her employment with Flow Traders.
All shares awarded to employees, are fully paid out from the
variable compensation pool. The terms and conditions of the
employee share plans are subject to review by the
Management Board annually. As a part of these plans,
shares have been and will be bought in the market.
Pension
We encourage our employees to save for retirement. At our
headquarters in Amsterdam, we partner with a pension
provider, giving employees the freedom of choice to select
the option that best suits their individual needs while
incentivizing participation in the company-sponsored
program. In our other ofces we offer schemes that are
driven by country-specic practices and regulations.
appropriate behavior or was responsible for behavior
that led to a substantial deterioration of the company’s
position, in accordance with applicable law.
■
We do not award guaranteed variable remuneration to
employees unless the guaranteed variable component
is awarded in relation to hiring new staff, limited to the
rst year of employment, and only if we have a sound
and strong capital base.
■
We do not award severance payments if there is a
serious imputable act or negligence by the employee in
the fullment of his or her function or where an
employee resigns voluntarily (unless this is the
consequence of a serious imputable act or negligence
(ernstig verwijtbaar handelen of nalaten) by the
company).
■
The company does not grant its employees any
personal loans, guarantees or the like as part of their
compensation package. We do not provide any other
ancillary benets for any employee. We have not
reserved or accrued any amounts to cover pension
claims or retirement claims.
Stimulating share ownership
One of our core values is ownership, and we mean it both in
terms of mindset and behavior as well as literally. We believe
that being a shareholder aligns the interests of the company
with those of our employees. Ever since the company went
public and before then, we have a history of offering our
employees the opportunity to become a shareholder. Since
2017 we promoted shareholding through the Flow Cash
Incentive Plan (FCIP). From performance year 2020 we have
started rewarding directly in company shares. The higher
variable remuneration an individual receives, the higher is
the proportion of variable pay paid out in shares.
Remuneration for other employees
Our performance cycle
We apply an annual performance cycle. At the beginning of
each calendar year, clear objectives are set depending on an
employee’s role, which are in line with our company
objectives for the year and our corporate key competencies:
drive, ownership and teamwork. Performance is reviewed
two times a year.
Individual variable remuneration payable from the collective
variable compensation pool is dependent on company and
business unit performance, individual performance and the
individual’s contribution to the long-term success of the
company as a whole, discouraging a culture of ‘star’
behavior and fostering collaboration and teamwork.
Flow Traders does not base variable remuneration directly
on nancial results achieved individually. The Supervisory
Board approves the awarding of variable remuneration.
If awarded, variable remuneration is paid in cash and
company shares in one, two, three or four annual
instalments, depending on the amount of variable
remuneration awarded. The deferred variable component
acts as a rst loss tranche to compensate for any operating
loss in the subsequent year, acting as a buffer before such
loss would impact shareholder equity. This serves as an
important incentive for risk-aware behavior, keeping in mind
the long-term objectives of the company and alignment with
our risk appetite. We deem the deferral period sufcient
given the company’s risk prole and horizon.
■
Variable remuneration components may become
subject to reduction or claw back if it is determined that
the relevant employee or member of the Management
Board did not meet adequate norms of competence and
reviewed these guidelines and have already determined
that we are largely compliant with these guidelines, and as
such, any impact on us will be minor. Nonetheless, we
continuously are vigilant for any new changes as they may
have a signicant impact on the General Remuneration
Policy, our global remuneration model and other
remuneration practices of the company and its group
companies. It may also impact our ability to attract or retain
talent given the global and highly competitive nature of our
industry.
Variable compensation granted
In 2021, the total amount of variable remuneration awarded
to all employees including members of the Management
Board was €80.6 million (2020: €256.5 million).
In 2021, companywide average compensation paid per
employee was approximately €269,400, while variable
remuneration amounted to around 65 percent of total
compensation in 2021. In 2021, 16 employees, including the
Management Board, were awarded remuneration of €1
million or more (2020: 66).
Business Unit
Number of employees to whom an annual remuneration
of €1 million or more was awarded
2021 2020 2019 2018
Europe 13 41 0 15
Americas 3 16 0 10
Asia 0 9 0 4
Total 16 66 0 29
Changes in regulation
Remuneration regulations are subject to change.
For example, as of 22 November 2021, the European
Banking Authority published a nal report, setting out the
“Guidelines on sound remuneration policies under Directive
(EU) 2019/2034” which are applicable to investment rms,
such as ours from 30 April 2022. These guidelines are
intended to implement sound and gender neutral
remuneration policies for all staff with specic provisions
applying for certain identied staff. For such identied staff,
the guidelines emphasizes that their variable remuneration is
aligned with the investment rm’s risk prole. We have
112 Consolidatednancialstatements
156 Companynancialstatements
Financial
statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION In thousands of euro
Note At 31 December 2021 At 31 December 2020
Assets
Cashandcashequivalents 13 4,949 8,345
Financialassetsheldfortrading 14 4,501,097 3,873,144
Tradingreceivables 15 6,160,238 4,633,469
Otherassetsheldfortrading 16 78,122 18,684
Otherreceivables 17 14,727 14,190
InvestmentsmeasuredatfairvaluethroughOCI 18 9,282 3,622
InvestmentsmeasuredatfairvaluethroughPL 19 1,716 -
Investmentsinassociates 20 2,670 176
Propertyandequipment 21 39,609 40,745
Intangibleassets 22 2,345 1,226
Currenttaxassets 12 1,340 7,351
Deferredtaxassets 12 7,628 5,285
Total assets 10,823,723 8,606,237
CONSOLIDATED STATEMENT OF FINANCIAL POSITION In thousands of euro
Note At 31 December 2021 At 31 December 2020
Liabilities
Financialliabilitiesheldfortrading 23 2,138,072 1,960,231
Tradingpayables 24 7,969,972 5,801,002
Otherliabilitiesheldfortrading 25 25,771 825
Leaseliabilities 26 16,175 14,657
Otherliabilities 27 162,117 192,786
Currenttaxliabilities 12 1,014 45,661
Deferredtaxliabilities 12 2,433 1,137
Total liabilities 10,315,554 8,016,299
Equity
Sharecapital 28
4,653 4,653
Sharepremium 28 56,330 117,046
Sharebasedpaymentreserve 28 50,523 45,821
Retainedearnings 28 379,904 417,337
Currencytranslationreserve 28 15,510 6,076
Fairvaluereserve 28 1,249 (995)
Total equity 508,169 589,938
Total equity and liabilities 10,823,723 8,606,237
Thenotesonpages118to155areanintegralpartoftheseconsolidatednancialstatements.
Consolidated statement of prot or loss and other comprehensive income
CONSOLIDATED STATEMENT OF PROFIT OR LOSS In thousands of euro For the year ended 31 December
Note
2021 2020
Grosstradingincome 542,351 1,090,455
Feesrelatedtothetradingactivities 95,160 103,170
Netnancialexpensesrelatedtothetradingactivities 63,150 53,860
Net trading income 9 384,041 933,425
Personnelexpenses 10 157,073 275,816
Depreciationofpropertyandequipment 21 14,738 13,946
Amortizationofintangibleassets 22 549 339
Writeoffof(in)tangibleassets 21/22 20 103
Otherexpenses 11 67,519 70,948
Operating expenses 239,899 361,152
Operating result 144,142 572,273
Result/(impairment)ofequity-accountedinvestees 20 585 (358)
Prot before tax 144,727 571,915
Taxexpense 12 29,793 107,402
Profit for the period 114,934 464,513
Other comprehensive income
Itemsthatareormaybereclassiedtoprotorloss
Foreigncurrencytranslationdifferences-foreignoperations 28 9,434 (10,158)
Itemsnotreclassiedtoprotorloss
Changesinfairvaluethroughothercomprehensiveincome 18/20 2,244 (41)
Other comprehensive income for the year (net of tax) 11,678 (10,199)
Total comprehensive income for the year 126,612 454,314
Earnings per share
Basicearningspershare
1
8 2.63 10.26
Dilutedearningspershare
1
8 2.52 9.81
1
The impact of COVID-19 on the results of the company is discussed in the Financial Overview section of Our Business report.
Thenotesonpages118to155areanintegralpartoftheseconsolidatednancialstatements.
Share
capital
Share
premium
Share based
payment
reserve
Currency
translation
reserve
Fair value
reserve
Retained
earnings
Total
Balance at 1 January 2021 4,653 117,046 45,821 6,076 (995) 417,337 589,938
Prot 114,934 114,934
Totalothercomprehensiveincome 9,434 2,244 11,678
Total comprehensive income for the period - - - 9,434 2,244 114,934 126,612
Transactions with owners of the
Company
Dividends (152,367) (152,367)
Treasuryshares (74,100) (74,100)
Sharebasedpayments 13,384 4,702 18,086
Total transactions with owners of the
company - (60,716) 4,702 - - (152,367) (208,381)
Balance at 31 December 2021 4,653 56,330 50,523 15,510 1,249 379,904 508,169
Share
capital
Share
premium
Share based
payment
reserve
Currency
translation
reserve
Fair value
reserve
Retained
earnings
Total
Balance at 1 January 2020 4,653 152,880 - 16,234 (954) 158,238 331,051
Prot 464,513 464,513
Totalothercomprehensiveincome (10,158) (41) (10,199)
Total comprehensive income for the period - - - (10,158) (41) 464,513 454,314
Transactions with owners of the
Company
Dividends (205,414) (205,414)
Treasuryshares (41,795) (41,795)
Sharebasedpayments 5,961 45,821 51,782
Total transactions with owners of the
company - (35,834) 45,821 - - (205,414) (195,427)
Balance at 31 December 2020 4,653 117,046 45,821 6,076 (995) 417,337 589,938
CONSOLIDATED STATEMENT OF CASH FLOWS In thousands of euro For the year ended 31 December
Note
2021 2020
Cash ows from operating activities
Prot for the period 114,934 464,513
Adjustedfor:
Depreciationofpropertyandequipment 21
14,738 13,946
Amortizationofintangibleassets 22 549 339
Writeoffof(in)tangibleassets 21/22 20 103
Result/(impairment)ofequity-accountedinvestees(netoftax) 18/20 (585) 358
Share-basedpaymenttransactions 10 23,242 50,662
SharedonationtoFlowTradersFoundation 11 2,005 5,961
Taxexpense 12 29,793 107,402
Changesinworkingcapital
■
(increase)/decreasenancialassetsheldfortrading 14 (627,953) (387,446)
■
(increase)/decreasetradingreceivables 15 (1,526,769) (1,437,030)
■
(increase)/decreasedigitalassetsheldfortrading 16 (59,438) (18,684)
■
(increase)/decreaseotherreceivables 17 (537) 402
■
increase/(decrease)nancialliabilitiesheldfortrading 23 177,841 341,367
■
increase/(decrease)tradingpayables 24 2,168,970 1,099,977
■
increase/(decrease)digitalliabilitiesheldfortrading 25 24,946 825
■
increase/(decrease)otherliabilities 27 (27,521) 98,279
■
Corporateincometaxpaid 12 (69,476) (69,716)
Cash flows from operating activities 244,759 271,258
Cash ows from investing activities
AcquisitionofinvestmentmeasuredatfairvaluethroughOCI 18 (2,928) (2,759)
AcquisitionofinvestmentmeasuredatfairvaluethroughPL 19 (1,725) -
Acquisitionofshareinterestinassociates 20 (2,427) -
Acquisitionofpropertyandequipment 21 (5,503) (6,504)
Acquisitionofintangibleassets 22 (1,252) (125)
Cash flows from investing activities (13,835) (9,388)
CONSOLIDATED STATEMENT OF CASH FLOWS In thousands of euro For the year ended 31 December
Note
2021 2020
Cash ows from nancing activities
Dividendpaid (152,367) (205,413)
Paymentsofleaseliabilities 26 (8,152) (7,550)
Repurchasesofshares 28 (74,100) (45,908)
Cash flows from financing activities (234,619) (258,871)
Effectofmovementsinexchangeratesoncashandcashequivalents
299 (341)
Change in cash and cash equivalents (3,396) 2,658
Change in cash and cash equivalents
Cashandcashequivalentsatopening 13 8,345 5,687
Cashandcashequivalentsatclose 13 4,949 8,345
Change in cash and cash equivalents (3,396) 2,658
> FINANCIAL STATEMENTSFLOW TRADERS | ANNUAL REPORT 2021
118
Notes to the consolidated financial statements
All amounts in thousands of euro, unless stated otherwise.
1. Reporting entity
Flow Traders N.V. (referred to as the ‘Company’) is a public limited liability company (naamloze
vennootschap) incorporated under the laws of the Netherlands, having its seat (statutaire
zetel) in Amsterdam, the Netherlands, having its registered office at
Jacob Bontiusplaats 9, 1018 LL Amsterdam, the Netherlands and registered with the Trade
Register of the Chamber of Commerce (Kamer van Koophandel, afdeling Handelsregister)
under number 34294936.
These consolidated financial statements comprise the Company and its subsidiaries (together
referred to as the ‘Group’).
The Group is a leading technology-enabled global multi-asset class liquidity provider with its
core business in Exchange Traded Products (ETP) actively expanding in fixed income, FX,
commodities and digital assets, while systemically increasing its presence in the global
ecosystem through strategic partnerships and investments.
The consolidated financial statements of the Group for the annual period ended 31 December
2021 incorporate financial information of Flow Traders N.V., its subsidiaries and associates.
The annual financial statements were authorized for issue by the Company’s Management
Board and the Supervisory Board on 3 March 2022 subject to adoption by the General Meeting
of shareholders.
2. Going concern
These financial statements have been prepared on the basis of the going concern assumption.
3. Basis of preparation
a) Statement of compliance
The Group applies International Financial Reporting Standards as adopted by the European
Union (‘IFRS-EU’) and title 9 book 2 of Dutch Civil Code. IFRS-EU provides several options in
accounting principles. The Group’s accounting principles IFRS-EU and its decisions regarding
the options available are set out in the section ‘Significant accounting policies’ below.
b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except
for the following items and unless otherwise indicated:
◾
financial assets and liabilities held for trading are measured at fair value with changes
recognized in profit or loss;
◾
other assets and liabilities held for trading are measured at fair value with changes
recognized in profit or loss;
◾
investments measured at fair value through OCI are measured at fair value with changes in
fair value recognized in other comprehensive income, except for impairment losses which
are recognized in profit or loss;
◾
investments measured at fair value through PL are measured at fair value with changes in
fair value recognized in profit and loss.
c) Functional and presentation currency
These consolidated financial statements are presented in euros, which is also the functional
currency of the parent company: Flow Traders N.V.. All financial information presented in euros
has been rounded to the nearest thousand, except when otherwise indicated.
d) Use of estimates and judgements
The preparation of the financial statements requires management to form opinions and make
estimates and assumptions that influence the reported value of assets and liabilities and of
income and expenditure. The actual results may differ materially from these estimates.
The estimates and the underlying assumptions are constantly assessed. Revisions of estimates
are recognized in the period in which the estimate is revised. For more details, we refer you to
the chapter on Fair values of financial instruments, other assets and liabilities and share based
payments. The accounting treatment of all aspects of the digitals assets and blockchain
industry have not yet been addressed by current IFRS guidance. The Company is required to
make significant assumptions and judgments as to its accounting policies and the application
thereof, which are disclosed in the note 6 New standards and interpretations, note 7 fair values
of financial instruments and other assets and liabilities held for trading and note 31 financial
risk management to these consolidated financial statements. If specific guidance is enacted by
the IASB in the future, the impact may result in changes to the company financial position as
currently presented.
Management Board report Report of the Supervisory Board Remuneration report Financial statements Other information
Subsidiaries
SubsidiariesareinvesteescontrolledbytheGroup.TheGroupcontrolsaninvesteeifitis
exposedto,orhasrightsto,variablereturnsfromitsinvolvementwiththeinvesteeandhas
theabilitytoaffectthosereturnsthroughpowerovertheinvestee.Thenancialstatements
ofsubsidiariesareincludedintheconsolidatednancialstatementsfromthedateon
whichcontrolcommencesuntilthedatewhencontrolceases.
WhentheGrouplosescontroloverasubsidiaryitderecognizestheassetsandliabilitiesof
thesubsidiary,anyrelatednon-controlledinterestandothercomponentsofequity.
Anyresultinggainorlossisrecognizedinprotorloss.Anyinterestretainedintheformer
subsidiaryismeasuredatfairvaluewhencontrolislost.
Investmentsinassociates
AssociatesarethoseentitiesinwhichtheGrouphassignicantinuence,butnotcontrol
orjointcontrol,overitsnancialandoperatingactivities.Controlorsignicantinuence
followsfromfactsandcircumstances,butthereisarebuttablepresumptionthatsignicant
inuencewhentheGroupholdsbetween20percentand50percentofthevotingpowerof
anotherentity.
Investmentsinassociatesareaccountedforusingtheequitymethodandarerecognized
initiallyatcost.
TheconsolidatednancialstatementsincludetheGroup’sshareoftheprotorlossand
othercomprehensiveincomeofequityaccountedinvestees,fromthedatethatsignicant
inuencecommencesuntilthedatethatsignicantinuenceceases.
WhentheGroup’sshareoflossesexceedsitsinterestinanequity-accountedinvestee,
thecarryingamountoftheinvestment,includinganylong-termintereststhatformpart
thereof,isreducedtozero,andtherecognitionoffurtherlossesisdiscontinuedexceptto
theextentthattheGrouphasanobligationorhasmadepaymentsonbehalfofthe
investee.
e) Principles for the preparation of the consolidated statement of cash ows
Thecashowfromoperatingactivitiesoftheconsolidatedstatementofcashowsis
basedontheindirectmethod,thecashowfrominvestingandnancingoftheconsol-
idatedstatementofcashowsisbasedonthedirectmethod.
Thecashowsaresplitintocashowsfromoperations,includingtradingactivities,
investmentactivitiesandnancingactivities.Receivablesfromandpayablestoclearing
organizationsareincludedinthecashowfromoperatingactivities.TheGrouphas
electedtoclassifyinterestreceivedandinterestpaid(includinginterestonleaseliabilities
andinterestarisingfromrevenuecontracts,ifthereisany)ascashowsfromoperating
activities.Investmentactivitiesarecomprisedofacquisitions,salesandredemptionsin
respectofnancialinvestmentsotherthaninthecourseofoperations,aswellas
acquisitionsandsalesofsubsidiariesandassociates,propertyandequipment.Financing
activitiesincludethepaymentofdividendtoshareholders,the(re)-purchaseofshares,
theissuanceandrepaymentofnancialdebt,includingnancialleaseliabilities,
andcapitalcontributions.
4. Significant accounting policies
TheGrouphasconsistentlyappliedtheaccountingpoliciesassetoutbelowtoallperiods
presentedintheseconsolidatednancialstatements.
General
a) Basis of consolidation
TheGroupaccountingpolicieshavebeenappliedconsistentlybyallgroupentities.
Intra-Groupbalancesandtransactions,andanyunrealizedincomeandexpensesarising
fromintra-Grouptransactions,areeliminatedinpreparingtheconsolidatednancial
statements.Unrealizedgainsarisingfromtransactionswithequity-accountedinvestees
areeliminatedagainsttheinvestmenttotheextentoftheGroup’sinterestintheinvestee.
Unrealizedlossesareeliminatedinthesamewayasunrealizedgains,butonlytothe
extentthatthereisnoevidenceofimpairment.
Foreigncurrencydifferencesarerecognizedinothercomprehensiveincome,
andpresentedintheforeigncurrencytranslationreserve(translationreserve)ofequity.
Whenaforeignoperationisdisposedofsuchthatcontrol,signicantinuenceorjoint
controlislost,thecumulativeamountinthetranslationreserverelatedtothatforeign
operationisreclassiedtoprotorlossaspartofthegainorlossondisposal.
c) Cash and cash equivalents
Cashandcashequivalentscomprisecashbalancesandcalldepositswithmaturitiesof
threemonthsorlessfromtheacquisitiondatethataresubjecttoaninsignicantriskof
changesintheirfairvalue,andareusedbytheGroupinthemanagementofitsshort-term
commitments.
d) Financial assets and liabilities
Recognition
TheGroupinitiallyrecognizesloansandadvancesonthedateonwhichtheyare
originated.Allothernancialinstruments(includingregular-waypurchasesandsalesof
nancialassets)arerecognizedonthetradedate,whichisthedateonwhichtheGroup
becomesapartytothecontractualprovisionsoftheinstrument.
Anancialassetornancialliabilityismeasuredinitiallyatfairvalueplusorminus,foran
itemnotatfairvaluethroughprotorloss,transactioncoststhataredirectlyattributableto
itsacquisitionorissue.
Classication
TheGroupclassiesitsnancialassetsintothefollowingcategories:
■
tradingreceivables,measuredatfairvaluethroughprotandloss;
■
investmentsmeasuredatfairvaluethroughOCI;
■
investmentsmeasuredatfairvaluethroughPL;
■
nancialassetsheldfortradingatfairvaluethroughprotorloss;and
■
othernancialassetsatamortizedcosts.
TheGroupclassiesitsnancialliabilities,otherthannancialguaranteesandloan
commitments,intothefollowingcategories:
■
tradingpayables,measuredatfairvaluethroughprotandloss;
■
nancialliabilitiesheldfortradingatfairvaluethroughprotorloss;and
Businesscombinations
Businesscombinationsareaccountedforusingtheacquisitionmethodasatthedate
controlistransferredtotheGroup.Theconsiderationtransferredintheacquisitionis
measuredatfairvalue,asaretheidentiablenetassetsacquired.Anygoodwillthatarises
istestedannuallyforimpairment.Anygainonabargainpurchaseisrecognizedinprotor
lossimmediately.Transactioncostsareexpensedasincurred,exceptiftheyarerelatedto
theissueofdebtorequitysecurities.
Contingentconsiderationismeasuredatfairvalueattheacquisitiondate.Anygainorloss
resultingfromthefairvalueremeasurementofcontingentconsiderationisrecognizedin
protorloss.
b) Foreign currency
Foreigncurrencytransactions
Transactionsinforeigncurrenciesaretranslatedtothefunctionalcurrenciesofthe
respectiveentitiesoftheGroupatexchangeratesatthedatesofthetransactions.
Monetaryassetsandliabilitiesdenominatedinforeigncurrenciesaretranslatedintothe
functionalcurrencyattheexchangerateatthereportingdate,withtheforeigncurrency
differencerecognizedinprotorloss.Differencesarisingonthetranslationofinvestments
measuredatfairvaluethroughOCIarerecognizedinothercomprehensiveincomeunless
theinstrumentisimpaired.
Non-monetaryassetsandliabilitiesdenominatedinforeigncurrenciesthataremeasured
atfairvaluearetranslatedintothefunctionalcurrencyattheexchangerateatthedatethat
thefairvaluewasdetermined.Non-monetaryitemsinaforeigncurrencythatare
measuredbasedonhistoricalcostaretranslatedusingtheexchangerateatthedateof
thetransaction.
Foreignoperations
Theassetsandliabilitiesofforeignoperations,includinggoodwillandfairvalue
adjustmentsarisingonacquisition,aretranslatedintoeurosatexchangeratesatthe
reportingdate.Theincomeandexpensesofforeignoperationsaretranslatedtoeurosat
exchangeratesatthedatesofthetransactions.
recognizedintheprotandlossaspartofthechangeinfairvalue,anyre-measurementof
theinvestmentsisclassiedtoprotorloss.
Subsequenttoinitialrecognition,theyaremeasuredatfairvalueandchangestherein,
arerecognizedinprotandloss.Whenaninvestmentisderecognized,thegainorlossis
classiedtoprotorloss.
Othernancialliabilities
Non-derivativenancialliabilitiesarerecognizedinitiallyatfairvaluelessanydirectly
attributabletransactioncosts.Subsequenttoinitialrecognition,thesenancialliabilities
aremeasuredatamortizedcostusingtheeffectiveinterestmethod.TheGroup
derecognizesanancialliabilitywhenitscontractualobligationsaredischarged,cancelled
orexpired.
Hedgeofanetinvestmentinforeignoperations
TheGroupapplieshedgeaccountingtohedgetheexposuretoforeignexchangerisk
associatedwithitscapitalcontributionstotheUnitedStatesandSingaporesubsidiaries.
Gainsorlossesonthehedginginstrumentrelatingtotheeffectiveportionofthehedgeare
recognizedasOCIwhileanygainsorlossesrelatingtotheineffectiveportionare
recognizedinthestatementofprotorloss.Ondisposaloftheforeignoperation,
thecumulativevalueofanysuchgainsorlossesrecordedinequityistransferredtothe
statementofprotorloss.
Offsetting
Financialassetsandliabilitiesarepresentedonanetbasiswhenalegalrightofoffsetis
agreedbetweenthepartiesandtheGroupintendseithertosettleonanetbasisorto
realizetheassetandsettletheliabilitysimultaneously.
IncomeandexpensesarepresentedonanetbasisonlywhenpermittedunderIFRS-EU,
forgainsandlossesarisingfromagroupofsimilartransactionssuchasintheGroup’s
tradingactivities.
Fairvaluemeasurement
Fairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityin
anorderlytransactionbetweenindependentmarketparticipantsatthemeasurementdate
■
othernancialliabilitiesmeasuredatamortizedcosts.
Financialassetsandliabilitiesheldfortrading
TradingassetsandliabilitiesarethoseassetsandliabilitiesthattheGroupacquiresor
incursprincipallyforthepurposeofsellingorrepurchasinginthenearterm,orholdsas
partofaportfoliothatismanagedtogetherforshort-termprot.
Tradingassetsandliabilitiesareinitiallyrecognizedandsubsequentlymeasuredatfair
valueinthestatementofnancialposition,withtransactioncostsrecognizedinprotor
loss.All
changesinfairvaluearerecognizedaspartofnettradingincomeinprotorloss.Trading
assetsandliabilitiesarenotreclassiedsubsequenttotheirinitialrecognition.
Tradingreceivablesandpayables
Suchassetsarerecognizedinitiallyatfairvaluewithanydirectlyattributabletransaction
costsrecognizedinprotorloss.
InvestmentsmeasuredatfairvaluethroughOCI
InvestmentsmeasuredatfairvaluethroughOCIarenon-derivativenancialassetsthat
theGroupconsiderslong-terminvestmentsofstrategicrelevanceforthegrowthofthe
company.InvestmentsmeasuredatfairvaluethroughOCIarerecognizedinitiallyatfair
value.Transactioncostsarerecognizedinothercomprehensiveincomeaspartofthe
changeinfairvalueatthenextremeasurementandtheyareneverreclassiedintoprot
orloss.
Subsequenttoinitialrecognition,theyaremeasuredatfairvalueandchangestherein,
otherthanforeigncurrencydifferencesonfairvaluethroughOCIinstruments,
arerecognizedinothercomprehensiveincomeandpresentedinthefairvaluereservein
equity.Whenaninvestmentisderecognized,thegainorlossaccumulatedinequityisnot
reclassiedtoprotorloss.
Investmentsmeasuredatfairvaluethroughprotandloss
Investmentsmeasuredatfairvaluethroughprotandlossarenon-derivativenancial
assetsthatthegroupholdsforlongtermtradingpurposes.Investmentsmeasuredatfair
valuethroughprotandlossarerecognizedinitiallyatfairvalue.Transactioncostsare
e) Other assets Held for Trading
TheOtherassetsHeldfortradingcomprisestheamountofdigitalassetsthatthegroup
holdsasabroker-trader.ThegroupappliesIAS2foritsdigitalassetsandtheseare
measuredatfairvaluethroughprotandloss.
Asaglobalmarketmakerindigitalassetsdeterminingthefairvalueandpricingofthese
assetsiscoretoourbusinessmodel.Providingourbid-askpricestoothermarketpartic-
ipantsisimpactingtheprincipalmarkets.AlldigitalassetspositionsinourTradingBook
relatetoveryshort-termholdingperiodsandarebaseduponourbusinessmodelinwhich
tradingpositionsareeconomicallyhedged.Forthedeterminationofthefairvalue,
thegroupconstantlycollectsreferencepricesfrommultiplecryptoexchangesandactive
marketsforthemark-to-markettreatment.Ifassetsarenotactivelytradedthanthe
valuationisbaseduponquotedpricesorobservableinputsfromsimilarassetspercrypto
exchange.GiventheIFRS13requirementsandourcurrentpricing&fairvaluemodels
usedforthevaluationofourotherassets-held-for-tradingandotherliabilities-for-trading
thesearerecognizedasLevel2FairValues.
f) Property and equipment
Recognitionandmeasurement
Itemsofpropertyandequipmentaremeasuredatcostlessaccumulateddepreciationand
accumulatedimpairmentlosses.Costincludesexpenditurethatisdirectlyattributableto
theacquisitionoftheasset.
Whenpartsofanitemofpropertyandequipmenthavedifferentusefullives,theyare
accountedforasseparateitems(majorcomponents)ofpropertyandequipment.
Anygainorlossondisposalofanitemofpropertyandequipment(calculatedasthe
differencebetweenthenetproceedsfromdisposalandthecarryingamountoftheitem)is
recognizedinprotorloss.
Subsequentexpenditureiscapitalizedonlywhenitisprobablethatthefutureeconomic
benetsassociatedwiththeexpenditurewillowtotheGroup.Ongoingrepairsand
maintenancecostsareexpensedonceincurred.
Itemsofpropertyandequipmentaredepreciatedonastraight-linebasisinprotorloss
intheprincipalor,initsabsence,themostadvantageousmarkettowhichtheGrouphas
accessatthatdate.Thefairvalueofaliabilityreectsitsnon-performancerisk.
TheGroupmeasuresthefairvalueofaninstrumentusingthequotedpriceinanactive
marketforthatinstrument.Amarketisregardedasactiveiftransactionsfortheassetor
liabilitytakeplacewithsufcientfrequencyandvolumetoprovidepricinginformationon
anongoingbasis.
Thebestevidenceofthefairvalueofanancialinstrumentatinitialrecognitionisnormally
thetransactionprice–i.e.thefairvalueoftheconsiderationgivenorreceived.Ifthe
Groupdeterminesthatthefairvalueatinitialrecognitiondiffersfromthetransactionprice
andthefairvalueisevidencedneitherbyaquotedpriceinanactivemarketforan
identicalassetorliabilitynorbasedonavaluationtechniquethatusesonlydatafrom
observablemarkets,thenthenancialinstrumentisinitiallymeasuredatfairvalue,
adjustedtodeferthedifferencebetweenthefairvalueatinitialrecognitionandthe
transactionprice.Subsequently,thatdifferenceisrecognizedinprotorlossonan
appropriatebasisoverthelifeoftheinstrumentbutnolaterthanwhenthevaluationis
whollysupportedbyobservablemarketdataorthetransactionisclosedout.
TheGrouppricesitsdailytradingpositionsbasedontheoreticalpriceswherebytheprice
differencesarerecordedthroughtheprotorlossaccount.Thosetheoreticalpricescan
differfromquotedmarketprices.TheGroup’sRiskandMid-Ofcedepartmentmonitors
whetheralldifferencescanbesubstantiated.
PortfoliosofnancialassetsandnancialliabilitiesthataremanagedbytheGrouponthe
basisofthenetexposuretoeithertheirmarketorcreditriskaremeasuredonthebasisof
apricethatwouldbereceivedtosellanetlongpositionorpaidtotransferanetshort
positionforaparticularriskexposure.
Thoseportfolio-leveladjustmentsareallocatedtotheindividualassetsandliabilitieson
thebasisoftherelativeriskexposureofeachoftheindividualinstrumentsintheportfolio.
TheGrouprecognizestransfersbetweenlevelsofthefairvaluehierarchyasoftheendof
thereportingperiodduringwhichthechangehasoccurred.
Goodwillistestedannuallyforimpairment.
h) Impairment
Non-derivativenancialassets
Theallowanceforexpectedcreditlosses(“ECLallowance”)forallloansandotherdebt
nancialassetsnotheldatFVPL,togetherwithloancommitmentsandnancialguarantee
contracts,inthissectionallreferredtoas‘nancialinstruments’,isbasedonthecredit
lossesexpectedtoariseoverthelifeoftheasset(thelifetimeexpectedcreditlossor
LTECL),unlesstherehasbeennosignicantincreaseincreditrisksinceorigination,
inwhichcase,theallowanceisbasedonthe12months’expectedcreditloss(12mECL).
ImpairmentlossesoninvestmentsmeasuredatfairvaluethroughOCIarerecognizedin
othercomprehensiveincomeanddonotreducethecarryingvalueoftheinvestment.
Animpairmentlossinrespectofanequity-accountedinvesteeismeasuredbycomparing
therecoverableamountoftheinvestmentwithitscarryingamount.Animpairmentlossis
recognizedinprotorloss,andisreversediftherehasbeenafavorablechangeinthe
estimatesusedtodeterminetherecoverableamount.
Forotherreceivables,theGroupappliesasimpliedapproachincalculatingECLsas
thesereceivablesrelatetooperatingactivitiesoftheGroup.Therefore,theGroupdoesnot
trackchangesincreditrisk,butinsteadrecognisesalossallowancebasedonlifetime
ECLsateachreportingdate.TheGrouphasestablishedaprovisionmatrixthatisbased
onitshistoricalcreditlossexperience,adjustedforforward-lookingfactorsspecictothe
debtorsandtheeconomicenvironment.
TheGroupconsidersanancialassetindefaultwhencontractualpaymentsare90days
pastdue.Howeverincertaincases,theGroupmayreconsideranancialassettobein
defaultwheninternalorexternalinformationindicatedthattheGroupisunlikelytoreceive
theoutstandingcontractualamountsinfullbeforetakingintoaccountanycredit
enhancementsheldbytheGroup.Anancialassetiswrittenoffwhenthereisno
reasonableexpectationofrecoveringthecontractualcashows.
Non-nancialassets
ThecarryingamountsoftheGroup’snon-nancialassets,otherthandeferredtaxassets,
overtheestimatedusefullivesofeachcomponent.
Theestimatedusefullivesforthecurrentandcomparativeyearsofsignicantitemsof
propertyandequipmentareasfollows:
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hardware:5years;
■
ofcextures:5years;
■
other:5years.
Thedepreciationmethod,usefullivesandresidualvaluesarereviewedateachreporting
dateandadjustedifappropriate.
Right-of-useassets
TheGrouprecognizesright-of-useassetsatthecommencementdateofthelease(i.e.,
thedatetheunderlyingassetisavailableforuse).Right-of-useassetsaremeasuredat
cost,lessanyaccumulateddepreciationandimpairmentlosses,andadjustedforany
remeasurementofleaseliabilities.Thecostofright-of-useassetsincludestheamountof
leaseliabilitiesrecognizedlessanyleaseincentivesreceived.Therecognizedright-of-use
assetsaredepreciatedonastraight-linebasisovertheshorterofitsestimatedusefullife
andtheleaseterm.Right-of-useassetsaresubjecttoimpairment.Right-of-useassetsare
recordedinpropertyandequipmentandintangibleassetsonthestatementofnancial
position.
g) Intangible assets
Recognitionandmeasurement
Intangibleassetsareamortizedonastraight-linebasisinprotorlossovertheestimated
usefullivesofeachcomponent.Theestimatedusefullifeofsignicantintangibleassetsis
5years.
Goodwill
Goodwillisinitiallyrecognizedandinsubsequentyearsmeasuredatcostless
accumulatedimpairmentlosses.
Goodwillinrespectofequity-accountedinvesteesisincludedinthecarryingamountofthe
investment,andanyimpairmentlossisallocatedtothecarryingamountoftheequity-
accountedinvesteeasawhole.
j) Share based payments
Thefairvalueofequity-settledtransactionsgrantedtoemployeesisdeterminedbythefair
valueofthesharesatthedatewhenthegrantismade.Whenemployeesrenderservices
asconsiderationforequityinstruments,theexpenseisrecognizedinemployeeexpenses,
togetherwithacorrespondingincreaseinequity(retainedearnings),overtheperiodin
whichtheserviceconditionsarefullled(thevestingperiod).Theawardsvestintranches
onvariousdatesoveratotalperiodofthreetoveyears.Vestingisconditionaluponthe
employeebeingactivelyemployedbytheGrouponthevestingdate.Iftheemployeeis
terminatedorresigns,anyunvestedtranchesoftheawardwillbeforfeited.Thecumulative
expenserecognisedforequity-settledtransactionsateachreportingdateuntilthevesting
datereectstheextenttowhichthevestingperiodhasexpiredandtheGroup’sbest
estimateofthenumberofequityinstrumentsthatwillultimatelyvest.Theexpenseor
creditinthestatementofprotorlossforaperiodrepresentsthemovementincumulative
expenserecognisedasatthebeginningandendofthatperiod.Serviceandnon-market
performanceconditionsarenottakenintoaccountwhendeterminingthegrantdatefair
valueofawards,butthelikelihoodoftheconditionsbeingmetisassessedaspartofthe
Group’sbestestimateofthenumberofequityinstrumentsthatwillultimatelyvest.Market
performanceconditionsarereectedwithinthegrantdatefairvalue.Anyotherconditions
attachedtoanaward,butwithoutanassociatedservicerequirement,areconsideredtobe
non-vestingconditions.Non-vestingconditionsarereectedinthefairvalueofanaward
andleadtoanimmediateexpensingofanawardunlesstherearealsoserviceand/or
performanceconditions.Noexpenseisrecognisedforawardsthatdonotultimatelyvest
becausenon-marketperformanceand/orserviceconditionshavenotbeenmet.Where
awardsincludeamarketornon-vestingcondition,thetransactionsaretreatedasvested
irrespectiveofwhetherthemarketornon-vestingconditionissatised,providedthatall
otherperformanceand/orserviceconditionsaresatised.
Thefairvalueofshareappreciationrights(SARs)grantedtoemployees,whichare
cash-settled,isrecognizedinemployeeexpenses,togetherwithacorrespondingincrease
inotherliabilities,overtheperiodduringwhichtheserviceconditionsarefullled(the
vestingperiod).Theliabilityisremeasuredattheendofeachreportingperioduptothe
dateofsettlement,withanychangesinfairvaluerecognisedinprotorloss.Estimates
usedarereassessedattheendofeachreportingperiod.
Sharebasedpaymentshaveadilutiveeffectonearningspershare(refertonote8).
arereviewedateachreportingdatetodeterminewhetherthereisanyindicationof
impairment.Ifanysuchindicationexists,thentheasset’srecoverableamountis
estimated.Goodwillandindenite-livedintangibleassetsaretestedannuallyfor
impairment.Animpairmentlossisrecognizedifthecarryingamountofanassetor
cash-generatingunit(CGU)exceedsitsrecoverableamount.
TherecoverableamountofanassetorCGUisthegreaterofitsvalueinuseanditsfair
valuelesscoststosell.Inassessingvalueinuse,theestimatedfuturecashowsare
discountedtotheirpresentvalueusingapre-taxdiscountratethatreectscurrentmarket
assessmentsofthetimevalueofmoneyandtherisksspecictotheassetorCGU.Forthe
purposeofimpairmenttesting,assetsaregroupedtogetherintothesmallestgroupof
assetsthatgeneratescashinowsfromcontinuingusethatarelargelyindependentofthe
cashinowsofotherassetsorCGUs.Subjecttoanoperatingsegmentceilingtest,
CGUstowhichgoodwillhasbeenallocatedareaggregatedsothatthelevelatwhich
impairmenttestingisperformedreectsthelowestlevelatwhichgoodwillismonitoredfor
internalreportingpurposes.Goodwillacquiredinabusinesscombinationisallocatedto
groupsofCGUsthatareexpectedtobenetfromthesynergiesofthecombination.
Impairmentlossesarerecognizedinprotorloss.Impairmentlossesrecognizedin
respectofCGUsareallocatedrsttoreducethecarryingamountofanygoodwillallocated
totheCGU(groupofCGUs),andthentoreducethecarryingamountsoftheotherassets
intheCGU(groupofCGUs)onaproratabasis.
Animpairmentlossinrespectofgoodwillisnotreversed.Forotherassets,animpairment
lossisreversedonlytotheextentthattheasset’scarryingamountdoesnotexceedthe
carryingamountthatwouldhavebeendetermined,netofdepreciationoramortization,
ifnoimpairmentlosshadbeenrecognized.
i) Employee benets
Short-termemployeebenets
Short-termemployeebenetobligationsareexpensedastherelatedserviceisprovided.
Aliabilityisrecognizedfortheamountexpectedtobepaidundershort-termcashvariable
compensationor(prot-sharing)structuresiftheGrouphasapresentlegalorconstructive
obligationtopaythisamountasaresultofpastserviceprovidedbytheemployee,andthe
obligationcanbeestimatedreliably.
o) Tax
Taxexpensecomprisescurrentanddeferredtax.Currenttaxanddeferredtaxare
recognizedinprotorlossexcepttotheextentitrelatestoabusinesscombination,
oritemsrecognizeddirectlyinequityorinothercomprehensiveincome.
Currenttaxistheexpectedtaxpayableorreceivableonthetaxableincomeorlossforthe
year,usingtaxratesenactedorsubstantivelyenactedatthereportingdate,andany
adjustmenttotaxpayableorreceivableinrespectofpreviousyears.Currenttaxpayable
alsoincludesanywithholdingtaxliabilityarisingfromthedeclarationofdividends.
Deferredtaxisrecognizedinrespectoftemporarydifferencesbetweenthecarrying
amountsofassetsandliabilitiesfornancialreportingpurposesandtheirtaxbases.
Deferredtaxisnotrecognizedfor:
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temporarydifferencesontheinitialrecognitionofassetsorliabilitiesinatransaction
thatisnotabusinesscombinationandthataffectsneitheraccountingnortaxable
protorloss;
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temporarydifferencesrelatedtoinvestmentsinsubsidiariesandjointlycontrolled
entitiestotheextentthatitisprobablethattheywillberevisedintheforeseeable
future;and
■
taxabletemporarydifferencesarisingontheinitialrecognitionofgoodwill.
Deferredtaxismeasuredatthetaxratesthatareexpectedtobeappliedtotemporary
differenceswhentheyreverse,usingtaxratesenactedorsubstantivelyenactedatthe
reportingdate.
Indeterminingtheamountofcurrentanddeferredtax,theGrouptakesintoaccountthe
impactofuncertaintaxpositionsandwhetheradditionaltaxesandinterestmaybedue.
TheGroupbelievesthatitsaccrualsfortaxliabilitiesareadequateforallopentaxyears
basedonitsassessmentofmanyfactors,includinginterpretationsoftaxlawand
managementjudgement.Thisassessmentreliesonestimatesandassumptionsandmay
involvejudgementaboutfutureevents.Newinformationmaybecomeavailablethatwould
causetheGrouptochangeitsjudgementregardingtheadequacyofexistingtaxliabilities
orthecollectabilityoftaxassets.Suchchangeswillimpacttaxexpenseintheperiodthat
suchachangeinestimateismade.
k) Other liabilities Held for Trading
Aspartofitstradingactivities,theCompanyentersintodigitalassetpayables.
Theborroweddigitalassetspayablesaremeasuredatfairvaluethroughprotorloss.
l) Provisions
Aprovisionisrecognizedif,asaresultofapastevent,theGrouphasapresentlegalor
constructiveobligationthatcanbeestimatedreliably,anditisprobablethatanoutowof
economicbenetswillberequiredtosettletheobligation.Provisionsaredeterminedby
discountingtheexpectedfuturecashowsatapre-taxratethatreectscurrentmarket
assessmentsofthetimevalueofmoneyandtherisksspecictotheliability.
Theunwindingofthediscountisrecognizedasnancecost.
m) Lease liabilities
Atthecommencementdateofthelease,theGrouprecognizesleaseliabilitiesonthe
statementofnancialpositionmeasuredatthepresentvalueofleasepaymentstobe
madeovertheleaseterm.Incalculatingthepresentvalueofleasepayments,theGroup
usestheincrementalborrowingrateattheleasecommencementdate.Afterthe
commencementdate,theamountofleaseliabilitiesisincreasedtoreecttheaccretionof
interestandreducedfortheleasepaymentsmade.Inaddition,thecarryingamountof
leaseliabilitiesisremeasuredifthereisachangeintheleasetermorincaseofother
reassessmentsormodications.
TheGroupappliestheshort-termleaserecognitionexemptiontoitsshort-termleases
(i.e.,thoseleasesthathavealeasetermof12monthsorlessfromthecommencement
dateanddonotcontainapurchaseoption).Leasepaymentsonshort-termleasesare
recognisedasexpenseonastraight-linebasisovertheleaseterm.
n) Income recognition
Nettradingincomecomprisesgrosstradingincomelessfeesandnetnancialexpenses
relatedtothetradingactivities.
Thefeesandnetnancialexpensesaredirectlylinkedtothetradingactivityandare
thereforedirectlyrecognizedintheprotandlossaccountundertradingincome.
Adisposalgroupqualiesasdiscontinuedoperationifitisacomponentofanentitythat
eitherhasbeendisposedof,orisclassiedasheldforsale,andispartofasingle
coordinatedplantodisposeofaseparatemajorlineofbusinessorgeographicalareaof
operations.
5. Operating segments
Themanagementboardexaminesthegroupperformancefromaregionalperspectiveand
hasidentiedthreereportablesegmentsofitsglobaltradingbusiness:Europe,
theAmericasandAsia.EuropeconsistsoftheactivitiesintheNetherlandswithbranches
forinstitutionaltradinginFrance,UK,ItalyandITactivitiesinRomania.Americasconsists
ofthesubsidiariesintheUSA.AsiacontainsoursubsidiariesinHongKongand
Singapore.Themanagementboardconsidersthissegmentationtoberelevantto
understandthegroupnancialperformancebecauseitallowsinvestorstounderstandthe
primarymethodusedbymanagementtoevaluatetheoperatingperformanceanddecision
makingaboutallocationofresourcesandtradingcapital.Thegroupmeasuresresultson
IFRSbasisandreconcilesthetotalsegmentresultsonnettradingincome,protbefore
taxandnetprot.Signicanttransactionsandbalancesbetweengeographicregions
occurprimarilyasresultofgroupoperatingcompaniesincurringtheoperatingexpenses
suchasemployeecompensation,communication,softwaredevelopmentanddata
processingandoverheadcostsforthepurposeofprovidingservicestoafliatedoperating
companies(lineitemsintercompanyrechargeincomeandexpenses).
TheGroup’stradingassetsandliabilitiesattributabletoeachsegmentarereportedto
managementonthebasisofnetliquidity.Consequently,thereportedtotalassetsineach
segmentarenetofthesegment’snancialliabilitiesheldfortrading,tradingpayablesand
otherliabilitiesheldfortrading.TheGroup’scapitalexpendituresincludeadditionsto
property,equipmentandintangibleassetsassetoutinnotes21and22.
Deferredtaxassetsandliabilitiesareoffsetifthereisalegallyenforceablerighttooffset
currenttaxliabilitiesandassets,andtheyrelatetotaxesleviedbythesametaxauthority
onthesametaxableentitywhichintendtosettlecurrenttaxliabilitiesandassetsonanet
basisorthetaxassetsandliabilitieswillberealizedsimultaneously.
Adeferredtaxassetisrecognizedforunusedtaxlosses,taxcreditsanddeductible
temporarydifferencestotheextentitisprobablethatfuturetaxableprotswillbeavailable
againstwhichtheycanbeutilized.Deferredtaxassetsarereviewedateachreporting
date.
p) Treasury shares
TheGroup’sownequityinstrumentsthatarereacquired(treasuryshares)arerecognized
atcostanddeductedfromequity.Nogainorlossisrecognizedinprotorlossonthe
purchase,sale,issueorcancellationoftheGroup’sownequityinstruments.Anydifference
betweenthecarryingamountandtheconsideration,ifreissued,isrecognizedintheshare
premium.
q) Non-current assets held for sale and discontinued operations
TheGroupclassiesnon-currentassetsanddisposalgroupsasheldforsaleiftheir
carryingamountswillberecoveredprincipallythroughasaletransactionratherthan
throughcontinuinguse.Non-currentassetsanddisposalgroupsclassiedasheldforsale
aremeasuredattheloweroftheircarryingamountandfairvaluelesscoststosell.Costs
tosellaretheincrementalcostsdirectlyattributabletothedisposalofanasset(disposal
group),excludingnancecostsandincometaxexpense.
Thecriteriaforheldforsaleclassicationisregardedasmetonlywhenthesaleishighly
probableandtheassetordisposalgroupisavailableforimmediatesaleinitspresent
condition.Actionsrequiredtocompletethesaleshouldindicatethatitisunlikelythat
signicantchangestothesalewillbemadeorthatthedecisiontosalewillbewithdrawn.
Managementmustbecommittedtotheplantoselltheassetandthesaleexpectedtobe
completedwithinoneyearfromthedateoftheclassication.
Assetsandliabilitiesclassiedasheldforsalearepresentedseparatelyascurrentitems
inthestatementofnancialposition.
SEGMENT REPORTING For the year ended 31 December 2020
Europe Americas Asia Total
Grosstradingincome 629,108 349,924 111,423 1,090,455
Feesrelatedtothetradingactivities 54,768 38,919 9,483 103,170
Netnancialexpensesrelatedto
thetradingactivities
21,876 27,207 4,777 53,860
Net trading income 552,464 283,798 97,163 933,425
Intercompanyrecharge 133,345 133,345
Total revenues 685,809 283,798 97,163 1,066,770
Personnelexpenses 177,660 65,811 32,345 275,816
Intercompanyrecharge - 105,647 27,698 133,345
Otherexpenses 45,620 16,713 8,615 70,948
Total operating expenses 223,280 188,171 68,658 480,109
EBITDA 462,529 95,627 28,505 586,661
Depreciationofpropertyand
equipment
6,821 4,274 2,851 13,946
Amortizationofintangibleassets 277 34 28 339
Writeoffof(in)tangibleassets 32 73 (2) 103
Operating result 455,399 91,246 25,628 572,273
Result/(impairment)of
equity-accountedinvestees
(440) 82 - (358)
Prot before tax 454,959 91,328 25,628 571,915
Taxexpense 86,481 19,498 1,423 107,402
Profit for the period 368,478 71,830 24,205 464,513
Assets 475,344 254,725 114,111 844,180
Capitalexpenditure 4,311 1,484 834 6,629
Liabilities 173,736 56,702 23,802 254,240
FTEs 380 104 70 554
SEGMENT REPORTING For the year ended 31 December 2021
Europe Americas Asia Total
Grosstradingincome 326,305 136,771 79,275 542,351
Feesrelatedtothetradingactivities 54,534 30,119 10,507 95,160
Netnancialexpensesrelatedto
thetradingactivities
25,933 32,233 4,984 63,150
Net trading income 245,838 74,419 63,784 384,041
Intercompanyrecharge 26,967 26,967
Total revenues 272,805 74,419 63,784 411,008
Employeeexpenses 102,289 33,466 21,318 157,073
Intercompanyrecharge - 8,986 17,981 26,967
Otherexpenses 40,798 16,881 9,840 67,519
Total operating expenses 143,087 59,333 49,139 251,559
EBITDA 129,718 15,086 14,645 159,449
Depreciationofpropertyand
equipment
7,111 4,705 2,922 14,738
Amortizationofintangibleassets 493 33 23 549
Writeoffof(in)tangibleassets 19 1 - 20
Operating result 122,095 10,347 11,700 144,142
Result/(impairment)of
equity-accountedinvestees
589 (4) - 585
Prot before tax 122,684 10,343 11,700 144,727
Taxexpense 26,702 1,820 1,271 29,793
Profit for the period 95,982 8,523 10,429 114,934
Assets 431,280 188,230 70,398 689,908
Capitalexpenditure 2,917 2,015 1,823 6,755
Liabilities 100,596 49,872 31,271 181,739
FTEs 422 111 80 613
Severalotheramendmentsandinterpretationsapplyforthersttimein2021,butdonot
haveanimpactontheconsolidatednancialstatementsoftheGroup.
7. Fair values of financial instruments and other assets and liabilities held for
trading
Fairvalueshavebeendeterminedformeasurementand/ordisclosurepurposesbasedon
thefollowingmethods.Whenapplicable,furtherinformationabouttheassumptionsmade
indeterminingfairvaluesisdisclosedinthenotesspecictothatassetorliability.
Valuation models
Theobjectiveofvaluationtechniquesistoarriveatafairvaluemeasurementthatreects
thepricethatwouldbereceivedtoselltheassetorpaidtotransfertheliabilityinan
orderlytransactionbetweenindependentmarketparticipantsatthemeasurementdate.
Thefairvaluesofnancialassetsandnancialliabilitiesthataretradedinactivemarkets
arebasedonpricesobtaineddirectlyfromanexchangeonwhichtheinstrumentsare
tradedorobtainedfromabrokerthatprovidesanunadjustedquotedpricefromanactive
marketforidenticalinstruments.Forallothernancialinstruments,theGroupdetermines
fairvaluesusingothervaluationtechniques.
TheGroupmeasuresfairvaluesusingthefollowingfairvaluehierarchy,dependingonthe
inputsusedformakingthemeasurements.
■
Level1:fairvalueofnancialinstrumentsbaseduponinputsthatarequoted,
unadjusted,marketpricesinactivemarketsforidenticalinstruments;
■
Level2:inputsotherthanquotedpricesincludedwithinLevel1,thatareobservable
eitherdirectly(i.e.asprices)orindirectly(i.e.derivedfromprices).Thiscategory
includesinstrumentsvaluedusing:quotedmarketpricesinactivemarketsforsimilar
instruments;quotedpricesforidenticalorsimilarinstrumentsinmarketsthatarenot
consideredactive;orothervaluationtechniquesinwhichallsignicantinputsare
directlyorindirectlyobservablefrommarketdata;
■
Level3:inputsthatareunobservable.Thiscategoryincludesallinstrumentsforwhich
thevaluationtechniqueincludesunobservableinputsthathaveasignicanteffecton
theinstrument’svaluation.Thiscategoryincludesinstrumentsthatarevaluatedbased
onquotedpricesforsimilarinstrumentsbutforwhichsignicantunobservable
6. New standards and interpretations
New accounting policy: Digital assets and liabilities
AllaccountingpoliciesarethesameasthoseappliedintheGroup’sconsolidatednancial
statementsasatandfortheyearended31December2021exceptfortheaccountingfor
digitalassets.TheGrouphasdecided,basedonthematerialityofthedigitalassetsinthe
2021nancialstatementstodevelopanaccountingpolicyfordigitalassetsandliabilities
basedontheIFRSInterpretationCommitteeguidelinesontheaccountingofcryptocur-
rencies(July2019).Thischangemainlyaffectsthepresentationoftheassetsand
liabilities,sincethevaluationhasnotchangedcomparedtoprioryears.Thischangeis
appliedretrospectively,thereforethecomparativenumbershavebeenrestated.
ManagementhasassessedthatfortheholdingofdigitalassetstheGroupactsas
abroker-traderandappliesIAS2–inventoriesheldforsaleinthenormalcourseof
business.IAS2requiresthemeasurementofinventoriesatfairvaluelesscoststosell.
Theaccountingforderivativesinrelationtodigitalassetsandstablecoinsremains
unchangedwithinnancialassetsandliabilitiesheldfortrading.Thishasresultedin
balancesheetreclassicationsfromnancialassetsandliabilitiesheldfortradingand
tradingreceivablesandpayablestootherassetsandliabilitiesheldfor.Thishasresulted
inadditionaldisclosuresinnote4signicantaccountingpolicies,note7fairvaluesof
nancialinstrumentsandotherassetsandliabilitiesheldfortradingandnote31nancial
riskmanagement.TheGrouphasmadeassumptionsandjudgementsrelatingtoits
accountingpolicyofdigitalassetsandliabilitiesandtheapplicationthereof,giventhe
limitedspecicguidanceinIFRS.FuturedevelopmentsbytheIASBmayimpactthe
currentaccountingasappliedbytheGroup.
Restatement of prior period error
Forour31December2020nancialstheIAS32nettingrulesinrespectofamountsdue
frombrokersandborrowingsfrombrokerswereincorrectlyapplied.Asaresult€
139
millionofbalancesduefrombrokerswasreclassiedfromtradingpayablestotrading
receivables,resultinginanincreaseoftradingreceivablesaswellastradingpayableswith
€
139millionasper31December2020.Thebalancesheetreclassicationhasresultedin
arestatementofthecashowstatement,the(increase)/decreasetradingreceivablescash
outowincreasedwith€
139millionandtheincrease/(decrease)tradingpayablescash
inowincreasedwiththesameamount.Thereisnoimpactontheprotandlossaccounts
andnoimpactonthenancialstatementfor2021.
a) Financialassetsandliabilitiesheldfortrading
Thevaluationoftradingpositions,boththelongandtheshortpositions,isdeterminedby
referencetolasttradedpricesfromidenticalinstrumentsfromtheexchangesatthe
reportingdate.SuchnancialassetsandliabilitiesareclassiedasLevel1.
Asubstantialpartofthenancialassetsandliabilitiesheldfortradingwhicharecarriedat
fairvaluearebasedontheoreticalpriceswhichcandifferfromquotedmarketprices.
ThetheoreticalpricesreectpriceadjustmentsprimarilycausedbythefactthattheGroup
continuouslypricesitsnancialassetsandliabilitiesbasedonallavailableinformation.
Thisincludespricesforidenticalandnear-identicalpositions,aswellasthepricesfor
securitiesunderlyingtheGroup’spositions,onotherexchangesthatareopenafterthe
exchangeonwhichthenancialassetorliabilityisprimarilytradedcloses.TheGroup’s
RiskandOperationsdepartmentchecksthetheoreticalpriceindependently.Aspartof
theirreview,theymonitorwhetherallpriceadjustmentscanbesubstantiatedwithmarket
inputs.Consequently,suchnancialassetsandliabilitiesareclassiedasLevel2.
Foroffsetting(deltaneutral)positions,theGroupusesmid-marketpricestodeterminefair
value.
b) Tradingreceivablesandpayables
Theseitemsarevaluedatfairvaluethroughprotorlossoninitialrecognitionand
changesinfairvaluerecognizedinprotorlossastheyarise.Inaccordancewiththe
GroupAccountingPolicyoftrade-dateaccountingforregular-waysaleandpurchase
transactions,sales/purchasetransactionsawaitingsettlementrepresentamounts
receivable/payableforsecuritiessold/purchasedbutnotyetsettledasatthereporting
date.Receivablesfromandpayablestobroker-dealers,includingcashbalancesheldat
theGroup’sclearingrmsandthenetamountreceivableorpayableforsecurities
transactionspendingsettlementareincludedinthiscategory.Thegroupmaintains
portfolionancingfacilitateswithitsprimebrokerstofacilitateitstradingactivitiesto
nancethepurchaseandsettlementofnancialinstruments.TheseFinancialliabilitiesare
includedatamortizedcost.Gains,andlosses,includingonderecognition,interest
expenseandforeignexchangegainsandlossesarerecognizedinprotorloss.
c) InvestmentsmeasuredatfairvaluethroughOCI
ThefairvalueofInvestmentsmeasuredatfairvaluethroughOCIisdeterminedby
adjustmentsorassumptionsarerequiredtoreectdifferencesbetweenthe
instruments,forexampleunlistedequitysecurities.
TheGroupuseswidelyrecognizedvaluationtechniquesandmodelsfordeterminingthe
fairvalueofcommon,simplenancialinstrumentsthatuseonlyobservablemarketdata
andrequirelittlemanagementjudgementandestimation.Observablepricesormodel
inputsusedinvaluationtechniquesincluderisk-freeandbenchmarkinterestratesand
creditspreadsusedinestimatingdiscountrates,bondandequityprices,foreigncurrency
exchangerates,equityandequityindexpricesandexpectedpricevolatilitiesand
correlations,whichareusuallyavailableinthemarketforlisteddebtandequitysecurities,
exchange-tradedderivativesandsimpleover-the-counterderivatives.Availabilityof
observablemarketpricesandmodelinputsreducestheneedformanagementjudgement
andestimationandthusreducestheuncertaintyassociatedwithdeterminingfairvalues.
Availabilityofobservablemarketpricesandinputsvariesdependingontheproductsand
marketsandispronetochangesbasedonspeciceventsandgeneralconditionsinthe
nancialmarkets.
WhentheGroupmeasuresportfoliosofnancialassetsandnancialliabilitiesonthe
basisofnetexposurestomarketrisks,itappliesjudgementindeterminingappropriate
portfolio-leveladjustmentssuchasbid-askspreads.Suchadjustmentsarederivedfrom
observablebid-askspreadsforsimilarinstrumentsandadjustedforfactorsspecictothe
portfolio.
Similarly,whentheGroupmeasuresportfoliosofnancialassetsandnancialliabilitieson
thebasisofnetexposuretothecreditriskofaparticularcounterparty,ittakesintoaccount
anyexistingarrangementsthatmitigatethecreditriskexposure(e.g.masternetting
agreementswiththecounterparty).
TheGrouphasanestablishedcontrolframeworkwithrespecttothemeasurementoffair
values.ThisframeworkinvolvesboththeRiskandOperationsdepartmentwhichare
independentoftheTradingdepartmentandreportdirectlytotheCROwhoisamemberof
theManagementBoard.TheRiskandOperationsdepartmenthaveoverallresponsibility
forindependentlyverifyingtheresultsoftradingandallsignicantfairvalue
measurements.Thedailyreconciliationofthepositionsandpricesbetweentheprime
brokersandtheTradingdepartmentismostimportant.
FAIR VALUE HIERARCHY At 31 December 2021
Level 1 Level 2 Level 3 Total
Longpositionsinequitysecurities-
trading
104,094 4,029,415 4,133,509
Longpositionsindebtsecurities-
trading
- 357,847 357,847
Marktomarketderivativesassets 94 9,647 9,741
Financial assets held for trading 104,188 4,396,909 - 4,501,097
Tradingreceivables 6,159,201 1,037 6,160,238
Otherassetsheldfortrading - 78,122 78,122
Investmentsmeasuredatfairvalue
throughPL
- 1,716 1,716
Investmentsmeasuredatfairvalue
throughOCI
1,073 8,209 9,282
Total long positions 6,263,389 4,477,141 9,925 10,750,455
Shortpositionsinequitysecurities-
trading
81,982 1,722,311 1,804,293
Shortpositionsindebtsecurities-
trading
- 327,750 327,750
Marktomarketderivativesliabilities 6 6,023 6,029
Financial liabilities held for
trading 81,988 2,056,084 - 2,138,072
Tradingpayables 7,968,557 1,415 7,969,972
Otherliabilitiesheldfortrading - 25,771 25,771
Total short positions 8,050,545 2,083,270 - 10,133,815
referencetotheirquotedclosingbidpriceatthereportingdate,orifunquoted,determined
usingavaluationtechniqueandareclassiedasLevel2orlevel3,conditionaluponthe
regularavailabilityofquotedclosingbidprices.
d) Investmentsmeasuredatfairvaluethroughprotandloss
ThefairvalueofInvestmentsmeasuredatfairvaluethroughprotandlossisdetermined
byreferencetotheirquotedclosingbidpriceatthereportingdate,orifunquoted,
determinedusingavaluationtechniqueandareclassiedasLevel3.
e) OtherassetsHeldforTrading
TheCompany’sdigitalassetsareprimarilytradedinactivemarketsandarepurchased
withtheintenttoresellinthenearfuture,generatingaprotfromtheuctuationsinprices
ormargins,asthecompanyusesitsownfairvaluemodelsbasedonquotedpricesor
observableinputsforthevaluationofthedigitassets,theseassetsareclassiedasLevel
2.
f) Otherliabilitiesheldfortrading
Fromtimetotime,theCompanyborrowsdigitalassetsaspartofitstradingstrategy.
TheborroweddigitalassetspayablesaremeasuredatFairValuethroughprotorloss,
asthecompanyusesitsownfairvaluemodelsbasedonquotedpricesorobservable
inputsforthevaluationoftheborroweddigitassets,theseliabilitiesareclassiedasLevel
2.
Hedge of net investments in foreign operations
Includedinnancialliabilitiesheldfortradingat31December2021wasaborrowingof
USD37millionwhichhasbeendesignatedasahedgeofthenetinvestmentsintheUnited
StatesandSingaporesubsidiaries,whichhavetheirfunctionalcurrenciesinUSD.
ThisborrowingisbeingusedtohedgetheGroup’sexposuretotheUSDforeignexchange
riskontheseinvestments.Gainsorlossesontheretranslationofthisborrowingare
transferredtoOCItooffsetanygainsorlossesontranslationofthenetinvestmentsinthe
subsidiaries.
Thereisaneconomicrelationshipbetweenthehedgeditemandthehedginginstrument
asthenetinvestmentcreatesatranslationriskthatwillmatchtheforeignexchangeriskon
theUSDborrowing.TheGrouphasestablishedahedgeratioof1:1astheunderlyingrisk
ofthehedginginstrumentisidenticaltothehedgedriskcomponent.Thehedgeineffec-
tivenesswillarisewhentheamountoftheinvestmentintheforeignsubsidiarybecomes
lowerthantheamountoftheborrowing.
FAIR VALUE HIERARCHY At 31 December 2020
Level 1 Level 2 Level 3 Total
Longpositionsinequitysecurities-
trading
47,387 3,521,348 - 3,568,735
Longpositionsindebtsecurities-
trading
- 303,965 - 303,965
Marktomarketderivativesassets - 444 - 444
Financial assets held for trading 47,387 3,825,757 - 3,873,144
Tradingreceivables 4,631,065 2,404 - 4,633,469
Otherassetsheldfortrading 18,684 18,684
Investmentsmeasuredatfairvalue
throughPL
-
Investmentsmeasuredatfairvalue
throughOCI
761 2,861 3,622
Total long positions 4,697,136 3,828,922 2,861 8,528,919
Shortpositionsinequitysecurities-
trading
47,788 1,516,508 - 1,564,296
Shortpositionsindebtsecurities-
trading
- 395,709 - 395,709
Marktomarketderivativesliabilities - 226 - 226
Financial liabilities held for
trading 47,788 1,912,443 - 1,960,231
Tradingpayables 5,798,637 2,365 5,801,002
Otherliabilitiesheldfortrading 825 825
Total short positions 5,846,425 1,915,633 - 7,762,058
Duetotheshortholdingperiodbetweenacquisitionandsale,therearenotransfers
betweenLevel1andLevel2.Thecurrentlevel3positionsconsistofequityinvestmentsin
MEMXandErisXexchangesandlongterminvestmentsinstart-upcompaniesinDigital
Assets and CO
2
tradingenvironment.
Theimpactofthehedginginstrumentrecordedinnancialliabilitiesheldfortradingonthe
statementofnancialpositionisasfollows:
FOREIGN CURRENCY DENOMINATED BORROWING
For the year ended 31 December 2021 For the year ended 31 December 2020
Notional amount
(US$000)
Carrying amount
(€000)
Change in fair value
used for measuring
ineffectiveness
for the period(€000)
Notional amount
(US$000)
Carrying amount
(€000)
Change in fair value
used for measuring
ineffectiveness
for the period(€000)
37,000 32,536 6,340 115,000 102,450 1,775
NET INVESTMENT IN FOREIGN SUBSIDIARIES
For the year ended 31 December 2021 For the year ended 31 December 2020
Change in fair value
used for measuring
ineffectiveness
(€000)
Foreign currency translation
reserve (€000)
Change in fair value
used for measuring
ineffectiveness
(€000)
Foreign currency translation
reserve (€000)
6,340 6,340 1,775 1,775
ThehedginggainrecognizedinOCIbeforetaxisequaltothechangeinfairvalueusedfor
measuringeffectiveness.Thereisnoineffectivenessrecognizedinprotorloss.
8. Earnings per share
Thecalculationofthebasicearningspershareisbasedonprotfortheyearattributable
toordinaryshareholdersandthenumberofordinarysharesoutstanding.
Theweightedaveragenumberofsharestakesintoaccounttheweightedaverageeffectof
changesintreasurysharesduringtheyear.
Dilutedearningspershareisdeterminedbyadjustingthebasicearningspershareforthe
effectsofalldilutiveshare-basedpaymentstoemployees.
EARNINGS PER SHARE For the year ended 31 December
2021 2020
Protfortheyear 114,934 464,513
Profit attributable to ordinary shareholders 114,934 464,513
Weightedaveragenumberofordinaryshares 43,699,300 45,276,693
Dilutiveeffectofshare-basedpayments 1,921,736 2,065,037
Weighted average number of ordinary shares
for diluted net profit
45,621,037 47,341,730
Basic earnings per share 2.63 10.26
Diluted earnings per share 2.52 9.81
9. Net trading income
Grosstradingincomecomprisestherealizedandunrealizedincomeonnancial
instruments,digitalassetsandcertainfeeswhichthegroupreceivesasaliquidityprovider
fromexchangesandissuersofproducts.
Feesrelatedtothetradingactivitiesconsistofexpensessuchasexchangefees,clearing
feesandothertradingrelatedfees.Netnancialexpensesrelatedtothetradingactivities
mainlyrelatetointerestexpenseonthecreditfacilitieswiththeprimebrokerscalculated
onthedrawnamountduringtheyear.
10.Employee expenses
For the year ended 31 December
2021 2020
Wagesandsalaries 41,433 37,103
Socialsecuritycharges 4,970 4,119
Recruitmentandotheremploymentcosts 8,201 6,479
Variablecompensationpaidincash 79,227 177,453
Variablecompensationpaidinshares 23,242 50,662
Employee expenses 157,073 275,816
ThewagesandsalariesincreasedinlinewiththeFTEdevelopmentfrom554asper
31December2020to613asper31December2021.Overallemployeeexpensesdeclined
by43%asaresultofthedecreaseinvariablecompensationpaidtoemployees.
Thedecreaseinvariablecompensationisalsoreectedinthedecreaseinotherliabilities.
Theamountofvariablecompensationpayableisbasedontheoperationalprotofthe
company.
Theamountsrecognizedinprotandlossduring2021donotfullyreconcilewiththe
remunerationreportduetothedeferredrecognitionofexpensesinfutureyearsduetothe
serviceconditionelementoftheemployeeshareplans.
Share-based payments
Thecompanyawardsitsemployeeswithsharesbasedontheirloyalty,sign-onpackageor
aspartoftheirvariablecompensation.Thesharesawardedunderthe2019,company
loyaltyandsign-onpackageshareplansareawardedbasedonanetbasis,whichentails
thatthecompanyisliablefortheemployeeincometaxduefortheseplans.Sharesawards
underthe2020or2021shareplanaregrossawards,whichentailsthattheemployee
incometaxobligationsaretobepaidoutoftheseawards.
IneithercasetheGroupisresponsibleforwithholdingwagetaxesuponvestinginthe
Netherlandsandinmostothercountriesofoperations.Theestimatedamountofwage
taxescanbeupto50%intheNetherlands,forwhichfuturecashoutowsarecoveredby
thesellingofpartoftheTreasuryShareskeptintheSharePremiumAccount.
For the year ended 31 December
2021 2020
2019,companyloyaltyandsign-onpackageshare
plans
2,348 5,225
2020shareplans 10,486 45,437
2021shareplans 10,408 -
Total expenses arising from equity settled
share based payments 23,242 50,662
Expensesarisingfromcashsettled
sharebasedpayments
9,605 814
Total expenses arising from cash-settled
share-based payments 9,605 814
Total 32,847 51,476
a) 2019, company loyalty and sign-on package share plans - equity settled
Underthe2019,companyloyaltyandsign-onpackageshareplans,sharesaregrantedas
apartofvariablecompensationtocertainemployees.Thesharesvestoveraperiodof
threetoveyears,dependingontheshareplanandagreementwiththeemployee,
subjecttotheconditionthattheemployeeremainsemployedonthevestingdate.
Thefairvalueoftheshareoptionsisestimatedatthegrantdate.Throughout2021the
companyawardedemployeessharesbasedonaxedmonetaryvalueof€0.6million,
reectingaweightedaveragefairvalueofsharesgrantedof€32.51(2020:€27.26).
Theexercisepriceoftheshareoptionisequaltothemarketpriceoftheunderlyingshares
onthedateofgrant.
Thefollowingtableillustratesthenumberofsharesandmovementsinshareawards
duringtheyear.Theexpenserecognizedduringtheyearwas€2.3million(2020:€4.9
million).
c) 2021 share plan - equity settled
Underthe2021shareplan,sharesaregrantedtoemployeesaspartoftheirvariable
compensation.Thesharesvestinfourequalinstalmentsduringtherstopenperiodofthe
yearoveraperiodoffouryearssubjecttotheconditionthattheemployeeremains
employedonthevestingdate.
Thefairvalueofthesharesisestimatedatgrantdateat€20.9million.Employeesare
grantedsharesbasedonaxedmonetaryvalue.Thenalnumberofshareswillbe
determinedbasedonthevolumeweightedaverageprice(VWAP)oftherstopenperiod
of2022andisnotnal.Therefore,thenumberofsharesincludedinthetablebelowis
basedonthexedbonusamountawarded,dividedbythefairvalueatgrantdateof
€33.10.Theexercisepriceoftheshareoptionisequaltothemarketpriceofthe
underlyingsharesonthedateofgrant.Theexpenserecognizedduringtheyearwas€10.4
million(2020:nil).
Number of shares
For the year ended 31 December
2021 2020
Outstanding at 1 January
- -
Sharesgrantedduringtheyear 633,026 -
Changesinsharesduetodividendreinvestment -
Sharesvestedduringtheyear - -
Sharesforfeitedduringtheyear - -
ChangeinsharesrecalculatedbasedonnalVWAP - -
Outstanding at 31 December 633,026 -
Total share awards outstanding per plan
For the year ended 31 December
2021 2020
2019,companyloyaltyandsign-onshareplans 162,471 167,080
2020shareplan 1,968,689 3,370,127
2021shareplan 633,026 -
Outstanding at 31 December 2,764,187 3,537,207
Number of shares
For the year ended 31 December
2021 2020
Outstanding at 1 January
167,080 47,500
Sharesgrantedduringtheyear 20,100 244,580
Changesinsharesduetodividendreinvestment 33,895 -
Sharesvestedduringtheyear (56,104) (118,500)
Sharesforfeitedduringtheyear (2,500) (9,000)
Sharesmodiedduringtheyear - 2,500
Outstanding at 31 December 162,471 167,080
b) 2020 share plan - equity settled
Underthe2020shareplan,sharesaregrantedtoemployeesaspartoftheirvariable
compensation.Thesharesvestinfourequalinstalmentsduringtherstopenperiodofthe
yearoveraperiodoffouryearssubjecttotheconditionthattheemployeeremains
employedonthevestingdate.
Atyearend2020,employeesweregrantedsharesbasedonaxedmonetaryvalueof
€96.3million,reectingagrantdatefairvaluesharepriceof€28.58(2020:€28.58).
Thenalnumberofsharesgrantedasat31December2020wasdeterminedbasedonthe
volumeweightedaverageprice(VWAP)oftherstopenperiodof2021of€32.20,
resultinginanupdatedcalculationofthesharesawarded,asisshowninthetablebelow.
Theexpenserecognizedduringtheyearwas€10.5million(2020:45.8million).
Number of shares
For the year ended 31 December
2021 2020
Outstanding at 1 January
3,370,127 -
Sharesgrantedduringtheyear - 3,370,127
Changesinsharesduetodividendreinvestment 191,681 -
Sharesvestedduringtheyear (661,762) -
Sharesforfeitedduringtheyear (128,967) -
ChangeinsharesrecalculatedbasedonnalVWAP (802,390) -
Outstanding at 31 December 1,968,689 3,370,127
12.Taxation
CURRENT TAX EXPENSES For the year ended 31 December
2021 2020
Taxrecognisedinprotorloss 29,793 107,402
Currenttaxexpense 31,023 112,330
Movementdeferredtaxasset (2,343) (3,780)
Movementdeferredtaxliability 1,296 (215)
Adjustmentforprioryears (183) (933)
Tax expense excluding share of tax
of equity-accounted investees
29,793 107,402
ReconciliationoftheweightedaveragestatutoryincomeratetotheGroup’seffective
incometaxrateisasfollows:
RECONCILIATION OF EFFECTIVE TAX RATE For the year ended 31 December
2021 2020
Protbeforetax 144,727 571,915
Dutchstandardtaxrate 25.0% 25.0%
Incometaxexpected 36,182 142,979
Actualincometaxcharge 29,793 107,402
Inpercentage 20.6% 18.8%
Difference in tax expense (4.4%) (6.2%)
RECONCILIATION OF EFFECTIVE TAX RATE For the year ended 31 December
2021
(€)
2021 2020
(€)
2020
Dutch standard tax rate
36,182 25.0% 142,979 25.0%
Differentweightedaveragestatutory
rateofgroup
(1,896) (1.3%) (7,180) (1.3%)
Income(partly)exempted (9,387) (6.5%) (27,259) (4.8%)
Othernondeductiblecosts 4,894 3.4% (1,138) (0.2%)
Subtotal (6,389) (4.4%) (35,577) (6.3%)
Effective tax rate 29,793 20.6% 107,402 18.8%
Share appreciation rights - cash settled
Certainemployeesareawardedshareappreciationrights(SARs)aspartoftheirvariable
compensation,settledincash.TheSARsvestinequalinstalmentsoveraperiodoffourto
veyearssubjecttotheconditionthattheemployeeremainsemployedonthevesting
date.TheliabilityfortheSARsismeasured,initiallyandattheendofeachreporting
perioduntilsettled,atthefairvalueoftheSARs.Thecarryingamountoftheliability
relatingtotheSARsat31December2021was€10.4million(2020:€0.8million).
Theexpenserecognizedduringtheyearwas€9.6million(2020:€0.8million).
11.Other expenses
OTHER EXPENSES For the year ended 31 December
2021 2020
Technology 49,769 46,544
Housing 3,142 2,735
Advisorsandassurance 3,026 3,183
Regulatorycosts 2,607 2,483
Fixedexchangecosts 5,338 3,765
Travelexpenses 1,078 994
Variousexpenses 2,559 2,783
DonationtoFlowTradersFoundation - 8,461
Other expenses 67,519 70,948
Technologyexpensesincreasedduetoinitiativestooptimizeourinfrastructure.In2020
thecompanydonated€8.5millionincashandsharestotheFlowTradersFoundation.
CURRENT TAX ASSETS AND LIABILITIES PER
REGION At 31 December
2021 2020
Assets
Europe 136 49
Americas 773 7,164
Asia 431 138
Total current tax assets 1,340 7,351
Liabilities
Europe 635 44,309
Americas 108 (131)
Asia 271 1,483
Total current tax liabilities 1,014 45,661
Recognized deferred tax assets and liabilities
Deferredtaxassetsandliabilitiesareattributabletothefollowing:
RECOGNIZED DEFERRED TAX ASSETS AND LIABILITIES At 31 December
2021 2020
Assets
Otherliabilities 7,628 5,285
Liabilities
Propertyandequipment (1,177) (1,137)
UnrealizedFXresultonnetinvestmenthedge (1,256)
Net asset/(liability) 5,195 4,148
ThedeferredtaxassetmainlyrelatestoUStemporarydifferencesinthedeductibilityof
thevariablecompensationinstalments.
Theeffectivetaxratediffersfromthe(nominal)statutorytaxrate.Thisdifferenceismainly
causedbyapplyingtheparticipationexemptionandDutchinnovationboxregime.
Inadditiontheeffectivetaxrateisimpactedbynon-deductibleshareplancoststhatoccur
ineachregion.
Effective tax rate per region
Anoverviewoftheeffectivetaxrateperregionispresentedinthetablebelow.
EFFECTIVE TAX RATE PER REGION For the year ended 31 December
2021
Statutory tax
rate
Effective tax
rate
Europe 25.0% 21.8%
Americas 21.0% 17.6%
Asia 16.6% 10.9%
Group 25.0% 20.6%
EFFECTIVE TAX RATE PER COUNTRY For the year ended 31 December
2020
Statutory tax
rate
Effective tax
rate
Europe 25.0% 19.0%
Americas 22.0% 21.3%
Asia 16.7% 10.3%
Group 25.0% 18.8%
Taxes paid per region
Anoverviewofthetaxespaidispresentedinthetablebelow.
TAXES PAID PER REGION For the year ended 31 December 2021
Corporate
income tax
Value
added tax
Payroll
tax
Dividend
withholding
tax
Total
Europe 69,249 1,391 53,099 17,410 69,249
Americas (2,832) 5 1,672 - (2,832)
Asia 3,059 (1) 405 - 3,059
TAXES PAID PER REGION For the year ended 31 December 2020
Corporate
income tax
Value
added tax
Payroll
tax
Dividend
withholding
tax
Total
Europe 86,488 2,993 27,415 23,521 86,488
Americas 19,498 74 8,377 - 19,498
Asia 1,423 - 400 - 1,423
In2021,FlowTradersUSHoldingLLCreceivedarefundof€4.6millionexcludinginterest
fromtheIRSinrelationtocarrybacklingsfor2015and2016.
13.Cash and cash equivalents
CASH AND CASH EQUIVALENTS At 31 December
2021 2020
Europe 1,643 4,410
Americas 1,379 255
Asia 1,927 3,680
Total cash and cash equivalents 4,949 8,345
Cashandcashequivalentsincludeabankguaranteeof€ 0.3millionforofcerent(2020:
€
0.3million).Theothercashandcashequivalentsareavailableondemand.
14.Financial assets held for trading
FINANCIAL ASSETS HELD FOR TRADING At 31 December
2021 2020
Longpositioninequitysecurities-trading 4,133,510 3,568,734
Longpositionindebtsecurities-trading 357,847 303,966
Marktomarketderivativesassets 9,740 444
Total financial assets held for trading 4,501,097 3,873,144
Financialassetsheldfortradingrelatetosettledpositionsandarecloselyrelatedto
nancialliabilitiesheldfortrading,tradingreceivables,tradingpayables,otherassetsheld
fortradingandotherliabilitiesheldfortrading.Thesumofthesepositionsisournet
liquiditypositionatourprimebrokersandtogetherwithcashusedinthemanagement
reportastradingcapital.TheGroupentersintoderivativecontractssuchasfutures,
forwards,swapsandoptionsfortradingandeconomichedgepurposes.Futurescontracts
aretransactedatstandardisedamountsonregulatedexchangesandaresubjecttocash
marginrequirements.Thetableaboveshowsthefairvaluesofderivativenancial
instrumentsrecordedasassets.Forwardsarecustomisedcontractstransactedinthe
over–the–countermarket.Swapsarecontractualagreementsbetweentwopartiesto
exchangestreamsofpaymentsovertimebasedonspeciednotionalamounts,inrelation
tomovementsinaspeciedunderlyingindex.TheGroup’sderivativeassetsandnancial
liabilitiesaregenerallynotoffsetinthestatementofnancialpositionunlesstheIFRS
nettingcriteriaaremet.TheGroup’stradingcapitalexposuresincludingderivative
contractsismonitoredondailybasisaspartofitsoverallriskmanagementframework.
Pleasealsorefertonote15,16,23and24.
15.Trading receivables
TRADING RECEIVABLES At 31 December
2021 2020
Receivablesforsecuritiessold 5,940,513 4,491,957
Duefrombrokersandexchanges 218,688 139,108
Marktomarketderivativesassets 1,037 2,404
Total trading receivables 6,160,238 4,633,469
18.Investments measured at fair value through OCI
INVESTMENTS MEASURED AT FAIR VALUE THROUGH OCI At 31 December
2021 2020
Netbookamount1January 3,622 1,271
Additions 2,928 2,759
Pricemovements 2,495 9
Effectofmovementsinexchangerate 237 (417)
Total Investments measured at fair value
through OCI
9,282 3,622
TheinvestmentsoftheGroupinvariousexchanges,throughparticipationsor“member
seats”,areclassiedasinvestmentsmeasuredatfairvaluethroughOCI.Memberseats
provideaccesstovariousexchanges.Theseinvestmentsaremeasuredatfairvalue
determinedonthelastavailablebidbeforeyearendintheforeigncurrencieswhichare
translatedtoeurosatexchangeratesatthereportingdate.Thepricemovementsare
relatedtothefairvalueupdatesfortheinvestmentinErisX(ErisDigitalHoldingLLC)and
MEMX.OnOctober20,2021CBOEGlobalMarketsInc.announcedtoacquireErisX,
thetransactionisexpectedtocloseinthersthalfof2022.Theadditionsin2021in
InvestmentsmeasuredatfairvaluethroughOCIrelatestotheGroup’sadditionalequity
investmentinMEMXaspartofanadditionalfundinground,astrategicinvestmentinD2X
GroupNV,anEUregulatedexchangeforoptionsandfuturesfordigitalassetsinEurope
andinvariousotherstrategicinvestmentscompaniesactiveindigitalassetsandother
investmentsincompaniesactiveinthedigitalassets.
InaccordancewiththeGroup’spolicyoftradedateaccountingforregularwaysaleand
purchasetransactions,receivablesforsecuritiessoldrepresentamountsofreceivablesfor
securitiesthataresold,butnotyetsettledasatthereportingdateandamountsduefrom
brokersandexchanges.Tradingreceivablesaremeasuredatfairvalue.
Pleasealsorefertonote14,16,23and24.
16.Other assets held for trading
OTHER ASSETS HELD FOR TRADING At 31 December
2021 2020
Otherassetsheldfortrading 78,122 18,684
Total other assets held for trading 78,122 18,684
Peryearendthegroupheldotherassetswithatotalvalueof€ 78.1millionwhich
comprisesofdigitalassets.
17.Other receivables
OTHER RECEIVABLES At 31 December
2021 2020
Prepayments 7,692 6,461
Dividendwithholdingtax 1,042 1,174
Securitydeposits 1,551 1,613
Receivablefromemployees 12 632
Otherreceivables 4,430 4,310
Total other receivables 14,727 14,190
Formoreinformation,pleaserefertonote28foramaturityanalysisofotherreceivables.
TheGroup’shistoricalinvestmentsinimmaterialassociatesinclude;
■
A10%ownershipinPickTwoLLC(2020:10%),aUSincorporatedcompanyactivein
tradingtelecommunications.Peryearend2021theinvestmenthadatotalvalueof
€0.2million(2020:€0.1million)
■
JointBackOfceClearingagreementswiththreeprimebrokersforatotalamountof
€0.1millionintheirpreferredsharesperend2021(2020:€0.1million)
In2021thegroupmadethefollowingstrategicinvestments;
■
On17September,2021theGroupacquireda25%shareinterestinQ-ShapeB.V.for
€0.7million,aDutchcompanyactiveinthecreationofanactivemarketplaceinfor
energyandenvironmentalcommodities.NexttoitsshareinteresttheGrouphasone
seatonthesupervisoryboardofQ-ShapeB.V.
■
OnOctober13,2021theGroupacquireda3.85%shareinterestinLedgerEdgeInc.
for€1.7million,aUSincorporatedcompanyactiveincreatinganecosystemfor
tradingcorporatebondsusingaDeFistrategy.NexttoitsshareinteresttheGroup
hastherighttoappointonedirectortotheboardofLedgerEdgeInc.
Includedintheresultonequity-accountedinvesteesisa€0.6milliongainrelatedtothe
fairvalueremeasurementofcontingentconsiderationrelatingtoadisposedassociate
(2020:€0.4millionloss).
19.Investments measured at fair value through PL
INVESTMENTS MEASURED AT FAIR VALUE
THROUGH PL At 31 December
2021 2020
Netbookamount1January -
Additions 1,725
Remeasurementrecognizedinprotorloss (44)
Effectofmovementsinexchangerate 35
Total Investments measured at fair value
through PL
1,716
Theadditionsin2021inInvestmentsmeasuredatfairvaluethroughPLrelatestothe
Group’sequityinvestmentsinvariousunlisteddigitalassetstruststhatareplanningtolist
in2022.Theremeasurementrecognizedinprotorlossisreportedintheresultofequity-
accountedinvestees.
20.Investments in immaterial associates
INVESTMENTS IN IMMATERIAL ASSOCIATES At 31 December
2021 2020
Netbookamount1January 176 202
Investments 2,427 -
Cashdistribution (19) (93)
Resultfromassociates 40 82
Effectofmovementinforeignexchangedifferences 46 (15)
Total investments in immaterial associates 2,670 176
21.Property and equipment
PROPERTY AND EQUIPMENT
Hardware Ofce
xtures
Ofce space
right-of-use assets
Hardware
right-of-use assets
Total
Cost
Balance at 1 January 2020 30,779 21,137 16,742 5,619 74,277
Additions 6,009 495 1,456 5,167 13,127
Disposals (4,519) (7,517) - (654) (12,690)
Exchangeratedifferences (1,095) (583) (1,109) 2 (2,785)
Balance at 31 December 2020 31,174 13,532 17,089 10,133 71,929
Balance at 1 January 2021 31,174 13,532 17,089 10,133 71,929
Additions 5,393 110 5,250 4,157 14,910
Disposals (3,519) (3,858) - (1,903) (9,280)
Effectofmovementsinexchangerates 863 430 1,062 199 2,554
Balance at 31 December 2021 33,911 10,214 23,401 12,586 80,113
Depreciation and impairment losses
Balance at 1 January 2020 11,079 12,770 4,110 3,017 30,976
Depreciationfortheyear 3,821 3,124 4,312 2,689 13,946
Disposals (4,373) (7,457) - (654) (12,484)
Exchangeratedifferences (456) (322) (410) (67) (1,254)
Balance at 31 December 2020 10,071 8,115 8,012 4,985 31,184
Balance at 1 January 2021 10,071 8,115 8,012 4,985 31,183
Depreciationfortheyear 4,848 1,908 4,770 3,232 14,758
Disposals (2,602) (3,853) (75) (312) (6,842)
Exchangeratedifferences 460 240 570 135 1,405
Balance at 31 December 2021 12,777 6,410 13,277 8,040 40,504
Carrying amounts
At1January2020 19,700 8,367 12,632 2,602 43,301
At 31 December 2020 21,103 5,416 9,077 5,148 40,745
At 31 December 2021 21,134 3,804 10,124 4,546 39,609
Right-of-useassetsaredisclosedinmoredetailinnote26andmustbeconsideredalongwithsoftwareright-of-useassetsinnote22.
22.Intangible assets
INTANGIBLE ASSETS In thousands of euro
Software Software
right-of-use assets
Goodwill Total
Cost
Balance at 1 January 2020 1,665 356 502 2,523
Additions 125 - - 125
Disposals (559) - (559)
Exchangeratedifferences (20) - - (20)
Balance at 31 December 2020 1,212 356 502 2,070
Balance at 1 January 2021 1,212 356 502 2,070
Additions 1,252 407 - 1,659
Disposals (230) (126) - (356)
Exchangeratedifferences 23 1 - 24
Balance at 31 December 2021 2,257 638 502 3,397
Depreciation and impairment losses
Balance at 1 January 2020 945 107 - 1,052
Depreciationfortheyear 264 71 - 336
Disposals (536) - - (536)
Exchangeratedifferences (7) - - (7)
Balance at 31 December 2020 666 178 - 844
Balance at 1 January 2021 666 178 - 844
Depreciationfortheyear 428 121 - 549
Disposals (354) (1) - (355)
Exchangeratedifferences 14 - - 14
Balance at 31 December 2021 754 298 - 1,052
Carrying amounts
At1January2020 720 249 502 1,471
At 31 December 2020 546 178 502 1,226
At 31 December 2021 1,503 340 502 2,345
Right-of-useassetsaredisclosedinmoredetailinnote26andmustbeconsideredalongwithofcespaceandhardwareright-of-useassetsinnote21.
Borrowings
TheGroupmaintainsportfolionancingfacilitieswithitsprimebrokerstofacilitatethe
tradingactivities(i.e.tonancethepurchaseandsettlementofnancialinstruments).
Thedrawnamountsonthesefacilitiescontinuouslyuctuatebasedonourtrading
positionsatanygivenmoment.
TheGroupenteredintointerest-bearingcreditfacilitieswithABNAMROClearingBank
N.V.(AACB),totalling€
2,825millionperyearend,comprisingofaEURdenominated
facilityof€
2,350millionandaUSDdenominatedfacilityof$540million.Inaddition,
theGroupenteredintointerest-bearingcreditfacilitiesforportfoliomarginnancingwith
BankofAmericaMerrillLynch(BAML),NatWestMarkets,GoldmanSachs,Barclays
Bank,Mizrahi-TefahotBankandSovaCapital.Thesefacilitiescanbemodiedor
terminatedatanytime.Thefacilitiesareexclusivelyforthenancingofpositionsofthe
nancialinstrumentstradedintheordinarycourseofthetradingactivitiesusingthe
variousprimebrokers.
OurprimebrokersrequiretheGrouptopostcashtocoverthehaircutormargin
requirements(representingaminorportionofourportfolio’ssize,whichisvariableand
calculatedonadailybasisdependingonportfoliosizeandcomposition)incashor
securitiesassecurityforourpositionsheldwiththerelevantprimebroker.Thepositions
aresubjecttopledgeandcollateralarrangements.
Covenants
Pursuanttothemaincovenantsincludedinourfacilities,theGroupisrequiredtocomply
withanetliquidationbalancethatexceedsthehaircutcalculatedbytheprimebroker.
Boththenetliquidationbalanceandhaircutarevariableandcalculatedonadailybasis,
dependingonportfoliosizeandcomposition.Themaincovenantsprescribecertain
maximumportfolio-toloansize(variableandcalculatedonadailybasis,dependingon
portfoliocomposition).Inaddition,theyrequireustomaintainasolvencyratioofatleast
4%,calculatedbyshareholdersequitydividedbycreditlimit.
ThemaincovenantsalsorequiretheGrouptosupplyourprimebrokerswithnancial
statementsandotherinformation,includinginformationonourtradingactivitiesand
tradingcounterparties,andpermissiontoinspectourbooksandrecords.Furthermore,
theyrequireustomaintainallrelevantauthorizationsandmembershipsrequiredinorder
Goodwill
InDecember2010theGroupobtainedcontrolofTradeSenseSolutionsB.V.andits
subsidiaryFlowTradersTechnologiesSRL(formerlyTradeSenseSolutionsSRL),
asoftwaredevelopmentcompanywithspecialfocusontradinginelectronicmarkets.
Thegoodwillamountedto€
0.5million.
Therewerenoadditionsorimpairmentstothegoodwillin2021and2020.
23.Financial liabilities held for trading
FINANCIAL LIABILITIES HELD FOR TRADING At 31 December
2021 2020
Shortpositionsinequitysecurities-trading 1,804,293 1,564,296
Shortpositionsindebtsecurities-trading 327,750 395,709
Marktomarketderivativesliabilities 6,029 226
Total financial liabilities held for trading 2,138,072 1,960,231
Pleasealsorefertonote14,15,16,24and25.
24.Trading payables
TRADING PAYABLES At 31 December
2021 2020
Payablesforcashmarketproducts 6,113,792 4,438,595
Borrowings 1,854,765 1,360,042
Marktomarketderivativesliabilities 1,415 2,365
Total trading payables 7,969,972 5,801,002
Pleasealsorefertonote14,15,16,23and25.
Payables for securities bought
InaccordancewiththeGroup’spolicyoftradedateaccountingforregularwaysaleand
purchasetransactions,payablesforsecuritiesboughtrepresentamountspayablesfor
securitiesthatwerepurchased,butnotyetsettledasatthereportingdate.Theamount
payableisbasedonthenetunsettledamountperclearinginstitution.
LEASES At 31 December 2020
Right-of-use
assets
Lease
liabilities
As at 1 January 2020 15,482 15,975
Additions 6,623 6,457
Depreciationexpense (7,072) -
Interestexpense - 391
Payments - (7,550)
Exchangeratedifferences (630) (616)
As of 31 December 2020 14,403 14,657
Formoreinformation,pleaserefertonotes21and22forfurtherdetailsoftheright-of-use
assets.
27.Other liabilities
At 31 December
2021 2020
Long-termvariablecompensationpayable 30,344 76,080
Subtotal non-current liabilities 30,344 76,080
Wagesandvariablecompensationpayable 111,051 95,518
Wagestaxpayable 2,438 5,364
Dividendpayable - 6
Creditorsandaccruals 18,284 15,818
Subtotal current liabilities 131,773 116,706
Total other liabilities 162,117 192,786
Thelong-termandcurrentvariablecompensationpayablesrelatetopayablestothe
company’semployeesinrespectofthevariablecashremunerationandthepayablesfor
therecognizedsharesappreciationrights-cashsettled(seenote10-Employee
expenses,note29-OtherContingentLiabilities).AssetoutinthechapterRemuneration
ChapterthecashvariablecompensationandtheSARSprogramsaredeferredinmultiple
instalments.Ifthegroupfacesoperationallossesthesevariablecompensationelements
arereducedorforfeitedentirelytocoverforsuchloss.
toconductourbusiness,andcomplywithallapplicablelaws,rulesandregulationsand
placerestrictionsonmergersanddispositionofourassetsoutsidetheordinarycourseof
ourbusiness.
25.Other liabilities held for trading
OTHER LIABILITIES HELD FOR TRADING At 31 December
2021 2020
Otherliabilitiesheldfortrading 25,771 825
Total other liabilities held for trading 25,771 825
Peryearendthegrouphadotherliabilitiesheldfortradingwithatotalvalueof€ 25.8
millioncomprisingofloansdenominatedindigitalcurrenciesorheldwithdigitalasset
brokers.
26.Leases
TheGrouphasleasecontractsforofcespace,softwareandhardwarewithleaseterms
betweenoneandveyears.TheGroupalsohascertainleaseswithleasetermsof12
monthsorless,forwhichthe‘short-termlease’recognitionexemptionisapplied.
SetoutbelowarethecarryingamountsoftheGroup’sright-of-useassets(includedunder
propertyandequipmentandintangibleassets)andleaseliabilitiesandthemovements
duringtheperiod:
LEASES At 31 December 2021
Right-of-use
assets
Lease
liabilities
As at 1 January 2021 14,403 14,657
Additions 9,814 8,700
Depreciationexpense (8,123) -
Disposals (1,639) -
Interestexpense - 390
Payments - (8,152)
Exchangeratedifferences 555 580
As of 31 December 2021 15,010 16,175
Account.Pleasealsorefertonote10.
Currencytranslationreserve
Thetranslationreservecomprisesallforeigncurrencydifferencesarisingfromthe
translationofthenancialstatementsofforeignoperations.Thisalsoincludesthehedge
results.
Fairvaluereserve
ThefairvaluereservecomprisesthefairvaluemovementsonallInvestmentsmeasuredat
fairvaluethroughOCIoftheGroup.
General distributions
PursuanttoArticle24.1ofthecompany’sArticlesofAssociation,theManagementBoard,
withtheapprovaloftheSupervisoryBoard,hasdecidedthatoftheprotfor2021(totalling
€
114.9million),anamountof€ 55.9millionshallbeaddedtothereserves.Theremaining
amountof€59.0millionisatthedisposaloftheGeneralMeetingofShareholders(General
Meeting).
Dividends
ItisproposedtotheGeneralMeetingthatatotalcashdividendof1.35persharewillbe
paidouttoshareholdersforthenancialyear2021,subjecttoa15%dividendwithholding
tax.Aninterimcashdividendof€1.00persharewaspaidouton20August2021.
ThismeansthatthenalcashdividendproposaltotheGeneralMeetingof29April2022
is0.35pershare.
29.Other contingent liabilities
Claims
TheGroupisnotinvolvedinanysignicantandmateriallegalproceduresand/orclaims
andtherearenoothercontingentliabilities.
Fiscal unity
TheGroupconstitutesascalunitywithitsfullyownedDutchsubsidiariesforDutch
incometaxpurposes.Moreover,FlowTradersB.V.formspartofascalunityforVAT
purposes,coveringpartoftheDutchGroup.Allcompaniesinthescalunityarejointly
andseverallyliableforthetaxobligationsofthescalunity.
28.Equity
Share capital and share premium
AllordinarysharesrankequallywithregardtotheCompany’sresidualassets.Thereare
nopreferredshareholders.
ORDINARY SHARES At 31 December
2021 2020
Inissue1January 46,534,500 46,534,500
Treasuryshares (3,498,134) (1,832,879)
Total 43,036,366 44,701,621
Ordinary shares
HoldersoftheCompany’sordinarysharesareentitledtodividendsandareentitledtoone
votepershareatgeneralmeetingsoftheCompany.
TotalauthorizedcapitaloftheCompanyis€
10millionconsistingof100millionsharesof
whichcurrently46,534,500sharesareissued.Thenominalvaluepershareis€
0.10each,
andthereforetheissuedandpaidupcapitalamountsto€
4,653,000.
SharePremiumAccount/Treasuryshares
Asat31December2021FlowTradersNVand/oritssubsidiarieshold3,498,134(2020:
1,832,879)ofordinaryshares(treasuryshares).TreasurysharesheldbytheGrouparenot
cancelledandarerecognizedatcostanddeductedfromEquitySharePremiumAccount.
NogainorlossisrecognizedintheP&Lonthepurchase,sale,issueorcancellationofthe
Group’sownequityinstruments.Anydifferencesbetweenthecarryingamountandthe
consideration,ifreissued,isrecognizedintheSharePremiumAccount.Thepurchasesof
theseordinarysharesonthemarketareprimarilyintendedtobeusedinrelationtothe
variableremunerationprogramsforemployeesandtheemployeeFlowLoyaltyIncentive
Plan(FLIP).
ShareBasedPaymentReserve
TheShareBasedPaymentReserveisusedtorecognizethegrantdatefairvalueof
sharesissuedtoemployees,thegrantdatefairvalueofdeferredsharesgrantedto
employeesbutnotyetvestedaswellasthereinvesteddividendsfortheunvestedshares
foremployees.Atthedeliveryofthesharestotheemployeestheshareswillbereclas-
siedreducingtheShareBasedPaymentReserveandincreasingtheSharePremium
Asfrom2020certainemployeesreceivepartoftheirvariablecompensationinshare
appreciationrights(SARs).TheSARsvestinequalinstalmentsoveraperiodoffourtove
yearssubjecttotheconditionthattheemployeeremainsemployedonthevestingdate.
TheSARSareexpensesandrecognizedinthenancialstatementsinlinewiththeIFRS2
Sharebasedpayment-cashsettledaccountingrules(referalsotonote10-Employee
Expenses).
Thecontingentliabilityfromtheseplansareasfollows:
Cash incentive provided to employees
Upuntilandincluding2019,employeeshadthepossibilitytoparticipateinanemployee
incentiveplanandareeligibletoacashincentivedependingontheirsharepositioninthe
company.Oneoftheconditionsforthiscashincentiveisthattheemployeeneedstobe
employedatthecompanyattimeofthepaymentofthecashincentive.Paymentswillbe
madeintherst,second,third,fourthandfthyearoftheplan.BasedonIAS19,costs
relatedtothecashincentivemaynotberecognizeduntiltheemployeefullstheservice
obligation.Thereforethesecostswillberecognizedinfutureyearsinprotandloss.
In2021thecompanyrecognized€2.3millionofcostsrelatingtothisplan(2020:€2.6
million).
2022 2023 2024 2025 2026 Total
Cashincentiveplan2017 308 308
Cashincentiveplan2018 839 839
Cashincentiveplan2019 455 455 911
Shareappreciationrights2020 1,343 1,911 1,819 5,072
Shareappreciationrights2021 645 754 817 505 2,721
Total 1,602 2,443 2,664 2,636 505 9,851
Guarantees
FlowTradersBVandFlowTradersUSHoldingLCChaveprovidedseveralguaranteesfor
theobligationsofFlowTradersUSInstitutionalTradingLCCtoexternalcounterpartiesin
relationtotradingrelationships.ObligationundertheguaranteesrequireFlowTraders
InstitutionalTradingtofullclaimsthatcompanyhasnotfullledoneofitsobligations
directlyrelatedtothetradingrelationships.Theseguaranteesareineffectforperiods
rangingfrom1yeartoanindenitivetermasofthesigningdateoftheagreement,which
canbewithdrawnwith1weeknotice.
30.Related parties
General
ThemembersoftheGroup’sSupervisoryBoardandtheManagementBoardare
consideredthepersonsresponsibleformanaging,controllingtheGroupandsupervising
thegroupfortheSupervisoryBoard.
Key management employee and Supervisory Board compensation
KeymanagementemployeecompensationcomprisedtheManagementBoardcompen-
sationover2021and2020.Basesalariesandvariablecompensationpaidincashis
short-terminnature.
Associates
TheGrouphasenteredintotransactionswithassociates,referenceismadetonote20.
Group companies
SUBSIDIARIES
Country of incorporation Ownership interest
2021 2020
FlowTradersHoldingB.V. Netherlands 100% 100%
FlowTradersB.V. Netherlands 100% 100%
FlowTradersTechnologiesB.V. Netherlands 100% 100%
INITCapitalB.V. Netherlands 100% 100%
FlowTradersInvestmentB.V. Netherlands 100% -
FlowTradersAsiaPte.Ltd. Singapore 100% 100%
FlowTradersUKServicesLtd. UnitedKingdom 100% -
FlowTradersLondonLtd. UnitedKingdom 100% -
FlowTradersInvestmentLtd. Jersey 100% -
FlowTradersHongKongLtd HongKong 100% 100%
FlowTradersHongKongServicesLtd HongKong 100% 100%
FlowTradersU.S.HoldingLLC UnitedStatesofAmerica 100% 100%
FlowTradersU.S.LLC UnitedStatesofAmerica 100% 100%
FlowTradersU.S.InstitutionalTrading
LLC UnitedStatesofAmerica
100% 100%
FlowTradersTechnologiesSRL Romania 100% 100%
Other branches
TheGrouphasthefollowingbranches:
Country Trading Name
London UnitedKingdom FlowTradersB.V.(LondonBranch)
Milan Italy FlowTradersB.V.(MilanBranch)
Paris France FlowTradersB.V.(ParisBranch)
Signicant restrictions
TheGroupdoesnothavesignicantrestrictionsonitsabilitytoaccessoruseitsassets
REMUNERATION MANAGEMENT BOARD AND SUPERVISORY BOARD 2021
Variable compensation
Base salary Cash Share-
based
payments
Extra-
ordinary
Total
ManagementBoard 524 2,538 2,538 113 5,712
SupervisoryBoard 620 620
REMUNERATION MANAGEMENT BOARD AND SUPERVISORY BOARD 2020
Variable compensation
Base salary Cash Share-
based
payments
Extra-
ordinary
Total
ManagementBoard 467 10,588 10,588 116 21,758
SupervisoryBoard 325 - - - 325
Flow Traders Foundation
AssomeofFlowTraders’SupervisoryBoardmemberssitontheboardoftheFlow
TradersFoundation(“Foundation”),thefoundationisconsideredarelatedparty.
In2020FlowTradersestablishedtheFlowTradersFoundation,aCharityorFoundation
(“Stichting”)tobetterstructureitshistoricengagementingivingtoothersinsocietywho
need(nancial)help.During2020FlowTradershasputinplacethefundingtomakesure
thatasignicantnancialbasishasbeenlaidsothattheFoundationhasthenancial
meanstomakenotonlyanannualbutalsoastructuralimpactandmeetsitspurpose.
In2021FlowTraderscontributedatotalvalueof€0.6million(2020:€0.2million)relatedto
theMultiyearrighttoappointcharitiestheFoundationsupportsasthemainshirtsponsor
ofaDutchprofessionalfootballcluband€0.4millionofthe2021cashbonusreservedfor
employeeswillbedonatedtotheFlowTradersFoundationin2022(2020:nil).
Furthermore,60,000FlowTradersNVsharesforatotalvalueof€2.0millionandacash
donationof€0.5millionweretransferredtotheFoundation.Thesetransferswerealready
accruedforin2020.
In2020FlowTradersmadecontributionstotheFoundationforatotalvalueof€10million.
andsettleitsliabilitiesotherthanthoseresultingfromthesupervisoryframeworkswithin
whichitssubsidiariesoperate.PleaserefertotheCapitalManagementsectionofthis
reportformoreinformation.
31.Financial risk management
Overview
TheGroupisexposedtothefollowingrisksarisingfromnancialinstruments:
■
Operationalrisk;
■
Creditrisk;
■
Marketrisk;
■
ForeignExchangerisk;
■
InterestRaterisk;
■
Liquidityrisk;
■
Concentrationrisk.
ThisnotepresentsinformationabouttheGroup’sexposuretoeachoftheaboverisks,
theGroup’sobjectives,policiesandprocessesformeasuringandmanagingrisk,andthe
Group’smanagementofcapital.
Operational risk
Operationalriskistheriskoflossresultingfrominadequateorfailedinternalprocesses,
peopleandsystemsorfromexternalevents.
OurGroupOperationalRiskframeworkcontributestoraiseawarenessoftheseriskstoall
ouremployeesandstimulatesariskmitigationcultureinallourprocessesthatarewell
documentedandperiodicallyupdated.Theriskgovernanceandindependentorganization
oftheRiskteamensuresthattheriskappetiteisappropriatelyimplemented,monitored
andreportedtoManagementonaregularbasis.Wemaintainaninternaloperationalrisk
eventdatabasethatcapturesanyincidentthatmayhaveoccurred(irrespectiveifitledto
anancialloss/protornot).Weroutinelyperformanin-depthanalysisoftheseincidents
inordertoavoidareoccurrence.Everyyear,weconductRiskControlSelfAssessments
(RCSA)ineveryteamtoupdatethemaininherentrisksthatcouldbethemostimpactful
andensuretheyremainwithinourriskappetite.AnydeviationisescalatedtoManagement
andaTaskforceisputinplacetobringbacktheresidualriskscoringwithinourrisk
appetite.Thisongoingvigilanceensureswededicatetheappropriateamountoftimeand
resourcestoimproveourcontrolenvironmentinaconsistentway.
Credit risk
CreditriskistheriskofnanciallosstotheGroupifacounterpartytoanancial
instrumentfailstomeetitscontractualobligations,andcanalsoarisefromthesettlement
ofoff-exchangetransactions.
Attheendofthereportingperiod,themaximumexposuretocreditriskisrepresentedby
thecarryingamountofeachnancialassetinthestatementofnancialposition.These
amountssignicantlyexceedexpectedlossintheeventofcounterpartydefault,
asexpectedlosstakesintoaccountthelikelihoodofsuchaneventandcollateralor
security.Thelikelihoodofcounterpartydefaultisdeemedtoberemoteduetothecredit-
worthinessofthecounterpartiesandthecentralcounterparties.Themaximumexposure
tocreditriskatthereportingdatewasasfollows:
CARRYING AMOUNT At 31 December
2021 2020
Cashandcashequivalents 4,949 8,345
Tradingreceivables 6,160,238 4,633,469
Otherreceivables 14,727 14,190
Creditriskrelatedtotransactionsonexchangesislimitedsincetheseareguaranteedby
thecentralcounterpartyorclearinghouserelatedtothatexchange.Membersofthese
clearinghousesarerequiredtodepositsubstantialamountsofcash,bondsorequitiesas
collateralforanyfailuretosettlementoftrading.Whilestillalimitedpartofourbusiness,
thereisaninherentriskrelatedtotransactionsondigitalassetsexchangesastheyare
generallyunregulated.Thisriskismitigatedbystrictonboardingproceduresandlimiting
thevaluetradedonexchangetominimizethemaximumrisk.
TheGroupmanagescreditriskthroughitsRiskandMid-Ofcedepartmentthatprovide
specicguidelines,rulesandproceduresforidentifying,measuringandreportingcredit
risk.
TheGrouphasoutsourcedcollateralmanagementtoitsprimebrokers.Itcanreceiveand
grantcollateralintheformofcashandmarketablesecuritiesinrespectofthefollowing
transactions:
■
derivatives;
■
saleandrepurchase,andreversesaleandrepurchaseagreements;and
■
securitieslendingandborrowing.
TheGroupreceivesandgrantscollateralintheformofcashandmarketablesecuritiesas
setoutinnotes15and24inrespectofderivatives(includingswaps).Suchcollateralis
subjecttostandardindustrytermsincluding,whereappropriate,anISDACreditSupport
Annex.This
meansthatsecuritiesreceived/grantedascollateralcanbepledgedorsoldduringthe
termofthetransaction,buthavetobereturnedonmaturityofthetransaction.Theterms
alsogiveeachpartytherighttoterminatetherelatedtransactionsonthecounterparty’s
failuretopostcollateral.
Offsetting
TheGrouphasvariousnettingagreementsinplacewithcounterpartiestomanagethe
associatedcreditrisks.Sucharrangementsprimarilyinclude:securitiesborrowingand
lendingarrangements,andover-the-counterandexchangetradedderivatives.These
nettingagreementsandsimilararrangementsgenerallyenablethecounterpartiesto
set-offliabilitiesagainstavailableassetsreceivedintheordinarycourseofbusinessand/
orintheeventofthecounterparty’sdefault.Theoffsettingrightisalegalrighttosettle,
orotherwiseeliminate,alloraportionofanamountduebyapplyinganamountreceivable
fromthesamecounterpartyagainstit,thus,reducingcreditexposure.However,
theoffsettingcriteriainIAS32arenotmetinallcases.
Policiesincludeamongstothers:
■
limitsforindividualproducttypes;
■
limitspercounterparty;
■
limitsonthedurationoftheexposure;
■
limitsforsettlementtypes;
■
strictmonitoringproceduresforlatesettlements.
Creditworthinessofcounterpartiesiscontinuouslyassessedandcounterpartyexposures
aremonitoredonanintra-daybasis.
Offsetting nancial assets and nancial liabilities
Thedisclosuressetoutinthisparagraphincludenancialassetsandnancialliabilities
that:
■
areoffsetintheGroup’sstatementofnancialposition;or
■
aresubjecttoanenforceablemasternettingarrangementorsimilaragreementthat
coverssimilarnancialinstruments,irrespectiveofwhethertheyareoffsetinthe
statementofnancialposition.
Thesimilaragreementsincludederivativeclearingagreements,globalmasterrepurchase
agreements,andglobalmastersecuritieslendingagreements.Similarnancial
instrumentsincludederivatives,salesandrepurchaseagreements,reversesaleand
repurchaseagreements,securitiesborrowingandsecuritieslendingagreements.
Financialinstruments,suchasloansanddeposits,arenotdisclosedinthisparagraph
unlesstheyareoffsetinthestatementofnancialposition.
TheISDAandsimilarmasternettingarrangementsdonotmeetthecriteriaforoffsettingin
thestatementofnancialposition.Thisisbecausetheycreatearighttooffsetrecognized
amountsforthepartiestotheagreementthatisenforceableonlyfollowinganeventof
default,insolvencyorbankruptcyoftheGrouporthecounterpartiesorfollowingother
predeterminedevents.
Inaddition,theGroupanditscounterpartiesdonotintendtosettleonanetbasisorto
realizetheassetsandsettletheliabilitiessimultaneously.
At 31 December 2021
Offsetting recognized
on the balance sheet
Netting potential not recognized
on the balance sheet
Maximum
exposure to risk
Gross assets/
liabilities before
offset
Offsetting with
gross liabilities
(IAS 32)
Net positions
recognized on
the statement of
nancial
position
Netting
potential
Positions after
consideration of
netting potential
Positions not
subject to
netting
arrangements
Positions
recognized in
the statement of
nancial
position
After
consideration of
netting potential
Financial assets
Longpositions,cashmarketproducts
andamountsreceivablefromclearing
agent
11,158,860 (497,525) 10,661,335 (10,108,044) 553,291 10,661,335 553,291
Otherassetsheldfortrading 78,122 78,122 78,122
Total financial assets 11,158,860 (497,525) 10,661,335 (10,108,044) 553,291 78,122 10,739,457 631,413
Financial liabilities
Shortpositions,cashmarketproducts
amountspayabletoclearingagents,
andborrowings
10,605,569 (497,525) 10,108,044 (10,108,044) - 10,108,044 -
Otherliabilitiesheldfortrading 25,771 25,771 25,771
Total financial liabilities 10,605,569 (497,525) 10,108,044 (10,108,044) - 25,771 10,133,815 25,771
At 31 December 2020
Offsetting recognized
on the balance sheet
Netting potential not recognized
on the balance sheet
Maximum
exposure to risk
Gross assets/
liabilities before
offset
Offsetting with
gross liabilities
(IAS 32)
Net positions
recognized on
the statement of
nancial
position
Netting
potential
Positions after
consideration of
netting potential
Positions not
subject to
netting
arrangements
Positions
recognized in
the statement of
nancial
position
After
consideration of
netting potential
Financial assets
Longpositions,cashmarketproducts
andamountsreceivablefromclearing
agent
9,240,990 (734,377) 8,506,613 (7,761,233) 745,380 8,506,613 745,380
Otherassetsheldfortrading 18,684 18,684 18,684
Total financial assets 9,240,990 (734,377) 8,506,613 (7,761,233) 745,380 18,684 8,525,297 764,064
Financial liabilities
Shortpositions,cashmarketproducts
amountspayabletoclearingagents,
andborrowings
8,495,610 (734,377) 7,761,233 (7,761,233) - 7,761,233 -
Otherliabilitiesheldfortrading 825 825 825
Total financial liabilities 8,495,610 (734,377) 7,761,233 (7,761,233) - 825 7,762,058 825
Market risk
ThemarketriskfortheGrouprelatestotheriskofthevalueofanancialinstrument
uctuatingbecauseofchangesinfactorsincluding,butnotlimitedto,interestrates,
volatilities,currencyrates,futuredividendexpectationsandequityprices.TheRiskand
Mid-Ofcedepartmentmonitorsmarketriskexposureonacontinuousbasis(including
intra-day).BasedonthelimitssetperproductortheaggregatedriskfortheGroup,limit
breaches,ifany,willtriggeractionfromtheRiskandMid-Ofcedepartmentinorderto
reducetherisk.
InadditiontotheGroup’sRiskandMid-Ofcedepartment,thetradingpositionsarealso
monitoreddaily.TheapplicablehaircutandmarginsarecomputedbytheGroup’sprime
brokers.TheRiskandMid-Ofcedepartmentcomputesthehaircutusinginternalmodels
enablingintra-daymonitoring.Limitsaresetonbothcapital-andcreditusage.Longand
shorttradingpositionsincludesecuritiesandderivativessuchas:shares,American
depositaryreceipts(ADRs),options,warrants,futures,forwardrateagreements(FRAs),
exchange-tradedproducts(ETP)anddigitalassets.Alltradednancialinstrumentsare
liquidinstruments.Therefore,theportfoliocanalwaysbeliquidatedwithinashorttime
frameandwithlimitedcosts.
TheGroupseekstohedgeitstradingpositionstominimizetheriskformarketmovements
anddoesnotengageinlongand/orshortonlypositions.Thedirectionofmarket
movements,i.e.whattheGroupconsidersdirectionalmarketrisk,isnotrelevantforthe
Groupbecauseofthislong/shorttradingstrategy.Becauseofthemannerinwhichthe
Grouphedgesforeigncurrency,interestrateriskandotherpricerisk,thedirectional
marketriskisclosetozero.Therefore,nosensitivityanalysishasbeendisclosed.
andareaccountedforatfairvalueonthebalancesheet.Allpositionscarriedonthe
balancesheetareshorttermandlistedonexchangesandthereforeliquidandtradable.
Asmentionedintheparagraphtradingpayables,theGrouphasacreditfacilityavailableto
facilitatethetradingpositionsaccountedforonthebalancesheet.Inordertomatchthe
liquidityandshortholdingperiodofthesetradingpositions,thefacilityhasaninterestrate
payable,whichisoating.TheGrouprunsalimitedriskontheoatinginterestduetothe
factthattheinterestisalsoembeddedinthefundingandnancingofthelong/short
positionsandintheEFPofthefuture.
Otherpricerisk
Equitypriceriskandcommoditypriceriskarisesfromtradingpositionsaswellasthe
Group’sinvestmentsininvestmentsmeasuredatfairvaluethroughOCI.Inaddition,forits
optionpositions,theimpliedvolatilityoftheunderlyingcontractisanadditionalriskfactor.
Otherfactorstoconsideraretimeanddividendexpectations.
TheGroupmanagesotherpricerisksbydenedlimitsintermsofindividualpositionsper
productandaggregatepositionpertradingdeskrelatingtothesizeoftheexposure,
concentrations,pricingandvaluationparametersandnaturalhedgingbetweentheselong
andshortpositions.
AstheGroupisactiveinliquidityprovisionanddoesnotspeculateondirectionalmovesin
underlyingvalues,thenetdeltapositionsoftheportfoliosshouldbeclosetozero.
Inadditiontodailyinternalmonitoringmeasures,applicablehaircutandmarginsare
computedbytheGroup’sprimebrokers.Thehaircutanalysismeasuresallpositions,
individualandcorrelated,andreectsthedifferentriskcomponents.Thethirdpartyhaircut
calculationconrmstheinternalassessmentthatcompletestheGroup’soverviewofthe
risksthatitisexposedtoonadailyandovernightbasis.Anoverviewoftheoverallmarket
riskispresentedunderMarketrisk.
Liquidity risk
LiquidityriskistheriskthattheGroupwillencounterdifcultyinmeetingtheobligations
associatedwithitsnancialliabilitiesthataresettledbydeliveringcashoranother
nancialasset.TheGroup’sapproachtomanagingliquidityistoensure,asfaras
possible,thatitwillalwayshavesufcientliquiditytomeetitsliabilitieswhendue,under
Theoverallmarketrisk(includinginterestraterisk,creditrisk,foreigncurrencyriskand
settlementrisk)ofthenancialassetsandliabilitiesheldfortradingarecapturedintherisk
andmarginrequirementswhichtheGroupisrequiredtopostatitsprimebrokersand
clearingrms.Theconsolidatedmarginandhaircutrequirementsover2021areshownin
theCapitalmanagementparagraph.Althoughthepositionsarefullyhedged,aminimum
riskclosetozeroremainsasaresultofinefcienciesinthemodelsoftheprimebrokers.
Market risk factors relating to digital assets and liabilities
Inasimilarmattertotraditionalassets,thepriceofadigitalassetorliabilityuctuates
accordingtoitssupplyanddemand.Wemanagethisriskbyholdingdigitalassetsinthe
sameproportionasliabilities(long/shortdeltaneutralbook).Peryearendwehadatotal
exposuretodigitalassetsof€
0.4million(2020€ 0.5million).
Foreigncurrencyrisk
TheGroupisexposedtocurrencyriskarisingfromtradingpositionsdenominatedin
acurrencyotherthantherespectivefunctionalcurrenciesofGroupentities,primarilythe
euro,butalsoUnitedStatesdollarsandSingaporedollars.
Foreigncurrencyriskalsoarisesonnetinvestmentsinforeignoperations,aswellasnet
resultsoftheseforeignoperationsduringtheyear.
TheGroupmanagesforeigncurrencyriskthroughdailymonitoringofthepositionsby
currency.Generally,theGroupseekstohedgeforeigncurrencyexposuresincurrencies
otherthanthefunctionalcurrency.
TheGroupdoesusenancialinstrumentstohedgethetranslationriskrelatedtonet
investmentsinforeignoperationsornetresultsofforeignoperations.
Interestraterisk
Interestrateswillaffectfutureprotabilityofthefairvalueofnancialinstruments.
TheGroupisexposedtointerestrateriskasaresultofmismatchesofarrangedinterest
ratesofassetsandliabilities.TheGrouphaslimitsinplaceoninterestrategapsfor
stipulatedperiods.Theselimitsensurethatinterestraterisksarehedged.Positionsare
monitoredonadailybasisandhedgingstrategiesareusedtoensurepositionsare
maintainedwithinestablishedlimits.Allnancialinstrumentsareheldfortradingpurposes
bothnormalandstressedconditions,withoutincurringunacceptablelossesorrisking
damagetotheGroup’sreputation.TheGroup’scashposition,aswellastheother
availablecreditlineswithprimebrokers,ismonitoredonadailybasis.
Maturitybasedoncontractualundiscountedcashowsisasfollows:
At 31 December 2021
Carrying
amount
Contractual
cash ow
3 months
or less
Payableforsecuritiesbought 6,113,792 6,113,792 6,113,792
Borrowings 1,854,765 1,854,765 1,854,765
Marktomarketderivativesliabilities 1,415 1,415 1,415
Total trading payables 7,969,972 7,969,972 7,969,972
At 31 December 2020
Carrying
amount
Contractual
cash ow
3 months
or less
Payableforsecuritiesbought 4,438,595 4,438,595 4,438,595
Borrowings 1,360,042 1,360,042 1,360,042
Marktomarketderivativesliabilities 2,365 2,365 2,365
Total trading payables 5,801,002 5,801,002 5,801,002
Concentration Risk
Concentrationriskariseswhenanumberofcounterpartiesareengagedinsimilar
businessactivities,oractivitiesinthesamegeographicregion,orhavesimilareconomic
featuresthatwouldcausetheirabilitytomeetcontractualobligationstobesimilarly
affectedbychangesineconomic,politicalorotherconditions.Concentrationsindicatethe
relativesensitivityoftheGroup’sperformancetodevelopmentsaffectingaparticular
industryorgeographiclocation.TheGroup’spoliciesandproceduresandthebroad
geographicandindustryspreadofitsactivitieslimititsexposuretoanyconcentrationrisk.
Additionallymanagementhasestablishedcreditlimitsforgeographicandcounterparty
exposures,whicharemonitoredonadailybasis.Wemonitorthedistributionofassetsand
off-balancesheetitemsbygeographicregionandindustrysectoronanongoingbasis.
Maturity analysis of nancial assets and liabilities
Thefollowingtableshowsananalysisoftheassetsandliabilitiesaccordingtowhenthey
areexpectedtoberecoveredorsettled.
At 31 December 2021
Total Receivable/payable
on demand
Within
3 months
3 months
to 1 year
>1 year
Assets
Cashandcashequivalents 4,949 4,949
Financialassetsheldfortrading 4,501,097 4,501,097
Tradingreceivables 6,160,238 6,160,238
Otherassetsheldfortrading 78,122 78,122
Otherreceivables 14,727 12,134 1,042 1,551
InvestmentsmeasuredatfairvaluethroughOCI 9,282 9,282
InvestmentsmeasuredatfairvaluethroughPL 1,716 1,716
Investmentsinassociates 2,670 2,670
Propertyandequipment 39,609
Intangibleassets 2,345
Currenttaxassets 1,340 1,340
Deferredtaxassets 7,628 7,628
Total assets 10,823,723 10,744,406 12,134 2,382 22,847
Liabilities
Financialliabilitiesheldfortrading 2,138,072 2,138,072
Tradingpayables 7,969,972 7,969,972
Otherliabilitiesheldfortrading 25,771 25,771
Variablecompensationpayable 137,476 103,342 34,134
Leaseliabilities 16,175 1,919 5,281 8,975
Otherpayables 24,641 24,641
Currenttaxliabilities 1,014 1,014
Deferredtaxliabilities 2,433 2,433
Total liabilities 10,315,554 10,108,044 131,032 30,936 45,542
At 31 December 2020
Total Receivable/payable
on demand
Within
3 months
3 months
to 1 year
>1 year
Assets
Cashandcashequivalents 8,345 8,345
Financialassetsheldfortrading 3,873,144 3,873,144
Tradingreceivables 4,633,469 4,633,469
Otherassetsheldfortrading 18,684 18,684
Otherreceivables 14,190 11,403 1,174 1,613
InvestmentsmeasuredatfairvaluethroughOCI 3,622 3,622
InvestmentsmeasuredatfairvaluethroughPL - -
Investmentsinassociates 176 176
Propertyandequipment 40,745
Intangibleassets 1,226
Currenttaxassets 7,351 7,351
Deferredtaxassets 5,285 5,285
Total assets 8,606,237 8,533,642 11,403 8,525 10,696
Liabilities
Financialliabilitiesheldfortrading 1,960,231 1,960,231
Tradingpayables 5,801,002 5,801,002
Otherliabilitiesheldfortrading 825 825
Variablecompensationpayable 14,657 1,795 4,873 7,989
Leaseliabilities 167,969 91,889 76,080
Otherpayables 24,817 24,817
Currenttaxliabilities 45,661 45,661
Deferredtaxliabilities 1,137 1,137
Total liabilities 8,016,299 7,762,058 93,684 75,351 85,206
Liquidity and capital resources
Besidesequity,theprincipalsourceoffundshasbeenliquidityprovidedbytheprime
brokersthroughuncommittedcreditlinesandmarginnancing,aswellascashgenerated
fromouroperatingactivities.Asof31December2021,theGroupheld€
4.9millionincash
andcashequivalentscomparedto€
8.3millionasof31December2020.Thesebalances
aremaintainedprimarilytosupportoperatingactivities,includingensuringthattheGroup
hassufcientshort-termaccesstoliquidity,andcapitalexpenditures.
TheGroupmaintainsahighlyliquidbalancesheet,withalargeportionofitstotalassets
consistingofcash,highlyliquidmarketablesecuritiesandshort-termtradingreceivables
(arisingfromsecuritiestransactions).
TheGroupactivelymanagesitsliquidityonanintra-daybasisandmaintainssignicant
portfolionancingfacilitieswiththeprimebrokersinordertofacilitatetrading.These
facilitiesaresecuredbycashandcashequivalents,aswellasallnancialassetsin
accountsheldattherespectiveprimebrokers.TheGrouphasnooutstandingborrowings
otherthantheportfolionancingfacilitieswithprimebrokers.
Capital management
Objectivesandprocessesofmanagingcapital
Themanagementboard’spolicyistomaintainastrongcapitalbasewellabovethe
requiredmargininordertomaintaininvestor,creditorandmarketcondenceandto
sustainfuturedevelopmentofthebusiness.Themanagementboardmonitorsthe
regulatorycapitalandprimebrokermarginrequirementsratio’sconsolidatedandforits
keyregions,thereturnonitscapitalaswellasthelevelofdividendtoitsshareholders.
Theprocessofallocationcapitaltodifferentregionsandactivitiesissubjecttoreviewto
theRiskCommittee.
RegulatoryCapital
Capitaladequacyandtheuseofrequiredregulatorycapitalarebasedontheguidelines
developedbyInvestmentFirmRegulationandInvestmentFirmEUDirectives(IFR/IFD).
Thegroup’sleadregulator,theDutchCentralBank,setsandmonitorscapital
requirementsforthegroupasawholeandfortheoperatingcompany.Inaddition,
theactivitiesofoursubsidiariesintheUSAandAPACaresupervisedbytheirlocal
regulators.TheDutchCentralBankadoptedtheIFR/IFDcapitalrequirementsasfrom
June26,2021.AspartoftheIFR/IFDCapitalRequirementsFlowTradersNVis
categorizedasCategoryIIInvestmentFirmandapplyingK-factorriskmodel,xed
overheadcostsandminimumcapitalrequirementsasthePillarIrequirements.TheDutch
CentralbankontopofPillarIhassetadditionalPillarIIcapitalrequirements.
Thegroupanditsindividuallyregulatedsubsidiarieshavecompliedwithallexternally
imposedcapitalrequirements.
CAPITAL POSITION ACCORDING TO IFR/IFD/CRR At 31 December
2021 2020
ShareholdersEquityEU-IFRS 508,169 589,938
ProposedDividend (15,442) (112,691)
Sharebuybacksproposedandexecutedafteryear
end
- (30,578)
Deductionforintangibleassetsandinvestments (10,125) (7,740)
Available Common Equity Tier 1 Capital 482,602 438,929
Requiredregulatorycapital 242,640 217,600
Excess regulatory capital 239,962 221,329
32.Subsequent events
Nomaterialsubsequenteventshaveoccurredsince31December2021thatrequire
recognitionordisclosureinthisyear’snancialstatements.
33.Authorization of consolidated financial statements
Amsterdam,3March2022
TheManagementBoard:
BrittaAchmann DennisDijkstra FolkertJoling ThomasWolff MikeKuehnel
TheSupervisoryBoard:
L.Hovius J.T.A.G.vanKuijk O.J.Bisserier R.Ferscha R.H.C.Hodenius I.Jankovich
PARENT COMPANY BALANCE SHEET (BEFORE RESULT APPROPRIATION)
Note 31 December 2021 31 December 2020
Assets
Investmentsingroupcompanies 1 549,979 617,402
Receivablesfromgroupcompanies 2 81,637 39,834
Otherreceivables 938 1,369
Currenttaxassets 36 1
Cash 15 3,407
Total assets 632,605 662,013
Liabilities
Liabilitiestogroupcompanies 3 74,120 9,851
Currenttaxliabilities 4 267 43,874
Otherliabilities 5 16,239 18,350
Total liabilities 90,626 72,075
Equity
Sharecapital 4,653 4,653
Sharepremium 89,428 117,046
Sharebasedpaymentreserve 50,523 45,821
Retainedearnings 380,616 417,337
Currencytranslationreserve 15,510 6,076
Fairvaluereserve 1,249 (995)
Total equity 541,979 589,938
Total equity and liabilities 632,605 662,013
PARENT COMPANY INCOME STATEMENT
Note 31 December 2021 31 December 2020
Personnelexpenses 7 6,494 17,011
Otherexpenses 8 756 9,075
Operating expenses 7,250 26,086
Operating result (7,250) (26,086)
Shareinresultfromparticipatinginterests,aftertaxation 1 120,899 488,811
Otherresults 712 -
Result/(impairment)ofequity-accountedinvestees 559 (440)
Prot before tax 114,920 462,285
Taxexpense (726) (2,228)
Profit for the period 115,646 464,513
Notes to the parent company nancial statements
All amounts in thousands of euro, unless stated otherwise.
Principles for the measurement of assets and liabilities and the determination
of the result
Insettingtheprinciplesfortherecognitionandmeasurementofassetsandliabilitiesand
determinationoftheresultforitsparentCompanynancialstatements,theGroupapplies
theoptionprovidedinsection2:362(8)oftheNetherlandsCivilCode.Theprinciplesfor
therecognitionandmeasurementofassetsandliabilitiesanddeterminationoftheresult
(hereinafterreferredtoasprinciplesforrecognitionandmeasurement)oftheparent
companynancialstatementsarethesameasthoseappliedfortheconsolidatedIFRS
-EUnancialstatements.ParticipatinginterestsoverwhichtheCompanyhassignicant
inuence,aremeasuredatequityvalue.Pleaseseenotestoconsolidatedstatements
chapter1to4foradescriptionoftheGroup’sIFRS-EUprinciples.
TheprotfromparticipatinginterestsconsistsoftheCompany’sshareintheresultsof
theseparticipatinginterests.Resultsontransactions,comparingthetransferofassetsand
liabilitiesbetween(i)theGroupanditsparticipatinginterestson(ii)betweenparticipating
intereststhemselves,arenotrecognized.
1. Investments in Group companies
At 31 December
2021 2020
Investmentsingroupcompanies 549,979 617,402
Total investments in group companies 549,979 617,402
ThemovementsoftheinvestmentsinGroupcompaniesisasfollows:
At 31 December
2021 2020
Balanceat1January 617,402 338,790
Changes:
■
exchangeratedifferences 9,434 (10,158)
■
revaluationreserve 2,244 (41)
■
shareinresultofinvestments 120,899 488,811
■
dividenddeclared (200,000) (200,000)
Balance at 31 December 549,979 617,402
2. Receivables from group companies
At 31 December
2021 2020
Sharebasedpaymentreceivablegroupcompanies 47,827 10,992
Intercompanyloansprovidedtogroupcompanies 33,810 28,842
Balance at 31 December 81,637 39,834
Per31December2021,theparentCompanyhadmainlysharebasedpaymentreceivables
towardsFlowTradersB.V.for€
29.0million(2020:nil),FlowTradersUSLLC€ 11.4million
(2020:€
10.1million)andFlowTradersHongKongServicesLtdfor€ 5.1million(2020:nil).
TheintercompanyloanreceivablewastowardsFlowTradersB.V.(2020:of€
24.3million).
3. Liabilities to group companies
At 31 December
2021 2020
Intercompanyloansfromgroupcompanies 74,120 9,851
Balance at 31 December 74,120 9,851
TheliabilitiestogroupcompaniespertainmainlytoanintercompanyloanfromFlow
TradersHoldingB.V.of€
73.4million(2020:€ 9.9million).
4. Current tax liabilities
At 31 December
2021 2020
Corporateincometax 267 43,874
Total current tax liabilities 267 43,874
TheparentCompanyformspartoftheGroupscalunityforcorporateincometax
purposes.Allcompaniesinthescalunityarejointlyandseverallyliableforthetax
obligationsofthescalunity.TheparentCompany’staxassetsorliabilitiesfacethetax
authoritiesonbehalfofthescalunity.
5. Other liabilities
At 31 December
2021 2020
Longtermbonuspayable 6,429 5,294
Subtotal non-current liabilities 6,429 5,294
Wagesandbonusespayables 9,547 9,050
Wagestaxpayable 63 544
Dividendpayable - 6
Othercurrentliabilities 200 3,456
Subtotal current liabilities 9,810 13,056
Total other liabilities 16,239 18,350
6. Equity
2021
Share
capital
Share
premium
Share based
payment reserve
Currency
translation
reserve
Fair value
reserve
Retained
earnings
Total
Balance at 1 January 2021 4,653 117,046 45,821 6,076 (995) 417,337 589,938
Prot 115,646 115,646
Totalothercomprehensiveincome 9,434 2,244 11,678
Total comprehensive income for the period - - - 9,434 2,244 115,646 127,324
Transactions with owners of the Company
Dividends (152,367) (152,367)
Treasuryshares (41,002) (41,002)
Sharebasedpayments 13,384 4,702 18,086
Total transactions with owners of the company - (27,618) 4,702 - - (152,367) (175,283)
Balance at 31 December 2021 4,653 89,428 50,523 15,510 1,249 380,616 541,979
2020
Share
capital
Share
premium
Share based
payment reserve
Translation
reserve
Fair value
reserve
Retained
earnings
Total
Balance at 1 January 2020 4,653 152,880 - 16,234 (954) 158,238 331,051
Prot 464,513 464,513
Totalothercomprehensiveincome (10,158) (41) (10,199)
Total comprehensive income for the period - - - (10,158) (41) 464,513 454,314
Transactions with owners of the Company
Dividends (205,414) (205,414)
Treasuryshares (41,795) (41,795)
Sharebasedpayments 5,961 45,821 51,782
Total transactions with owners of the company - (35,834) 45,821 - - (205,414) (195,427)
Balance at 31 December 2020 4,653 162,234 45,821 6,076 (995) 417,337 589,938
10.Off-balance sheet commitments
TheCompanyhasnooff-balancesheetcommitments.
11.Claims
TheCompanyisnotinvolvedinanysignicantlegalproceduresand/orclaims.
Therearenoothercontingentliabilities.
12.Related parties
Formoreinformation,refertonote30Relatedpartiesintheconsolidatednancial
statements.
13.Profit appropriation
Formoreinformation,refertonote8Earningspershareandnote28Equityintheconsol-
idatednancialstatements.
14.Subsequent events
Nomaterialsubsequenteventshaveoccurredsince31December2021thatrequire
recognitionordisclosureinthisyear’snancialstatements.
Thedifferenceof€
33.8millionper31December2021betweentheShareholdersEquity
accordingtotheparentcompanynancialstatementandtheconsolidatednancial
statementsisduetotheintercompanyreceivableinrelationtothelendingoftreasury
sharestowardsgroupentities.Fortheparentcompanynancialstatementsthistranslates
intoanintergroupreceivable(refertonote2),whileforIFRSconsolidatedreportingallthe
treasurysharesheldbygroupentitiesaredeductedfromshareholdersequity.
7. Employee expenses
For the year ended
2021 2020
Wagesandsalaries 1,015 697
Socialsecuritycharges 51 33
Recruitmentandotheremploymentcosts 29 2
Variablecompensationpaidincashandshares 5,399 16,279
Total employee expenses 6,494 17,011
8. Other expenses
For the year ended
2021 2020
Advisorsandassurance 266 169
Regulatorycosts 81 77
Shareholdermeetingcosts 114 138
DonationFlowTradersfoundation - 8,461
Variousexpenses 295 230
Other expenses 756 9,075
9. Result of equity-accounted investments
Formoreinformation,refertonote20Investmentsinassociatesintheconsolidated
nancialstatements.
15.Auditor fees
WithreferencetoSection2:382a(1)and(2)oftheNetherlandsCivilCode,thefollowing
feesforthenancialyearhavebeenchargedbyErnst&YoungAccountantsLLPandits
memberrmsandafliatestotheGroup,itssubsidiariesandotherconsolidatedentities,
whichdidnotincludetaxadvice:
FEES OF THE AUDITOR In thousands of euro
Ernst & Young
Accountants
LLP
Other
EY member
rms and
afliates
Total EY
2021
Statutoryauditofannualaccounts 302 76 378
Otherassuranceservices 156 6 162
Total auditor fees 2021 458 82 539
FEES OF THE AUDITOR In thousands of euro
Ernst & Young
Accountants
LLP
Other
EY member
rms and
afliates
Total EY
2020
Statutoryauditofannualaccounts 260 73 333
Otherassuranceservices 100 6 106
Total auditor fees 2020 360 79 439
16.Authorization of company financial statements
Amsterdam,3March2022
TheManagementBoard:
BrittaAchmann DennisDijkstra FolkertJoling ThomasWolff MikeKuehnel
TheSupervisoryBoard:
L.Hovius J.T.A.G.vanKuijk O.J.Bisserier R.Ferscha R.H.C.Hodenius I.Jankovich
Other information
Provisions in the Articles of Association governing the
appropriation of prot
Theprovisionsinthearticlesofassociationgoverningtheappropriationofprotreadas
follows:
1. TheManagementBoardmaydecide,withtheapprovaloftheSupervisoryBoard,that
theprotsrealizedduringanancialyearwillfullyorpartiallybeappropriatedto
increaseand/orfromreserves.Theprotsremainingafterapplicationtoorfrom
reservesshallbeputatthedisposalofthegeneralmeetingattheproposalofthe
ManagementBoard,withtheapprovaloftheSupervisoryBoard.Aproposaltopay
dividendsshallbedealtwithasaseparateagendaitematthegeneralmeeting.Distri-
butionsfromthecompany’sdistributablereservesaremadepursuanttoaresolution
ofthegeneralmeetingattheproposaloftheManagementBoard,withtheapprovalof
theSupervisoryBoard.Provideditappearsfromaninterimstatementofassets
signedbytheManagementBoardthattherequirementsconcerningthepositionofthe
company’sassetshasbeenfullled,theManagementBoardmay,withtheapprovalof
theSupervisoryBoard,makeoneormoreinterimdistributionstotheholdersof
shares.TheManagementBoardmaydecide,withtheapprovaloftheSupervisory
Board,thatadistributiononsharesshallnottakeplaceasacashpaymentbutasa
paymentinshares,ordecidethatholdersofsharesshallhavetheoptiontoreceivea
distributionasacashpaymentand/orasapaymentinshares,outoftheprotand/or
attheexpenseofreserves,providedthattheManagementBoardisdesignatedbythe
generalmeeting.WiththeapprovaloftheSupervisoryBoard,theManagementBoard
shalldeterminetheconditionsapplicabletotheaforementionedchoices.
2. Thecompany’spolicyonreservesanddividendsshallbedeterminedandcanbe
amendedbytheManagementBoard,withtheapprovaloftheSupervisoryBoard.
Theadoptionandthereaftereachamendmentofthepolicyonreservesanddividends
shallbediscussedandaccountedforatthegeneralmeetingunderaseparateagenda
item.
3. Distributionscanonlybemadeuptotheamountofthedistributablepartofthe
shareholders’equity.
4. Dividendsandotherdistributionswillbemadepayablepursuanttoaresolutionofthe
ManagementBoardwithinfourweeksafteradoption,unlesstheManagementBoard
setsanotherdateforpayment.
5. Theclaimofashareholdertoreceiveanydistributionsshalllapsewithinveyears
aftertheyhavebecomedueforpayment.
6. ForalldividendsandotherdistributionsinrespectofsharesincludedintheStatutory
GiroSystemthecompanywillbedischargedfromallobligationstowardstherelevant
shareholdersbyplacingthosedividendsorotherdistributionsatthedisposalof,orin
accordancewiththeregulationof,EuroclearNetherlands.
7. Incalculatingtheamountofanydistributiononshares,sharesheldbytheCompany
shallbedisregarded.
Independent auditor’s report
To:theshareholdersandsupervisoryboardofFlowTradersN.V.
Report on the audit of the nancial statements 2021 included in
the annual report
Our opinion
Wehaveauditedthenancialstatements2021ofFlowTradersN.V.basedinAmsterdam.
Thenancialstatementscomprisetheconsolidatednancialstatementsandthecompany
nancialstatements.
Inouropinion:
■
theaccompanyingconsolidatednancialstatementsgiveatrueandfairviewofthe
nancialpositionofFlowTradersN.V.asat31December2021andofitsresultandits
cashowsfor2021inaccordancewithInternationalFinancialReportingStandardsas
adoptedbytheEuropeanUnion(EU-IFRS)andwithPart9ofBook2oftheDutch
CivilCode
■
theaccompanyingcompanynancialstatementsgiveatrueandfairviewofthe
nancialpositionofFlowTradersasat31December2021andofitsresultfor2021in
accordancewithPart9ofBook2oftheDutchCivilCode
Theconsolidatednancialstatementscomprise:
■
theconsolidatedstatementofnancialpositionasat31December2021
■
thefollowingstatementsfor2021:theconsolidatedstatementofprotorlossand
othercomprehensiveincome,theconsolidatedstatementsofchangesinequityand
cashows
■
thenotescomprisingasummaryofthesignicantaccountingpoliciesandother
explanatoryinformation.
Thecompanynancialstatementscomprise:
■
theparentcompanybalancesheetasat31December2021
■
theparentcompanyincomestatementfor2021
■
thenotescomprisingasummaryoftheaccountingpoliciesandotherexplanatory
information.
Basis for our opinion
WeconductedourauditinaccordancewithDutchlaw,includingtheDutchStandardson
Auditing.OurresponsibilitiesunderthosestandardsarefurtherdescribedintheOur
responsibilitiesfortheauditofthenancialstatementssectionofourreport.
WeareindependentofFlowTradersN.V.(hereinafteralsoreferredtoasthecompanyor
FlowTraders)inaccordancewiththeEURegulationonspecicrequirementsregarding
statutoryauditofpublic-interestentities,the“Wettoezichtaccountantsorganisaties”(Wta,
Auditrmssupervisionact),the“Verordeninginzakedeonafhankelijkheidvanaccountants
bijassurance-opdrachten”(ViO,CodeofEthicsforProfessionalAccountants,aregulation
withrespecttoindependence)andotherrelevantindependenceregulationsinthe
Netherlands.Furthermorewehavecompliedwiththe“Verordeninggedrags-enberoep-
sregelsaccountants”(VGBA,DutchCodeofEthics).
Webelievetheauditevidencewehaveobtainedissufcientandappropriatetoprovide
abasisforouropinion.
Information in support of our opinion
Wedesignedourauditproceduresinthecontextofourauditofthenancialstatementsas
awholeandinformingouropinionthereon.Thefollowinginformationinsupportofour
opinionandanyndingswereaddressedinthiscontext,andwedonotprovideaseparate
opinionorconclusiononthesematters.
Our understanding of the business
FlowTradersN.V.isaglobalnancialtechnology-enabledmulti-assetclassliquidity
providerwithitscorebusinessinExchangeTradedProducts(ETP),whichincludesxed
income,FX,digitalassets(cryptocurrencies)andcommodities.FlowTradersN.V.isatthe
headofagroupofentities.Thegroupisstructuredincomponentsandwetailoredour
groupauditapproachaccordingly.Wepaidspecicattentioninouraudittoanumberof
areasdrivenbythenatureofthegroupandourriskassessment.
Westartbydeterminingmaterialityandidentifyingandassessingtherisksofmaterial
misstatementofthenancialstatements,whetherduetofraudorerrorinordertodesign
auditproceduresresponsivetothoserisksandtoobtainauditevidencethatissufcient
Wehave:
■
PerformedauditproceduresourselvesforthegroupentityFlowTradersB.V.
■
Usedtheworkofanother(non-EY)auditorforauditingthegroupentityFlowTraders
U.S.LLC
■
UsedotherEYauditrmstoperformspecicauditproceduresatothergroupentities
Wesentinstructionstocomponentauditors,coveringthesignicantareasandthe
informationrequiredtobereportedtous.Basedonourriskassessment,wedetermined
thelevelofinvolvementincomponentaudits.Becauseofthecontinuingtravelrestrictions
andsocialdistancingduetotheCovid-19pandemic,oursitevisitforthecomponentteam
intheUSwasvirtualandencompassedsome,orall,ofthefollowingactivities:reviewing
keylocalworkingpapersandconclusions,videoconferencingwithlocalmanagement
teamsandobtaininganunderstandingofkeyprocesses.Weinteractedregularlywiththe
USandothercomponentteamsduringvariousstagesoftheaudit,throughtheuseof
videoconferencingfacilities.
Byperformingtheproceduresmentionedaboveatcomponentsofthegroup,togetherwith
additionalproceduresatgrouplevel,wehavebeenabletoobtainsufcientand
appropriateauditevidenceaboutthegroup’snancialinformationtoprovideanopinion
abouttheconsolidatednancialstatements.
Teaming, use of specialists
Weensuredthattheauditteamsbothatgroupandatcomponentlevelsincludedthe
appropriateskillsandcompetenceswhichareneededfortheauditofalistedclientinthe
businessofprovidingliquiditytonancialmarkets.Weincludedspecialistsintheareasof
ITaudit,forensics,taxandtransferpricingandhavemadeuseofourownexpertsinthe
areasofvaluationsoftradingpositions,digitalassets(cryptocurrencies)andactuaries.
Our focus on fraud and non-compliance with laws and regulations
Our responsibility
Althoughwearenotresponsibleforpreventingfraudornon-complianceandwecannotbe
expectedtodetectnon-compliancewithalllawsandregulations,itisourresponsibilityto
obtainreasonableassurancethatthenancialstatements,takenasawhole,arefreefrom
materialmisstatement,whethercausedbyfraudorerror.
andappropriatetoprovideabasisforouropinion.Theriskofnotdetectingamaterial
misstatementresultingfromfraudishigherthanforoneresultingfromerror,asfraudmay
involvecollusion,forgery,intentionalomissions,misrepresentations,ortheoverrideof
internalcontrol.
Materiality
Materiality €7.3million(2020:€28.6million)
Benchmarkapplied 5%ofprotbeforetax(rounded)
Explanation Weappliedprotbeforetaxasthisbenchmarkisan
importantmetricfortheusersoftheconsolidated
nancialstatements.Wedeterminedmateriality
consistentlywiththepreviousnancialyear.
Wehavealsotakenintoaccountmisstatementsand/orpossiblemisstatementsthatinour
opinionarematerialfortheusersofthenancialstatementsforqualitativereasons.
Weagreedwiththesupervisoryboardthatmisstatementsinexcessof€0.3million,which
areidentiedduringtheaudit,wouldbereportedtothem,aswellassmaller
misstatementsthatinourviewmustbereportedonqualitativegrounds.
Scope of the group audit
FlowTradersN.V.isattheheadofagroupofentities.Thenancialinformationofthis
groupisincludedintheconsolidatednancialstatements.
Becauseweareultimatelyresponsiblefortheopinion,wearealsoresponsiblefor
directing,supervisingandperformingthegroupaudit.Inthisrespectwehavedetermined
thenatureandextentoftheauditprocedurestobecarriedoutforgroupentities.Decisive
werethesizeand/ortheriskproleofthegroupentitiesoroperations.Onthisbasis,
weselectedgroupentitiesforwhichanauditorreviewhadtobecarriedoutonthe
completesetofnancialinformationorspecicitems.
Ourgroupauditmainlyfocusedonsignicantgroupentities,beingFlowTradersB.V.
andFlowTradersU.S.LLC,basedontherelativenancialsizeofthesecomponents.
headofoperationsandregionaldirectors)andthesupervisoryboard.
Thepresumedfraudrisks,enquiriesandotheravailableinformationdidnotleadtospecic
indicationsoffraudorsuspectedfraudpotentiallymateriallyimpactingtheviewofthe
nancialstatements.
Our audit response related to risks of non-compliance with laws and regulations
Weassessedfactorsrelatedtotherisksofnon-compliancewithlawsandregulationsthat
couldreasonablybeexpectedtohaveamaterialeffectonthenancialstatementsfrom
ourgeneralindustryexperience,throughdiscussionswiththemanagementboard,reading
minutes,inspectionofinternalauditandcompliancereports,andperformingsubstantive
testsofdetailsofclassesoftransactions,accountbalancesordisclosures.Giventhatthe
companyoperatesinahighlyregulatedenvironment,thereisanincreasedriskof
non-compliancewithlawsandregulationsthatmayresultinnes,litigationorother
consequencesforthecompanythatcouldhaveamaterialeffectonthenancial
statements.
Weinspectedlawyers’lettersandcorrespondencewithregulatoryauthoritiesand
remainedalerttoanyindicationof(suspected)non-compliancethroughouttheaudit.
Incaseofpotentialnon-compliancewithlawsandregulationsthatmayhaveamaterial
effectonthenancialstatements,weassessedwhetherthecompanyhasanadequate
processinplacetoevaluatetheimpactofnon-complianceforitsactivitiesandnancial
reportingand,whererelevant,whetherthecompanyimplementedremediationplans.
Finallyweobtainedwrittenrepresentationsthatallknowninstancesofnon-compliance
withlawsandregulationshavebeendisclosedtous.
Our audit response related to going concern
Asdisclosedunder‘2.Goingconcern’inthenotestotheconsolidatednancialstatements
andinthesection‘Goingconcern’includedinthemanagementboardreport,management
madeaspecicassessmentofthecompany’sabilitytocontinueasagoingconcernand
tocontinueitsoperationsforatleastthenext12months.Wediscussedandevaluatedthe
specicassessmentwithmanagement,exercisingprofessionaljudgmentandmaintaining
professionalskepticism.
Weconsideredwhethermanagement’sgoingconcernassessment,basedonour
knowledgeandunderstandingobtainedthroughourauditofthenancialstatementsor
otherwise,containsalleventsorconditionsthatmaycastsignicantdoubtonthe
Our audit response related to fraud risks
Weidentiedandassessedtherisksofmaterialmisstatementsofthenancialstatements
duetofraud.Duringourauditweobtainedanunderstandingofthecompanyandits
environmentandthecomponentsofthesystemofinternalcontrol,includingtherisk
assessmentprocessandmanagement’sprocessforrespondingtotherisksoffraudand
monitoringthesystemofinternalcontrolandhowthesupervisoryboardexercises
oversight,aswellastheoutcomes.
Werefertosection‘Enterpriseriskmanagement’ofthemanagementboardreportfor
management’s(fraud)riskassessment.
Weevaluatedthedesignandrelevantaspectsofthesystemofinternalcontrolandin
particularthefraudriskassessment,aswellasthecodeofconduct,whistleblower
proceduresandincidentregistration.Weevaluatedthedesignandtheimplementation,
andwhereconsideredappropriate,testedtheoperatingeffectivenessofinternalcontrols
designedtomitigatefraudrisks.
Aspartofourprocessofidentifyingfraudrisks,weevaluatedfraudriskfactorswith
respecttonancialreportingfraud,misappropriationofassetsandbriberyandcorruption
incloseco-operationwithourforensicspecialists.Weevaluatedwhetherthesefactors
indicatethatariskofmaterialmisstatementduetofraudispresent.Wealsoconsidered
whethertheCovid-19pandemicgivesrisetospecicfraudriskfactorswithremote
working,ofceclosuresorillnesspossiblydilutingtheeffectivenessofinternalcontrols.
Weincorporatedelementsofunpredictabilityinouraudit.Wealsoconsideredtheoutcome
ofourotherauditproceduresandevaluatedwhetheranyndingswereindicativeoffraud
ornon-compliance.
Asinallofouraudits,weaddressedtherisksrelatedtomanagementoverrideofcontrols
andwhenidentifyingandassessingfraudriskswepresumedthattherearerisksoffraud
inrevenuerecognition.Fortherisksrelatedtomanagementoverrideofcontrolswehave
performedproceduresamongotherstoevaluatekeyaccountingestimatesfor
managementbiasthatmayrepresentariskofmaterialmisstatementduetofraud,
inparticularrelatingtoimportantjudgmentareasandsignicantaccountingestimates,
inparticularrelatingtofairvaluemeasurementasdisclosedinNote7tothenancial
statements.Wehavealsouseddataanalyticstoidentifyandaddresshigh-riskjournal
entries.Theserisksdidhowevernotrequiresignicantauditor’sattentionduringouraudit.
Weconsideredavailableinformationandmadeenquiriesofrelevantexecutives,directors
(includinginternalaudit,legal,compliance,riskmanagement,nance,humanresources,
Our key audit matters
Keyauditmattersarethosemattersthat,inourprofessionaljudgment,wereofmostsignif-
icanceinourauditofthenancialstatements.Wehavecommunicatedthekeyaudit
matterstothesupervisoryboard.Thekeyauditmattersarenotacomprehensive
reectionofallmattersdiscussed.
Incomparisonwithpreviousyear,ourkeyauditmattersdidnotchange.
company’sabilitytocontinueasagoingconcern,alsofocusingonwhetherthecompany
meetstheregulatorysolvencyrequirementsforaninvestmentrm.
Ifweconcludethatamaterialuncertaintyexists,wearerequiredtodrawattentioninour
auditor’sreporttotherelateddisclosuresinthenancialstatementsor,ifsuchdisclosures
areinadequate,tomodifyouropinion.
Basedonourproceduresperformed,wedidnotidentifyseriousdoubtsonthecompany’s
abilitytocontinueasagoingconcernforthenext12months.Ourconclusionsarebased
ontheauditevidenceobtaineduptothedateofourauditor’sreport.However,future
eventsorconditionsmaycauseacompanytoceasetocontinueasagoingconcern.
Risk Our audit approach Key observations
Fair value measurement of nancial assets and liabilities held for trading
Asdisclosedinnote7ofthenancialstatements,Flow
Traders’fairvaluemeasurementofnancialassetsand
liabilitiesheldfortradingisbasedoninternally
determinedtheoreticalprices,whicharealsousedfor
quotingpurposes.Assuch,valuationcandifferfrom
closingpricesatvariousstockexchangesorpricesfrom
clearers,forexampleduetomarketilliquidity,varietyin
openinghoursofthestockexchangesandtheuseof
hedginginstruments.
Thefairvaluesrecordedcouldincludeestimateswhich
aresubjectivebynature.Therefore,weidentiedthe
valuationofnancialassetsandliabilitiesheldfortrading
asakeyauditmatter.
Ourauditproceduresincluded,amongstothers,
assessingtheappropriatenessofFlowTraders’
accountingpoliciesrelatedtovaluationofnancialassets
andliabilitiesaccordingtoIFRS9“FinancialInstruments”
andIFRS13“FairValueMeasurement”.Inaddition,we
obtainedanunderstandingofthevaluationprocess,
includingvericationsdonebytheRiskandMid-Ofce
department.Weevaluatedthedesignandimplementation
ofinternalcontrolsrelevanttofairvaluemeasurement,
involvingourownexpertsintheareaofvaluationof
tradingpositions.
Weperformedrisk-basedsampletestingonthevaluation
ofindividualpositionsbyevaluatingtheinternally
developedpricesagainstmarketpricesfromindependent
sources.
Furthermore,weevaluatedthepresentationand
disclosureinthenancialstatementsforcomplianceand
consistencywithIFRS7“FinancialInstruments:
Disclosure”andIFRS13ondisclosurerequirementsfor
nancialassetsandliabilitiesheldfortrading,including
thefairvaluehierarchy.
Basedonourproceduresperformed,weconsiderthefair
valueofthenancialassetsandliabilitiesheldfortrading
tobereasonableandweconsidertherelateddisclosures
tobeadequateandappropriateinaccordancewiththe
requirementsunderEU-IFRS.
Risk Our audit approach Key observations
Digital assets transactions and balances
FlowTraderstradesincryptographicallysecureddigital
assets(‘cryptocurrencies’)asdisclosedinnote16tothe
nancialstatements.Thecryptocurrenciespositionsare
recordedasotherassetsheldfortradingandresults
recordedaspartoftradingincome.Cryptocurrenciesare
exchangeabledirectlybetweentwopartiesthrough
decentralized(‘blockchain’)networksthatrecord
anonymoustransactiondata.Alternatively,directtrades
areexecutedbetweenmembersofnon-regulatedcrypto-
currencyexchanges.Referenceismadetothe
informationoncryptocurrenciesinNote31Financialrisk
management.Forentitiesthatusethirdpartiestostore
theprivatekeysthatprovidesaccesstothedigitalassets,
ownershiphastobeestablishedbasedonlegalterms.
Thisdetermineswhetheranentityshouldrecognizethe
assetsorarighttotheassets.
Werecognizedariskintheexistenceofthecrypto-
currencypositions.Inaddition,werecognizedariskof
incorrectvaluationofcryptocurrencies,giventhehigh
volatilityandlargenumberofdifferentexchanges.
Wethereforeconsideredtheexistenceandvaluationof
cryptocurrencypositionsandtransactionsasakeyaudit
matter.
Ourauditproceduresincluded,amongstothers,
assessingtheappropriatenessofFlowTraders’
accountingpoliciesrelatedtoclassicationand
measurementofcryptocurrencypositionsunder
IFRS-EU.
Weperformedprocedurestoevaluatethedesignand
implementationofproceduresrelatedtocryptocurrencies
byFlowTraders,includingreviewsperformedbytheRisk
andMid-Ofceandthecompliancedepartmentsin
onboardingexchangesaswellastradinginnewcrypto-
currencies,involvingourownexpertsintheareaofdigital
assets.
Furthermore,weevaluatedthedesignandimplemen-
tationofthedailytradesreconciliationcontrolsand
proceduresfordepositsandwithdrawalswithcrypto-
currencyexchanges.Last,byobservingthepositionsat
eachoftheexchangesatyear-endandsubsequently
testingonthevaluationofindividualpositionsby
comparingtheinternallydevelopedpricestoindependent
sources,weindependentlytestedthevaluationand
existenceofthecryptocurrenciespositionofFlowTraders
at31December2021.
Basedontheproceduresperformed,wedidnotidentify
anymaterialauditndingsinrelationtotheexistenceor
carryingvaluesofthecryptocurrencyassets.
No prohibited non-audit services
Wehavenotprovidedprohibitednon-auditservicesasreferredtoinArticle5(1)oftheEU
Regulationonspecicrequirementsregardingstatutoryauditofpublic-interestentities.
European Single Electronic Reporting Format (ESEF)
FlowTradersN.V.haspreparedtheannualreportinESEF.Therequirementsforthisare
setoutintheDelegatedRegulation(EU)2019/815withregardtoregulatorytechnical
standardsonthespecicationofasingleelectronicreportingformat(hereinafter:theRTS
onESEF).
Inouropinion,theannualreport,preparedintheXHTMLformat,includingthepartially
marked-upconsolidatednancialstatements,asincludedinthereportingpackageby
FlowTraders,compliesinallmaterialrespectswiththeRTSonESEF.
Themanagementboardisresponsibleforpreparingtheannualreport,includingthe
nancialstatements,inaccordancewiththeRTSonESEF,wherebythemanagement
boardcombinesthevariouscomponentsintoasinglereportingpackage.
Ourresponsibilityistoobtainreasonableassuranceforouropinionwhethertheannual
reportinthisreportingpackagecomplieswiththeRTSonESEF.
Ourprocedures,takingintoaccountAlert43oftheNBA(theNetherlandsInstituteof
CharteredAccountants),includedamongstothers:
■
obtaininganunderstandingofthecompany’snancialreportingprocess,includingthe
preparationofthereportingpackage
■
obtainingthereportingpackageandperformingvalidationstodeterminewhetherthe
reportingpackagecontainingtheInlineXBRLinstancedocumentandtheXBRL
extensiontaxonomyleshasbeenpreparedinaccordancewiththetechnicalspeci-
cationsasincludedintheRTSonESEF
■
examiningtheinformationrelatedtotheconsolidatednancialstatementsinthe
reportingpackagetodeterminewhetherallrequiredmark-upshavebeenappliedand
whethertheseareinaccordancewiththeRTSonESEF.
Report on other information included in the annual report
Theannualreportcontainsotherinformationinadditiontothenancialstatementsandour
auditor’sreportthereon.
Basedonthefollowingproceduresperformed,weconcludethattheotherinformation:
■
Isconsistentwiththenancialstatementsanddoesnotcontainmaterial
misstatements
■
ContainstheinformationasrequiredbyPart9ofBook2forthemanagementreport
andtheotherinformationasrequiredbyPart9ofBook2oftheDutchCivilCodeand
asrequiredbySections2:135band2:145subsection2oftheDutchCivilCodeforthe
remunerationreport.
Basedonourknowledgeandunderstandingobtainedthroughourauditofthenancial
statementsorotherwise,wehaveconsideredwhethertheotherinformationcontains
materialmisstatements.Byperformingtheseprocedures,wecomplywiththe
requirementsofPart9ofBook2andSection2:135bsub-Section7oftheDutchCivil
CodeandtheDutchStandard720.Thescopeoftheproceduresperformedissubstan-
tiallylessthanthescopeofthoseperformedinourauditofthenancialstatements.
Themanagementboardisresponsibleforthepreparationoftheotherinformation,
includingthemanagementreportinaccordancewithPart9ofBook2oftheDutchCivil
CodeandotherinformationrequiredbyPart9ofBook2oftheDutchCivilCode.
Themanagementboardandthesupervisoryboardareresponsibleforensuringthatthe
remunerationreportisdrawnupandpublishedinaccordancewithSections2:135band
2:145subsection2oftheDutchCivilCode.
Report on other legal and regulatory requirements and ESEF
Engagement
WewereengagedbysupervisoryboardasauditorofFlowTradersN.V.on19May2016,
asoftheauditfortheyear2016andhaveoperatedasstatutoryauditoreversincethat
date.
Description of responsibilities for the nancial statements
Responsibilities of the management board and the supervisory board for the
financial statements
Themanagementboardisresponsibleforthepreparationandfairpresentationofthe
nancialstatementsinaccordancewithEU-IFRSandPart9ofBook2oftheDutchCivil
Code.Furthermore,themanagementboardisresponsibleforsuchinternalcontrolasthe
managementboarddeterminesisnecessarytoenablethepreparationofthenancial
statementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.
Aspartofthepreparationofthenancialstatements,themanagementboardis
responsibleforassessingthecompany’sabilitytocontinueasagoingconcern.Basedon
thenancialreportingframeworksmentioned,themanagementboardshouldpreparethe
nancialstatementsusingthegoingconcernbasisofaccountingunlessthemanagement
boardeitherintendstoliquidatethecompanyortoceaseoperations,orhasnorealistic
alternativebuttodoso.Themanagementboardshoulddiscloseeventsandcircum-
stancesthatmaycastsignicantdoubtonthecompany’sabilitytocontinueasagoing
concerninthenancialstatements.
Thesupervisoryboardisresponsibleforoverseeingthecompany’snancialreporting
process.
Our responsibilities for the audit of the financial statements
Ourobjectiveistoplanandperformtheauditengagementinamannerthatallowsusto
obtainsufcientandappropriateauditevidenceforouropinion.
Ouraudithasbeenperformedwithahigh,butnotabsolute,levelofassurance,which
meanswemaynotdetectallmaterialerrorsandfraudduringouraudit.
Misstatementscanarisefromfraudorerrorandareconsideredmaterialif,individuallyor
intheaggregate,theycouldreasonablybeexpectedtoinuencetheeconomicdecisions
ofuserstakenonthebasisofthesenancialstatements.Thematerialityaffectsthe
nature,timingandextentofourauditproceduresandtheevaluationoftheeffectof
identiedmisstatementsonouropinion.
Wehaveexercisedprofessionaljudgmentandhavemaintainedprofessionalskepticism
throughouttheaudit,inaccordancewithDutchStandardsonAuditing,ethical
requirementsandindependencerequirements.The‘Informationinsupportofouropinion’
sectionaboveincludesaninformativesummaryofourresponsibilitiesandthework
performedasthebasisforouropinion.
Ourauditfurtherincludedamongothers:
■
Performingauditproceduresresponsivetotherisksidentied,andobtainingaudit
evidencethatissufcientandappropriatetoprovideabasisforouropinion
■
Obtaininganunderstandingofinternalcontrolrelevanttotheauditinordertodesign
auditproceduresthatareappropriateinthecircumstances,butnotforthepurposeof
expressinganopinionontheeffectivenessofthecompany’sinternalcontrol
■
Evaluatingtheappropriatenessofaccountingpoliciesusedandthereasonableness
ofaccountingestimatesandrelateddisclosuresmadebythemanagementboard
■
Evaluatingtheoverallpresentation,structureandcontentofthenancialstatements,
includingthedisclosures
■
Evaluatingwhetherthenancialstatementsrepresenttheunderlyingtransactionsand
eventsinamannerthatachievesfairpresentation
Communication
Wecommunicatewiththesupervisoryboardregarding,amongothermatters,theplanned
scopeandtimingoftheauditandsignicantauditndings,includinganysignicant
ndingsininternalcontrolthatweidentifyduringouraudit.Inthisrespect,wealsosubmit
anadditionalreporttotheauditcommitteeofthesupervisoryboardinaccordancewith
Article11oftheEURegulationonspecicrequirementsregardingstatutoryauditof
public-interestentities.Theinformationincludedinthisadditionalreportisconsistentwith
ourauditopinioninthisauditor’sreport.
Weprovidethesupervisoryboardwithastatementthatwehavecompliedwithrelevant
ethicalrequirementsregardingindependence,andtocommunicatewiththemall
relationshipsandothermattersthatmayreasonablybethoughttobearonour
independence,andwhereapplicable,relatedsafeguards.
Fromthematterscommunicatedwiththesupervisoryboard,wedeterminethekeyaudit
matters:thosemattersthatwereofmostsignicanceintheauditofthenancial
statements.Wedescribethesemattersinourauditor’sreportunlesslaworregulation
precludespublicdisclosureaboutthematterorwhen,inextremelyrarecircumstances,
notcommunicatingthematterisinthepublicinterest.
TheHague,3March2022
Ernst&YoungAccountantsLLP
Signedby:R.Koekkoek
Glossary
AGM AnnualGeneralMeetingofshareholders
AML Anti-MoneyLaundering
AMX AmsterdamMidcapIndex
AP AuthorizedParticipant
APT DutchAssociationofProprietaryTraders
AuM AssetUnderManagement
AuM CAGR AssetUnderManagementCompoundAnnualGrowthRate
CEO
CFO
ChiefExecutiveOfcer
ChiefFinancialOfcer
CID procedure CounterpartyIdenticationProcedures
CRD IV EUCapitalRequirementsDirective(2013/36/EU)
CRR EUCapitalRequirementsRegulation(575/2013)
CSDR Regulation(EU)No909/2014onimprovingsecuritiessettlementinthe
EuropeanUnionandoncentralsecuritiesdepositories
CTO ChiefTechnologyOfcer
CTrO ChiefTradingOfcer
DNB DutchCentralBank
ERM EnterpriseRiskManagement
ETC Exchange-TradedCommodities
ETF Exchange-TradedFunds
ETN Exchange-TradedNotes
ETP Exchangetradedproduct
EY Ernst&YoungAccountantsLLP,thecompany’sexternalauditor
General Meeting AnnualGeneralMeetingofShareholders
FCIP FlowCashIncentivePlan
FIA EPTA FIAEuropeanPrincipalTradersAssociation
FIA PTG FIAPrincipalTradersGroup
FICC Fixedincome,currencyandcommodities
FLIP FlowLoyaltyIncentivePlan
FSI Schemes FastSemi-Iterativeschemes
FWD Forward
FX Forex(Currencytrading)
IA Internalauditfunction
IFD Directive(EU)2019/2034ontheprudentialsupervisionofinvestment
rms
IFR Regulation(EU)2019/2033ontheprudentialrequirementsof
investmentrms
IR InvestorRelations
KPI KeyPerformanceIndex
MiFID II MarketsinFinancialInstrumentsDirective(Directive2014/65/EU;as
amended)
NDF Non-DeliverableForward
NTI NetTradingIncome
NTI CAGR NetTradingIncomeCompoundAnnualGrowthRate
OECD OrganizationforEconomicCooperationandDevelopment
OTC Overthecounter
RMF RiskManagementFramework
RSA Risk(self-)assessments
SDG SustainableDevelopmentGoals
UN UnitedNations
VWAP Volumeweightedaverageprice
EU Directive
Requirements EU Directive Subtopic Chaper/section reference
A brief description of the business
model Businessmodel Ourprole:Whatwedo,p.9
Businessenvironment Valuecreationandstrategy:Marketsandtrends,p.18-23
Organizationandstructure Ourgovernance,p.61-67
Ourmarket
Ourprole:Products,p.10-14,Valuecreationandstrategy:Marketsandtrends,p.
20-23
Strategyandobjectives Valuecreationandstrategy:Ourambitionandstrategy,p.18
Long-termmarketdrivers Valuecreationandstrategy:Marketsandtrends,p.20-23
Relevant social and personnel topics Adescriptionofthepoliciespursued Ourperformance:Sustainableemployment,p.33-38
Theoutcomeofthesepolicies Ourperformance:Sustainableemployment,p.33-38
Principlerisksinownoperationsandwithinthevaluechain Ourriskmanagement:Operationalrisk,p.48-60
Howrisksaremanaged Ourriskmanagement:Enterpriseriskmanagement,p.53-60
Non-nancialkeyperformanceindicators Ourperformance:Sustainableemployment,p.33-38
Relevant environmental topics Adescriptionofthepoliciespursued Ourperformance:Carbonemissions,materialandwaste,p.41-42
Theoutcomeofthesepolicies Ourperformance:Carbonemissions,materialandwaste,p.41-42
Principlerisksinownoperationsandwithinthevaluechain Ourriskmanagement:Environmentalrisk,p.58
Howrisksaremanaged Ourriskmanagement:Environmentalrisk,p.58
Non-nancialkeyperformanceindicators Ourperformance:Carbonemissions,materialandwaste,p.41-42
Requirements EU Directive Subtopic Chaper/section reference
Relevant human rights topics Adescriptionofthepoliciespursued Duetothenatureofourbusinessaswellasourgeographicalpresence,Flow
Tradersisnotmateriallyexposedtohumanrightsviolations.Forouremployeeswe
arecomplianttoallapplicablelawsandregulations,pleaserefertop.30-38onour
wayofworking.AspartofthedevelopmentofanESGstrategyinthecourseof
2022wewillagainevaluatetheexposureofFlowTraderstohumanrights
violations.
Theoutcomeofthesepolicies
Principlerisksinownoperationsandwithinthevaluechain
Howrisksaremanaged
Non-nancialkeyperformanceindicators
Addressing anti-corruption and
bribery Adescriptionofthepoliciespursued Ourriskmanagement:Complianceandtransparency,p.59-60
Theoutcomeofthesepolicies Ourriskmanagement:Complianceandtransparency,p.59-60
Principlerisksinownoperationsandwithinthevaluechain Ourriskmanagement:Complianceandtransparency,p.59-60
Howrisksaremanaged Ourriskmanagement:Complianceandtransparency,p.59-60
Non-nancialkeyperformanceindicators Ourriskmanagement:Complianceandtransparency,p.59-60
Addressing board diversity Adescriptionofthepoliciespursued Ourgovernance:Diversity,p.67-68
Diversityobjectives Ourgovernance:Diversity,p.67-68
Implementationofpolicy Ourgovernance:Diversity,p.67-68
Resultsofthediversitypolicy Ourgovernance:Diversity,p.67-68
Colophon
FlowTradersN.V.
JacobBontiusplaats9
1018LLAmsterdam
TheNetherlands
Tel:+31207996799
www.owtraders.com
Concept&realisation
DomaniB.V.
TheHague
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