flo-2022-12-31-en

Cam Colella

Matheus Haserick-Lara

Marc Jansen

Head of Technology

Head of Trading (Fixed Income) &
Managing Director of Americas

Head of Trading (Currency, Crypto,
Commodity)

Cam Colella joined Flow Traders in
2015. Initially a Trader, he spent a
year in Amsterdam before moving
to the New York office in 2016. Cam
became Head of Trading
Performance in 2019 and Head of
Technology AMER in 2020. He
oversees the Technology function in
the US and is responsible for driving
technology strategy, innovation, and
architecture globally.
Cam holds a bachelor’s degree in
Economics and Pure Mathematics
from the University of Michigan.

Matheus joined Flow Traders in
2015 as a Trader on the emerging
debt desk and led Flow Traders’
expansion into Fixed Income ETFs
and bond market making in the US.
In 2018, Matheus was promoted to
Head of Trading with a focus on
Fixed Income for the US and to
Managing Director AMER in 2019. In
addition to being responsible for the
strategic growth of Flow Traders in
the US, he is also leading the
expansion of operations into Latin
America, including Brazil and
Mexico.
Matheus holds a bachelor’s degree
in Economics from The Wharton
School of the University of
Pennsylvania with dual
concentration in Finance and
Operations Management.

Marc joined Flow Traders as a
Trader in 2013. He initially focused
on Commodity products and in 2016
expanded his scope to include FX.
Marc was promoted to Head of
Trading for EMEA in 2018. Marc also
spent 1.5 years in New York to
strengthen Equity Index trading,
during which time he was also co-
head of the AMER region. In 2021,
Marc relocated to Amsterdam and
became Head of Trading with a
focus on Digital Assets.
Marc holds a double master’s degree
in Econometrics and Management
Science specialized in Quantitative
Finance and a master’s degree in
Economics and Business specialized
in Entrepreneurship & Strategy
Economics both from the Erasmus
University Rotterdam.

Message of the Board

From left to right: Folkert Joling, Roger Hodenius, Jan van Kuijk, Linda Hovius, Rudolf Ferscha, Olivier Bisserier and Mike

Kuehnel.

Throughout 2022, Flow Traders continued to

deliver value to its stakeholders globally while

focusing on driving transparency, efficiency, and

accessibility across markets. As a multi-asset

global liquidity provider, we further executed on

our ambitious growth strategy, diversified the

business, expanded our leading positions across

asset classes and capitalized on the evolution of

the financial markets.

We grew our talented team with a record

number of new hires across all markets, while

our leadership layer was strengthened by the

formation of a global Executive Committee in

September.

Towards the end of the year, Dennis Dijkstra,

following fourteen years with the business made

the decision not to stand for reappointment as

CEO at the 2023 Annual General Meeting. The

role was assumed by Mike Kuehnel on 1

February 2023. Mike had served as CFO since

2021.

Global team

Throughout the year we remained committed to

developing our people and fostering our

entrepreneurial culture, which is core to our

success. We welcomed 206 new hires globally, a

record number for the company in a single year.

We introduced dedicated frameworks to support

our teams in their professional and personal

development and designed programs tailored to

our technology department.

In September, we welcomed our biggest group

of graduates ever, further demonstrating that

Flow Traders is seen as an employer of choice

within our industry and recognizing our

dedication to supporting our workforce to reach

its full potential.

We introduced a global Executive Committee to

support the Board in accelerating the execution

of Flow Traders’ strategic growth ambitions.

Comprised of talent from within the business,

this centrally coordinated and dedicated senior

leadership team represents our business areas

and strengthens our global leadership layer,

while bringing additional values to the entire

organization.

In 2022, Flow Traders introduced a broader and

enhanced Diversity, Equity and Inclusion policy

to further embrace equal opportunities across

the workforce and foster a diverse culture. The

firm also further focused on developing its

external positioning around this theme by being

FLOW TRADERS | ANNUAL REPORT 2022 6

active in Women in ETF globally and several

local initiatives.

Our people also continued to contribute to

society and charity, a long standing passion of

the Flow Traders team. In March 2022, the

company collaboratively drove charitable

initiatives to support Ukraine and the colleagues

impacted. Through the Flow Traders Foundation

many employees remained actively involved in

causes across the globe. Employees volunteer

and donate to support initiatives that focus on

fighting poverty. In February 2023, Flow

Traders employees also undertook the challenge

to climb Kilimanjaro to raise funds for the

Foundation with more than 30 colleagues taking

part.

We continue to be extremely proud of all of our

colleagues and their dedication to delivering on

our priorities and contributing to our global

growth. Flow Traders’ unique culture and

entrepreneurial spirit has been key to the

success of the business thus far and will be for

many years to come.

"Our dedication to pricing

excellence and innovative

proprietary trading

infrastructure further

enhanced our proposition

across all asset classes"

Global growth

Our focus on developing opportunities in the

rapidly evolving financial markets resulted in

many positive developments for our business

throughout the year, underpinning our strength

and ability to continue providing liquidity.

Our three core business pillars grew in terms of

both trading capabilities and footprint. Our

presence grew across exchanges and trading

venues and our extensive global counterparty

network surpassed the 2,000 mark, while we

also enhanced our institutional trading

capabilities with dedicated expertise on Fixed

Income and our newly formed currency, crypto,

and commodity business pillar.

In Equity, we maintained our position as the

leading liquidity provider both on- and off-

exchange in Europe, and we collaborated with a

range of existing and new partners, such as

iShares and SPDR, to launch innovate financial

products.

We also expanded our trading footprint in Asia,

obtaining a Qualified Foreign Institutional

Investor (QFII) license in China, and we have

already successfully executed our first trades

on-shore in China’s domestic markets.

Additionally, we received approval to open a

Representative Office in Shanghai and this was

opened in October 2022.

During the year we combined currency, crypto,

and commodity into one business pillar,

leveraging our infrastructure, insights and

expertise to drive value across these asset

classes, using their natural connection to

enhance capabilities and drive the segment

forward as a whole. We also branched out into

liquidity provisions for tokens, successfully

manoeuvred the ETH merge, and drove growth

through the creation of a global commodity

strategy. Our robust and proactive risk

management procedures and approach meant

that we were able to navigate the volatility in

the crypto markets, particularly around the

events surrounding the collapse of FTX.

We further built upon our successful Fixed

Income business, continuing to leverage the

accelerating trends towards electronication and

algorithmic trading, as well as fostering the low

vs high touch trading model which is something

Flow Traders is well positioned to support. We

were the exclusive partner for BondBloxx to

launch their range of Fixed Income ETPs in the

US, retained our top-five dealer status on

Bloomberg in Europe, and were once again lead

sponsor of the main Fixed Income Leadership

Summit.

Overall, our dedication to pricing excellence and

innovative proprietary trading infrastructure

further enhanced our proposition across all

asset classes.

We formalized the creation of our venture

capital unit, Flow Traders Capital. This is a

dedicated €50 million fund to actively invest in

the development of financial markets

infrastructure and the digital asset space. Flow

Traders Capital makes direct minority

investments, across all geographies, with an

emphasis on three key themes: platform, data,

and connectivity and in 2022 we completed 16

investments, in organizations such as D2X,

Elwood and Thalex.

FLOW TRADERS | ANNUAL REPORT 2022 7

Governance and regulatory

In October 2022, following a thorough legal and

capital structure review, Flow Traders

announced its intention to update its corporate

holding structure which was approved by an

overwhelming majority of the shareholders on 2

December 2022. The change in jurisdiction for

the top holding company to Bermuda resulted in

different regulatory capital requirements and

seeks to create a more level playing field with

competitors globally. This in turn supports Flow

Traders to accelerate our growth strategy and

achieve our ambitions. The implementation of

the new top holding was completed on 13

January 2023 and and Flow Traders Ltd. became

our top holding company. As a result, Flow

Traders installed a one-tier board structure,

composed of executive and non-executive

directors and updated its governance

documents to reflect the necessary changes

pursuant to the update while mimicking as

much as reasonably possible the previous

governance arrangements.

We foresee that EU financial market regulations

will be further reviewed through 2023, and we

look to engage where we believe Flow Traders

can make a valuable contribution. The Markets

in Crypto Assets regulation (MiCA) is a particular

focus area for the business, as it heads into the

final stage of the legislative process after the

political agreement at the end of 2022, and the

introduction of a consolidated tape for the

European capital market as part of the Markets

in Financial Instruments regulation review

(MiFIR).

Financial overview

Flow Traders delivered an improved financial

and trading performance in 2022 compared to

2021 reflecting a more active market

environment. We recorded Normalized Total

Income in 2022 of €460.6 million and

demonstrated a healthy Normalized EBITDA

margin of 45% with Normalized EBITDA of

€208.2m. Ultimately, we recorded a Normalized

Net Profit of €150.2m with Normalized Basic

EPS of €3.45. This, along with our strong capital

position, allowed the company to pay a total

dividend of €1.50 per share to shareholders.

Farewell to Dennis Dijkstra

On 31 January 2023, Dennis Dijkstra stepped

down as CEO of Flow Traders after fourteen

years with the company and eight years as CEO.

Under his entrepreneurial leadership, Flow

Traders has become one of the world’s leading

liquidity providers and we would like to express

our deepest gratitude to Dennis. He has been a

key contributor to creating the unique Flow

Traders spirit that thrives across the business,

and which will continue to be a part of the

company culture and a key factor to our

success. On behalf of everyone at Flow Traders,

we wish him every success with his future

endeavours.

Looking ahead

Finally, we would like to recognize our people

and their incredible efforts in 2022. Our talented

and vibrant team make Flow Traders a special

place to work and they have been key to the

success of the business. The journey ahead is

an exciting one and we would like to thank our

people, shareholders and other stakeholders for

their support and contribution.

Regards,

Rudolf Ferscha

Linda Hovius

Olivier Bisserier

Jan van Kuijk

Roger Hodenius

Mike Kuehnel

Folkert Joling

FLOW TRADERS | ANNUAL REPORT 2022 8

Our profile

Who we are

Flow Traders is a leading global financial technology-

enabled liquidity provider in a wide range of financial

products, historically specialized in Exchange Traded

Products (ETPs), now successfully expanded across

multiple asset classes. Flow Traders ensures the

provision of liquidity to support the uninterrupted

functioning of financial markets. This allows

investors to continue to buy or sell ETPs or other

financial 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.

What we do

We are a financial technology company operating in

the global financial markets, using our proprietary

technology platform to provide liquidity by quoting

bid and ask prices in thousands of financial products.

Flow Traders ensures the provision of this liquidity to

support the uninterrupted functioning of financial

markets. Our core trading focus is on exchange-

traded products (ETPs) and we do this globally,

enabling investors to buy and sell ETPs efficiently by

quoting bid and ask prices under virtually all market

circumstances.

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 diversified our market

making activities across multiple asset classes, such

as fixed income, cryptocurrency, Foreign Exchange

(FX), and commodity.

Flow Traders’ group companies can be found in Note

33 in the Financial Statements.

FLOW TRADERS | ANNUAL REPORT 2022 9

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 specific sectors or countries, to

commodities, or to currencies. ETPs also enable

investors to create and manage diversified

investment portfolios in an efficient 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).

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.

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.

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.

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 investor.

FLOW TRADERS | ANNUAL REPORT 2022 10

Our business is aligned to three distinct

asset classes and underlying focus

groups.

Equity

At present, Flow Traders provides liquidity within the

Equity space solely in ETPs and associated index

products. We traded these Equity products globally

utilising our three trading hubs in Europe, Asia and

Americas.

Fixed income

The fixed income markets in particular have been

experiencing a wave of electronification which is

expanding the opportunities available to non-bank

liquidity providers such as Flow Traders.

Flow Traders provides liquidity in fixed income ETPs

as well as cash bonds (investment grade and high

yield corporate credit and emerging market

sovereigns) in Europe, the Americas and Asia. We

have held a long-standing strong position within the

fixed income ETP space. Our cash bonds proposition

was launched in 2021 and was further expanded and

built out through the course of 2022 both in terms of

ISIN coverage, counterparty onboarding as well as

RfQ platform connectivity. Fixed income is a key

strategic growth area for the business.

Currency, Crypto and Commodity (CCC)

Flow Traders started providing liquidity in FX as a

separate asset class during 2018. We provide

liquidity in an increasing number of FX pairs on spot

and futures in the EMEA and APAC markets to a fast-

growing number of counterparties on an expanding

number of platforms, including Bloomberg’s FX

platform. In addition, we naturally also provide

liquidity in FX ETPs.

Flow Traders also provides liquidity across the digital

asset space which include cryptocurrency ETPs,

futures and spot, which we consider to be a key part

of our broader CCC proposition. This is a growing

part of our overall business and is also a key

strategic focus.

In commodities in general, Flow Traders has always

been active in the ETP market as well as the

underlying asset classes. This also includes

commodity futures and spot products.

FLOW TRADERS | ANNUAL REPORT 2022 11

Pricing

Pricing fast and accurately

Being able to accurately and rapidly price the

various financial 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 pricing. Our experience in establishing

the pricing and hedging relationships across different

products in a variety of market conditions means we

can offer competitive bid and ask prices, while still

covering our trading and hedging costs while

achieving a transaction profit. 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 the various

asset classes we trade such as cryptocurrency and

corporate credit.

Cutting edge proprietary technology

platform

Developing software in-house

We are a technology-enabled company operating in

the financial markets space. As such, technology

truly 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 40 percent of our

FTEs 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, trading

platforms and geographical markets as we grow the

business.

In 2022 our total technology expenses increased by

23 percent versus 2021 as we invested further in the

trading business. Our technology expenses

represented 35 percent of our total fixed expenses

and the number of technology FTEs grew to 262 in

2022 from 244 in 2021, in order to support the

execution of our growth strategy.

FLOW TRADERS | ANNUAL REPORT 2022 12

FLOW TRADERS | ANNUAL REPORT 2022 13

Share information

Flow Traders Ltd. (formerly known as

Flow Traders N.V.) shares are listed on

Euronext Amsterdam and are included

in the Amsterdam Midcap Index (AMX),

carrying a weight of 1.32 percent as at

the end of 2022. 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).

Performance and key figures


KEY FIGURES PER SHARE
Normalized earnings per share	€3.45
P/E ratio	6.27x
Interim dividend per share	€0.70
Final dividend per share	€0.80
Total dividend per share	€1.50
Dividend yield	6.9%
Year-end share price*	21.64

*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
Number of shares in treasury	3,699,872
Free float**	70%
Market cap at year end (€)	€1,007,006,580

Source: Euronext as per 31 December 2022.

* ISIN as of 16 January 2023: BMG3602E1084

**Official Euronext definition

FLOW TRADERS | ANNUAL REPORT 2022 14


VOLUMES
Total annual volume	49,137,507
Daily volume - high	1,596,231
Daily volume - low	53,601
Average daily volume	191,197

Source: Euronext.


SHARE PRICE PERFORMANCE
Opening price 3 January 2022	€32.38
Annual highest price (closing)	€35.72
Annual lowest price (closing)	€18.12
Closing price 30 December 2022	€21.64

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
KBC Securities	Thomas Couvreur
UBS	Michael Werner

Financial calendar


Q1 Trading Update	21 April 2023
Annual General Meeting	26 April 2023
Final dividend 2022 ex-dividend date	28 April 2023
Final dividend 2022 record date	2 May 2023
Final dividend 2022 payment date	4 May 2023
Q2 / H1 results release	21 July 2023

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 profits realized during the financial year. The

Board may decide that the profits realized during a

financial 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 Bye-laws of the company, and the

Board Rules.

It is anticipated that our interim dividends will be

declared and paid following the publication of our

results for the first 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 profits, financial conditions, general economic

and business conditions, future prospects and such

other factors as the 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 Board may decide to make allocations to

reserves and therefore decides how much of the

profit will be allocated to reserves. The profits

remaining shall be put forward at the disposal of the

General Meeting (subject to a change of the Bye-

laws which will be proposed at our upcoming general

meeting in 2023).

Reserves and dividend proposal for the financial

year 2022 Pursuant to Bye-law 33.1, the Board has

decided that of the profit for 2022 (totalling €126.8

million), an amount of €64.9 million shall be added

to the reserves. The remaining amount of €61.9

million is at the disposal of the General Meeting

(subject to a change of the Bye-laws which will be

proposed at our upcoming general meeting in 2023).

It will be proposed to the General Meeting (subject

to a change of the Bye-laws which will be proposed

at our upcoming general meeting in 2023) that a

total cash dividend of €1.50 per share will be paid

out to shareholders for the financial year 2022,

subject to a 15 percent dividend withholding tax

(dividendbelasting). An interim cash dividend of

€0.70 per share was paid out on 19 August 2022.

This means that the final cash dividend proposal to

the General Meeting is €0.80 per share. Subject to

approval by the General Meeting (subject to a

change of the Bye-laws which will be proposed at

our upcoming general meeting in 2023) on 26 April

2023. Shares will trade ex-dividend on 28 April

2023. Payment of the final dividend is anticipated to

be made on 4 May 2023.

FLOW TRADERS | ANNUAL REPORT 2022 15

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.flowtraders.com/investors) where, among

other information, its financial calendar, press

releases, presentations, reports and the dividend

policy can be found. IR is the first point of contact

for interested investors, shareholders and analysts.


INVESTOR RELATIONS CONTACT DETAILS
Jonathan Berger	Investor Relations Officer
Telephone	+31 20 799 6799
E-mail	investor.relations@flowtraders .com

FLOW TRADERS | ANNUAL REPORT 2022 16

Value creation and strategy

We create value in a number of financial

and non-financial ways for a variety of

stakeholders. Supported by our

proprietary technology platform, we

provide liquidity in financial products

that helps contribute to more efficient

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 profitably and

providing dividend returns. Our value

creation model shows how we create

value and the impact our business has

on our stakeholders.

Our ambition and strategy

Our purpose and ambition

We are the driving force for an investment

environment that is more transparent, efficient and

lower-cost for end-investors, through the power of

trading acumen, innovation and talent.

Our market and environment

We operate in a highly dynamic world, where

globalization and technological development are

continuing to accelerate the pace of change. In

addition, we see certain mega trends which are

more specifically shaping the future of the financial

markets:

▪Rise of passive investing with significantly

growing assets under management with

Blackrock estimating that ETP AuM will double by

2025 compared to 2020

▪Increasing electronification of trading across fixed

income and other asset classes

▪Growth in digital assets and institutional adoption

as well development of new large liquidity pools

▪Emerging ecosystems adapting to shifting trends

and driving venture capital and private equity

investments

▪Ever developing regulatory landscape which

creates greater transparency and a more level

playing field

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

financial markets across multiple asset classes,

building on our status as an ETP powerhouse. We

also are seeking to be a driver and accelerator of

change in the financial markets through our

dedicated corporate venture capital unit, Flow

Traders Capital.

Our business principles

Our business principles are being flexible, 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 defines whether or not we have a

competitive edge.

Our strategy

We will achieve our strategic ambition by continuing

to grow our business through our dedicated multi-

year diversification strategy. Here we have

expanded, and will continue to expand, on our

market leading position in ETPs with growth in Fixed

Income, Digital Assets, FX, and Commodities. This

should result in structurally increasing our Net

Trading Income (NTI), while increasing the resilience

of the business and also maintaining our desired risk

profile, 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,

FLOW TRADERS | ANNUAL REPORT 2022 17

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 profile 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 across multiple asset classes, Flow Traders

can maximize the growth of its NTI.

By growing our presence in the global financial

market as a liquidity provider and as an agent of

change, 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. Our investments through Flow Traders

Capital are expected to not only generate a financial

return but also drive business growth as we drive

innovation across the global financial markets. In

this sense, we believe we are on the journey to

becoming a next generation liquidity provider.

Our strategy is firmly aligned with our ESG ambition

and mission. Growing our presence in the financial

markets through expanding and deepening our ETP

trading footprint as well as improving pricing and

access to fixed income, commodity and FX liquidity

will only make markets more efficient and reduce

trading costs for end-investors globally. It will also

enable the financing of the shift towards a

sustainable world economy.

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.

Becoming a leading global multi-asset

liquidity provider

We believe there are six elements of our strategic

ambition which will drive Flow Traders in its goal to

becoming a leading global multi-asset liquidity

provider:

▪Global access - providing liquidity any time

anywhere across trading venues, exchanges and

to institutional counterparties

▪Asset universe - trading any asset to expand our

presence in ETPs and grow in the underlying

asset classes

▪Pricing excellence - acting as a market neutral

provider 24/5 with strong hedging capabilities for

low risk in all asset classes

▪Proprietary cutting edge technology - benefiting

from automated, low-touch trading infrastructure

for seamless execution

▪Talented team - leveraging experienced talent

pool that forms an open, diverse and

entrepreneurial team

▪Ecosystem innovation - shaping financial markets

through venture capital investments and

partnerships with leading players

FLOW TRADERS | ANNUAL REPORT 2022 18

FLOW TRADERS | ANNUAL REPORT 2022 19

Markets and trends

Our business

In 2022 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 2,200

institutional counterparties across the globe,

including banks, asset managers, pension funds,

insurance companies, family offices, 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 2022, we continued to implement our

dedicated diversification initiatives across other

asset classes and provided liquidity as a market

maker in FX, fixed 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 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 financial 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 significant growth in both

Assets under Management (AuM) and number of

products. According to ETFGI, global ETP AuM

declined from €9,030 billion by the end of 2021 to

€8,143 billion by the end of 2022. This a reflection

mainly of the underlying market performance during

2022 and the expectation is that AuM will grow

going forward, We believe there are a number of

reasons for this expected trend, including beyond

2023: 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 financial instruments

from almost any asset class, sector or location,

providing investors access to markets that would

normally be difficult to reach.

Review of 2022

Global ETP markets shrank by 10% percent in 2022,

as measured by AuM, driven predominantly by the

performance of the underlying markets. Annual

global inflows of ETP AuM were €818 billion in 2022

(2021: €1,138 billion – source ETFGI). Overall

trading activity in 2022 increased as the markets

absorbed the outbreak of the Russian - Ukraine

conflict as well as interest rate and inflation

increases alongside the continued high levels of

retail investor activity, particularly in the US.

FLOW TRADERS | ANNUAL REPORT 2022 20

Global coverage

Flow Traders operates three main trading hubs in

Amsterdam, Hong Kong, and New York. In addition,

we operate various branch or representative offices

around the world in London, Milan, Paris and

Shanghai. In November 2022, we announced the

receipt of regulatory approval to open a

representative office in Shanghai. This 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 specific markets.

In 2022, Flow Traders ETP value traded once again

was in excess of the €1 trillion mark. The largest ETP

market globally remains in the United States, where

total ETP value traded (on-exchange and off-

exchange) was €44.7 trillion in 2022. Our New York

office’s total ETP value traded was €892 billion in

2022, markedly higher than in 2021 and, for the

fourth year in a row, a record year for Flow Traders

US since inception. With institutional trading gaining

further momentum in 2022, Flow Traders US

continued to grow and deepen its overall presence in

this important market. We also expanded our Lead

Market Maker activities during 2022 and accordingly

supported numerous ETF listings in the United

States for a variety of leading issuers. Our strategic

investment in Members Exchange (MEMX) underlines

our long-term commitment to the US equities

ecosystem as we seek to grow our business and

presence further. The EMEA ETP market had a total

ETP value traded of €2.4 trillion in 2022. Our total

ETP value traded from our Europe offices was €787

billion in 2022. We remained the number one

liquidity provider in ETPs in EMEA and managed to

grow our on- and off-exchange presence further. In

APAC, the ETP market remained fragmented, with

large differences in trading volumes, trading costs,

regulation and maturity across the financial markets.

The APAC ETP market had a total ETP value traded

of €4.8 trillion in 2022, including China, while the

total ETP value traded at our APAC offices was €95.8

billion. Flow Traders had a successful year in 2022 in

APAC in terms of trading volumes, confirming the

contribution of specific recent investments made in

the region. In 2022, Flow Traders was awarded Best

ETF Market Maker by the Tokyo Stock Exchange and

received the Top Market Maker - ETP Coverage

award from the HKEX for Flow Traders' contribution

to the ETF market. Flow Traders is currently a

market maker in more than 200 ETPs on HKEX. In

addition, there was an expansion of Flow Traders’

ETP trading footprint in APAC through receipt of a

QFII licence in China and by becoming an official

market maker on ASX and CBOE Australia in 55

tickers.

Equity

We still see significant opportunities for growth in

the equity ETP market, which is the main focus of

the Equity business at Flow Traders. Global Equity

ETP value traded increased to €26.1 trillion in 2022

and further market growth is expected to due

increasing investor demand and awareness for the

product.

Flow Traders Equity value traded (ETPs, Futures and

Cash) amounted to €3,349 billion in 2022.

Flow Traders strengths and future focus relating to

Equity include:

▪Market leader in EMEA ETPs consistently with

26.8% overall market share and 41% market

share on-exchange

▪Strong performance globally in International ETPs

and Index Futures

▪Domestic ETPs build-out dependent on single-

stock competencies (particularly in the United

States)

▪Leveraging of global pricing capabilities in Asia as

we penetrate and unlock new growth markets

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 inflection point of electronification 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

electronification trend.

Responding to these market dynamics, Flow Traders

has built a strong fixed income liquidity provision

capability set spanning ETPs, corporate credit

(investment grade and high yield bonds) and

emerging market sovereigns.

There has been a consistent increase in fixed income

ETP value traded in recent years as well as AuM

Indeed in 2022, Global Fixed Income ETP value

traded increased to €3.0 trillion.

Flow Traders Fixed Income value traded (ETPs,

Futures and Cash) amounted to €1,323 billion in

FLOW TRADERS | ANNUAL REPORT 2022 21

2022, which is a significant increase over 2021

(€1,036 billion) as we deepen and broaden our

market coverage and our offering gains traction with

the buyside.

From a strategic standpoint, Flow Traders strategic

focus areas include:

▪ETP ecosystem - partner with issuers to develop

innovative fixed income products. We are also

seeking creation-redemption synergies with

corporate bond market making

▪Credit trading - will increase quote sizes to

undertake larger block transactions with

counterparties as well as distributing pre-trade

portfolio trading levels to expedite portfolio

construction

▪Model pricing - expand model trading capabilities

to new fixed income subsets and improve pricing

and coverage of investment grade bonds

Currency, Cryptocurrency and

Commodity (CCC)

In recent years, cryptocurrency has emerged as an

important asset class with increased institutional

acceptance. The crypto markets have experienced

significant volatility during 2022 with digital

currencies experiencing material price declines. For

example, the price of Bitcoin decreased by 64% in

2022 and Ethereum by 68%. Trading volumes also

experienced corresponding reductions with Bitcoin

average daily volume in Q4 2022 21% lower than

Q4 2021. The development of institutional grade and

regulated digital asset market infrastructure

continued to progress in 2022, 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

5 years ago and spans OTC spot as well as ETPs. We

are connected to 20 trading venues globally and

trade 300 coins. From an ETP perspective, Flow

Traders is the number 1 liquidity provider in crypto

ETPs in Europe with a circa 45% market share and

has a 27% market share globally on exchange. The

digital assets space is well suited to Flow Traders’

technology-enabled capabilities.

FLOW TRADERS | ANNUAL REPORT 2022 22

The volatility evident in the crypto markets in 2022

with the onset of the "crypto winter" and the

collapse of FTX digital assets trading platform has

not altered our conviction around the long term

potential of crypto and decentralised finance both

from a trading as well as a technological and

financial markets innovation standpoint. With Flow

Traders' generally market neutral approach, we

continuously provided liquidity across these markets

in throughout 2022 which once again highlights our

trading capabilities, strong risk framework and

consistently improving technology stack.

The future focus and opportunities for digital assets

include:

▪ETPs - maintain our leading position in crypto

ETP market making with prospect of further

regional expansion while at the same time

working to increase efficiency of access across

the ecosystem

▪Spot and derivatives - continue to grow market

making business across these products by

expanding platform and token coverage

▪Strategic partnerships - leverage new and

existing partnerships to build out further the

trading infrastructure around digital assets. Work

with Flow Traders Capital to embed Flow Traders

further into the overall ecosystem

Flow Traders Capital

In 2022, Flow Traders Capital, a dedicated corporate

venture capital unit, was established with an initial

commitment of €50 million to actively invest in the

development of financial markets infrastructure and

the digital asset space.

The primary focus of Flow Traders Capital is to

invest in innovative ventures that accelerate growth,

create greater transparency within the digital asset

space and enable financial ecosystem scalability.

Flow Traders Capital will make direct investments,

across all geographies, with an emphasis on three

key themes: platform, data, and connectivity.

To support portfolio investments, Flow Traders

Capital offers a combination of funding and a

dedicated team with expertise in product design,

product development, capital market and go-to-

market strategies as well as trading insights.

Portfolio investments will also be able to access Flow

Traders’ network of partners and resources, as well

as leveraging the expertise within the existing Flow

Traders Capital portfolio community.

In addition to the potential to generate investment

returns, by deploying this unique capability set, Flow

Traders will expand its involvement in emerging

technologies, identify market trends and explore

new business opportunities that create long-term

strategic value.

Flow Traders’ current investment portfolio already

includes leading digital asset ventures such as

Elwood, Tonic, bloXroute, Ondo, AllianceDAO and

D2X. Additionally, the ongoing strategic investments

in MEMX, RFQ-Hub, LedgerEdge, ShapeQ and the

Pyth Network will also be managed as part of the

Flow Traders Capital portfolio moving forward. As at

31 December 2022, the value of Flow Traders

Capital's investments was €25.3 million.

FLOW TRADERS | ANNUAL REPORT 2022 23

During 2022, Flow Traders Capital announced a number of strategic investments / actions:


Company	Date	Description
Elwood Technologies	January 2022	Digital assets trading platform built for financial institutions, institutional investors, fintechs & neobanks and corporations
Ondo Finance	January 2022	Decentralized investment bank
Mariana Labs	January 2022	Delivers 'roll-up' technologies to leading layer 1 ecosystems by offering the most popular smart contracting language, Solidity
Osprey Funds	January 2022	Osprey is a crypto asset manager that offers products to the retail and institutional investors directly as well as to intermediaries
BloXroute	February 2022	High performance blockchain distribution network for Ethereum, BSC and Polygon
Tonic Exchange	March 2022	On-chain central limit orderbook to bring the flexibility of centralized exchanges to NEAR. The protocol will create an exchange platform where products can be built on top such as DEXs, swaps, derivatives, and trading bots
Membrane	March 2022	Decentralized prime broker that facilitates multi-chain netting and clearing, trading and lending of crypto assets
RFQ Hub	May 2022	Multi-asset RFQ platform
Defi Alliance	April 2022	A community governed Web3 Accelerator
Astaria	June 2022	Capital efficient borrowing and lending market
C3	June 2022	Decentralized capital market for spot and derivatives trading that uses a cross-margin and cross-collateralization engine
GoGo Pool	June 2022	Decentralized staking protocol for Avalanche subnets
Thalex Holding	June 2022	Derivatives trading platform that focuses on crypto options, futures and perpetuals
Primary Portal	July 2022	Capital markets platform that connects banks and institutional investors active in the equity issuance space, providing a digital infrastructure layer
Kemet	July 2022	Digital asset derivative trading infrastructure for institutions
Crossover Investments	September 2022	Digital assets spot and derivatives trading platform for institutions. Crossover will be the institutional, execution only, digital assets exchange

FLOW TRADERS | ANNUAL REPORT 2022 24

Our performance

Flow Traders delivered an improved

financial and trading performance in 2022

compared to 2021 reflecting a more active

market environment. We recorded

Normalized Total Income in 2022 of €460.6

million (2021: €387.1 million). Significant

operational highlights included the

continued growth of our fixed income

proposition, broadening and deepening our

equity ETP trading footprint, as well as

resilience in the digital assets markets. A

key strategic milestone was the successful

the update of our corporate holding

structure.

Financial overview

Total income

The market environment in 2022 was more active

compared to 2021 as the markets and investors

reacted to the Russia-Ukraine conflict as well as the

changing macro environment as rising interest rates

and inflation affected the global economy. Volatility

in 2022 was on average higher than seen in 2021 as

measured by the VIX index (25.98 vs 19.88).

Given this market backdrop and our leading global

trading footprint, Flow Traders total value traded in

2022 grew to €6.8 trillion (2021: €5.7 trillion), of

which €1.8 trillion (2021: €1.5 trillion) was traded in

ETPs (on-exchange and off-exchange). The rest was

traded in related financial products to facilitate

competitive pricing in ETPs as well trading in other

asset classes, such as fixed income, FX and

cryptocurrency. Meanwhile, ETP market value traded

(on-exchange and off-exchange) also increased

during the same period to €51.8 trillion (2021:

€36.8 trillion).

The market environment Normalized total income of

€460.6 million in 2022 (2021: €387.1 million),

comprising Normalized Net Trading Income (NTI) of

€459.5 million (2021: €384.0 million) and €1.1

million of other income from unrealized gains in our

growing portfolio of strategic investments (2021:

€3.1 million) - the second most successful year for

Flow Traders. Europe, our home market, contributed

the most to our NTI which reflects that region’s high

level of flow visibility and counterparty and product

coverage. There was also significant contributions

from the US and APAC. During 2022, we were able

to successfully leverage our recent dedicated efforts

to diversify our trading activities across various

asset classes and products.

In the fourth quarter of 2022, Flow Traders reported

Normalized total income of €113.9 million which

reflected generally higher activity levels in the

markets as well as the growing resilience and

trading diversification of the business.

Market volatility

In 2022 market volatility increased from the levels

witnessed in 2021. The main volatility took place

during October, May and June with average VIX

levels of 30.37, 29.98, and 28.56 respectively.

Operational expenses

On the cost side, Normalized fixed operating

expenses increased to €161.6 million in 2022 (2021:

€122.1 million). The main drivers of the increase in

fixed expenses related to USD strengthening, base

compensation increases, technology investments to

support diversification initiatives as well as new

hires. FTEs increased by 8 percent to 660.

Normalized variable employee expenses increased to

€90.8 million (2021: €86.5 million) which reflects

the improved overall financial performance of the

business during the year and the adjusted profit

sharing percentage of 32.5% (2021: 35%) which

was implemented to ensure the base compensation

increases were income statement neutral.

Given these income and cost dynamics, Flow Traders

continued to demonstrate strong operational

leverage with a Normalized EBITDA margin of 45%

FLOW TRADERS | ANNUAL REPORT 2022 25

in 2022 (2021: 46%) with Normalized EBITDA of

€208.2 million (2021: €178.5 million).

Normalized Performance: IFRS

Reconciliation

Flow Traders makes certain adjustments to various

IFRS expense and profit measures to derive an

Alternative Performance Measures (APM). The policy

is to exclude or adjust items that are considered to

be significant in both nature or size and where the

treatment as an adjusted item provides stakeholders

with useful information to assess the year-on-year

or quarter-on-quarter underlying performance. On

this basis, the following items were adjusted or

excluded for the 2022 results reporting:

▪Removal of IFRS 2 treatment of share-based

payments which include the deferral of a portion

of the current year share plans as well as

recognition of prior years’ share plans. This

adjustment provides insights into the relationship

between the current year variable employee

expenses and current year trading performance.

▪Other income line includes all the realized and

unrealized results on Flow Traders’ long-term

equity investments whether accounted for as Fair

Value Other Comprehensive Income (FV OCI),

Fair Value Profit and Loss (FVPL) or Results of

Equity-accounted Investments.

▪Exclusion of strategic advisory costs as one-off

expenses in 2022 in relation to optimization of

the Group legal entity and regulatory structure

and further balance sheet review efforts.

▪Tax expenses are adjusted based upon the pre-

tax adjustments and/or excluded items above.

See normalized to IFRS reconciliation:


In thousands of euro	For the year ended
	2022	2021
Normalized Income	460,605	387,121
Fair value OCI adjustment	(2,563)	(2,495)
Results of equity - accounted investments	631	(585)
Total IFRS Income	458,673	384,041

Normalized EBITDA	208,176	178,479
FVOCI adjustment from equity to PL	(2,563)	(2,495)
Profit or (loss) on equity-accounted investments	631	(585)
One-off expenses	(14,057)	—
Prior year share plans	(25,359)	(27,282)
Other variable remuneration plan adjustments	—	—
Current share plan deferral	12,510	11,332
Total IFRS EBITDA	179,338	159,449

Normalized net profit	150,200	130,885
Profit before tax IFRS adjustments	(29,469)	(18,445)
Tax difference	6,096	2,494
IFRS net profit	126,827	114,934

FLOW TRADERS | ANNUAL REPORT 2022 26

Capital base and dividends

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 €0.70 interim dividend in August 2022

and propose to pay €0.80 as a final dividend over

2022. Over the course of 2022 we therefore aim to

return a total of €1.50 per share through dividends

to our shareholders, which represents a 51% (2021:

51%) percent dividend pay-out ratio.

As at 31 December 2022 our regulatory capital

requirements under IFR/IFD were €274 million. As

Flow Traders’ total regulatory capital stood at €538

million, this resulted in an excess capital position of

€264 million. Trading capital stood at €651.0 million

at the end of 2022 (€610.6 million as at 31

December 2021).

Cash flows

Cash flows from operating activities decreased to

€93.8 million in 2022 (2021: €244.8 million in

2021). Cash flows from operating activities in 2021

were at an elevated level due to dividend funding

and share repurchases.

Cash outflows from investing activities amounted to

€19.7 million in 2022 (2021: €13.8 million) as

additional strategic investments were made through

the newly established Flow Traders Capital alongside

continued investment in the business. Lastly, cash

outflows from financing activities in 2022 amounted

to €70.6 million (2021: €234.6 million) as dividends

and share buybacks reduced year over year.

Growth

We continued to grow our global team, trading

strategies and infrastructure in 2022. We increased

our institutional counterparty base globally to over

2,200 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 660 by year-end (2021: 613).

Outlook

While Flow Traders remains committed to bringing

onboard additional talent in growth business areas,

FTEs are expected to remain broadly flat during

2023 given expected efficiency gains. There is a

strong commitment to maintain the fixed operating

cost base in line with the December 2022 run-rate.

Accordingly, normalized fixed operating expenses in

2023 are expected to amount to c. €175 - €185

million compared to €161.6 million in 2022.

Flow Traders will remain focused on all arising

opportunities to create shareholder value through

systematic capital management going forward.

FLOW TRADERS | ANNUAL REPORT 2022 27

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 34

▪Liquidity in financial markets

Providing liquidity to global financial markets to

promote fair, transparent and stable markets.

Flow Traders ensures the provision of liquidity to

support the uninterrupted functioning of financial

markets. The provision of this liquidity allows

investors to continue to buy or sell ETPs or other

financial instruments under all market

circumstances. See pages 34-35

▪Good corporate governance

Pursuing the highest standards of good corporate

governance to make sure we take actions that

have a beneficial effect on all our stakeholders.

Corporate governance is the system of rules,

practices, and processes by which a firm is

directed and controlled and essentially involves

balancing the interests of a company’s many

stakeholders, such as shareholders, senior

management executives, customers, suppliers,

financiers, the government, and the community.

See page 35

▪Diversity and inclusion

Pursuing a diverse and inclusive business.

Diversity is defined 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

defined 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 35-36

▪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 36-41

▪Fair taxation

Pursuing the principle that tax should follow the

business. Consequently Flow Traders pays taxes

where profits are earned in accordance with local

tax legislation. We aim to comply with domestic

and 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

41-42

▪Societal commitments and charities

Supporting charitable initiatives and engaging in

community giving, not only financially 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 43

▪Stakeholder engagement

Engaging with stakeholders that may be affected

by decisions and giving stakeholders the

opportunity to influence decision making

processes through extensive stakeholder

dialogue. See pages 43-44

▪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 offices 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 44-45

FLOW TRADERS | ANNUAL REPORT 2022 28

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 financing the transition towards a sustainable society	Flow Traders has a critical and important role to play in the global financial ecosystem and ensures that financial markets function in an orderly manner	Strategy and agenda set by the Executive Committee with regular monitoring by the 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 financial markets	Providing liquidity to global financial markets to promote fair, transparent and stable markets	▪Regular monitoring by Chief Trading Officer and the Heads of Trading as well as the Executive Committee ▪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	▪One-tier Board structure ▪Broader organizational structure ▪Internal rules and regulations, including our Articles of Association, Board By- Laws, the Terms of Reference of our Board committees and our Code of Conduct ▪Overseen by Board and Company Secretary	▪Number of Board and Committee meetings ▪Full and transparent reporting
Diversity and inclusion	Pursuing a diverse and inclusive business	▪Regular monitoring by HR, Executive Committee and Board. Reference made to Equal Opportunity Policy	▪Number of nationalities ▪Gender representation

FLOW TRADERS | ANNUAL REPORT 2022 29


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 financing the transition towards a sustainable society	Flow Traders has a critical and important role to play in the global financial ecosystem and ensures that financial markets function in an orderly manner	Strategy and agenda set by the Executive Committee with regular monitoring by the 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 Executive Committee 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 Executive Committee and the Board	▪Taxes paid by category ▪Overall tax disclosure
Societal commitments and charities	Supporting charitable initiatives	▪Employee led with Executive Committee 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 Executive Committee and monitored by the 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 Executive Committee and monitored by the Board	▪CO2 footprint ▪Remaining carbon neutral

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 | ANNUAL REPORT 2022 30

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 influence 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 Executive

Committee and the Board pay close attention to a

wide variety of developments and trends that could

pose either a risk or an opportunity and in 2022 the

COVID-19 pandemic was still relevant as such an

event. Another is the opportunity that comes with

the shift to digitalization, which is helping make

financial 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.

Flow Traders ESG mission and ambition

The world is facing significant 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 finance sector can be an important contributor

to the global sustainability agenda and can promote

sustainable finance, 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 financial ecosystem and ensures that

financial 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 efficient to

trade than in previous decades, which benefits

everyone. In this key role Flow Traders has a

responsibility to contribute to the financial 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 financial ecosystem, Flow Traders will support

the acceleration of the transition towards sustainable

growth and finance, notably by providing liquidity in

the ever growing suite of ESG ETFs.

Flow Traders ESG ambition is to ensure to smooth

functioning of markets which will assist in financing

the transition towards a sustainable society by:

▪Investing in our trading capabilities to ensure

that sustainable investment products can be

traded easily and efficiently;

▪Promoting the drive for fair and transparent

markets, in continuous collaboration with the

financial 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.

FLOW TRADERS | ANNUAL REPORT 2022 31

EU Taxonomy

The EU Taxonomy is a classification system, which

will be used to determine, and report on, which

activities are sustainable, through the creation of

activity specific sustainability criteria. As financial

and non-financial 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) defined in the

Regulation; b) Do no significant harm to any of the

remaining five environmental objectives; and c)

Comply with the minimum social safeguards. The

European Commission (EC) is defining 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 defined 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.

Accordingly, we report a nil value for the Eligibility

EU Taxonomy percentage for 2022. 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

2022. Moreover, 2022 annual accounts including

Taxonomy information are not available. We have

not provided disclosure regarding voluntary EU

Eligible Taxonomy percentages as our balance sheet

reflects a point-in-time position and our trading

books reflect 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.

Stakeholder expectations and

materiality analysis

As a first 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 first 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 influences their interests. These Flow

Traders’ stakeholders recognize that we play a role

in ESG from numerous standpoints: Flow Traders as

a participant in the financial markets ecosystem,

Flow Traders as a business providing services and as

a corporate actor. In each of these roles, Flow

Traders has different responsibilities. A 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 identified 9

key issues, of which five are considered highly

material.

FLOW TRADERS | ANNUAL REPORT 2022 32


31 December 2022							31 December 2021
(€ millions)	Total	Of which covered by the KPI (dealing on own account)	Climate change mitigation (CCM)	Climate change adaption (CCA)	TOTAL (CCM + CCA)	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 (%) (Taxonomy- eligible)	Of which assets covered by the EU Taxonomy (%) (Taxonomy- eligible)	Of which assets covered by the EU Taxonomy (%) (Taxonomy- eligible)			Of which assets covered by the EU Taxonomy (%) (Taxonomy- eligible)	Of which assets covered by the EU Taxonomy (%) (Taxonomy- eligible)	Of which assets covered by the EU Taxonomy (%) (Taxonomy- eligible)
Total assets
Of which: on own behalf (4)	10,957	5,852	—%	—%	—%	10,739	5,048	—%	—%	—%
(1) The exposure to non-NFRD counterparties amounts to €5,105 million.						(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 €424 million.						(2) The exposure to central government, central bank and supranational issuers amounts to €315 million.
(3) The exposure to derivatives amounts to €0 million.						(3) The exposure to derivatives amounts to €9 million.
(4) Invested under investment firms’ activities dealing on own account (as per Section A of Annex I of Directive 2014/65/EU)						(4) Invested under investment firms’ activities dealing on own account (as per Section A of Annex I of Directive 2014/65/EU)

FLOW TRADERS | ANNUAL REPORT 2022 33

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 trafficking 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, 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 behaviour occurs. No

cases of bribery or corruption were reported in 2022.

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

financial 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 products (ETPs) and

other financial products to be traded across the

world’s markets, by continuously quoting bid and

ask prices. As an innovative segment of global

financial markets, ETPs have introduced efficiencies

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 benefits that liquidity providers, such as

Flow Traders, offer through these innovative

financial products compared to more traditional

investment products. We are seeking to bring the

same benefits to other markets we operate in such

as fixed income (corporate bonds) and digital assets.

In 2022 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.

Our role is to enable trading in widely diversified

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 efficient. This benefits institutional

investors, individual investors and, ultimately,

society at large by creating a more open and

accessible financial market.

FLOW TRADERS | ANNUAL REPORT 2022 34

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 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

As of 13 January 2023, Flow Traders operates a one-

tier board governance structure, comprising

executive and non-executive directors. The

executive directors along with the Executive

Committee which was established in September

2022 are responsible for the day-to-day

management of the company, formulating strategies

and policies, and setting and achieving our

objectives. The non-executive directors on the Board

supervises and advises the senior management

team. The Board is accountable to the Annual

General Meeting for the company's and its

performance.

Our governance is reflected in our internal rules and

regulations, including our Articles of Association, By-

Laws, the Terms of Reference of our 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 objectives and ESG priorities. ESG strategy

and agenda is determined and set by the Executive

Directors and Executive Committee with regular

monitoring by the Board. Please refer to the chapter

‘Governance’ for further information.

4.Diversity and inclusion

Flow Traders is a multinational company with offices

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 qualified job

applicants.

Companies that are diverse in e.g., age, gender,

race, sexual orientation, physical or mental ability,

ethnicity, and perspective are proven to be more

successful in attracting talent and are also proven to

accomplish better performance and growth. A

diverse workforce will stimulate greater innovation

and creativity, bring forward a larger range of skills,

increase productivity through a broad range of

background and experience, and provide more talent

to choose from.

Flow Traders embraces this philosophy and sees the

added value diversity brings to our business. Our

current company demographics are also something

to be proud of:

▪Over 25% of the world’s nationalities (of all

inhabited continents) are represented in our

650+employee workforce over 8 offices globally

▪Our people bring in experience over 50 academic

study backgrounds, providing multiple angles,

broad perspectives, and insights to solve

challenges together and develop personally by

learning from others

▪We are a relatively young company with an

overall average age of 34 years. However, we

see a healthy mix of ages through all ranks with

~40% of our workforce in the age category of

30-40 years old. Average age between our three

company divisions (Trading, Tech, and Business

Support) is also balanced with a difference in

average age of less than 5 years

▪Gender diversity is on our mind at Flow Traders.

Our Business Support division, comprising of

~180 employees, shows a balanced ratio of 51%

female employees in line with the sector

benchmark of 44%. The Tech and Trading

divisions female representation is growing

▪We employ people from 58 nationalities across

our offices.

We strongly encourage women to apply for any

function within the firm, particularly when they have

a background in fields that traditionally have a

higher proportion of male employees. This is

FLOW TRADERS | ANNUAL REPORT 2022 35

supported by our new Diversity, Equity and Inclusion

policy which was adopted and approved by the

Supervisory Board on 21 September 2022.

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 Board and accordingly, Flow Traders

met the Dutch legislative requirement that at least

one-third of its Supervisory Board consists of women

and one-third consists of men in 2022. For any

further future board appointments, due regard will of

course be made towards our Diversity, Equity and

Inclusion policy (September 2022).

To ensure we keep evolving, enforcing, and

nurturing our company culture we want to increase

our Diversity, Equity and Inclusion mark. For the

coming years we have indicated several targets

across the three themes. Some of these targets are

mandatory and need to be made public (in e.g. the

Annual Report) or reported to external organizations

(e.g. the SER; “Sociaal Economische Raad”). Other

targets are voluntary targets that we feel strongly

about.

Below is Flow Traders’ DE&I strategy for the coming

years up to 2025. Mandatory KPIs/targets have been

marked to clarify the difference between chosen

metrics/targets and metrics/targets that are non-

negotiable.

Diversity

In general, we aim to incorporate diversity aspects

such as nationality, age, gender, educational

background or professional background into decision

making concerning the composition of our

workforce. To the extent possible, this also applies

to the composition of our Management Board,

Supervisory Board and Executive Committee, as well

as the corporate bodies of Flow Traders B.V.

Regardless of rules and regulations, we see diversity

as a means to guarantee a safe and inclusive

environment for our employees. Nonetheless, since

the introduction of “de wet ingroeiquotum en

streefcijfers” as per 1 January 2022 it has become

increasingly important to track explicit metrics and

have clear targets to work towards. This piece of

legislation obliges corporates to disclose a number of

diversity metrics. We therefore aim for the following

goals and targets:

▪Strive to have more than 20% of world’s

nationalities working at Flow Traders (currently

25%)

▪Strive to have women in Technology at par with

the market (benchmark 17%)

▪Strive to have at least 1/3 female and 1/3 male

non-executive directors

▪Strive to have at least one female and one male

executive director

▪Flow Traders top-50 (which includes the

members of the Executive Committee) reflects

the total workforce gender distribution

Equity and Inclusion

Equity and Inclusion are paramount in maintaining

and thriving our entrepreneurial culture and

mindset. Next to current focus we are always

looking to expand and improve. In the coming years

we will therefore keep on evolving and implementing

initiatives to keep Equity and inclusion top of mind.

Below a subset of what’s on the roadmap

▪Increase our range of (online) training even

further on communication and unconscious bias

▪Include a D&I module in our Leadership training

to train our managers on inclusive leadership

▪Start with “high performing team training” and

offer team activities around DE&I to ensure more

inclusive collaboration and train employees in

understanding how inclusion will improve

performance / high performing teams

▪Become even more vocal internally and

externally about our (D)E&I initiatives, partnering

with other companies in the sector on big DE&I

topics

▪Create even more external awareness about Flow

Traders, our mission, our people, and our culture

through external events.

▪Keep reviewing policies and procedures on a

yearly basis and update/create were applicable or

required by law

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.

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

FLOW TRADERS | ANNUAL REPORT 2022 36

proud that we create and maintain high-quality jobs,

which result in a stable and trusting working

environment that benefits our people, our business,

and society. This is reflected in a low absenteeism

rate of 1.36% globally in 2022 (2021: 1.51%).

Our offices are all growing, and we look to hire as

many qualified applicants as we can find. 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 find 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 easing of

pandemic-related restrictions, we have resumed in

person campus recruiting events. We still recruit for

all disciplines and look for the best calibre 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 first hand, we invite

a select group of students to our Business Courses in

our Amsterdam and New York offices. 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 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 firm, we facilitate

opportunities for young talent in technology. In 2022

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 field 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 first hand, we invite an

exclusive group of students to our technology event

CODE@FLOW in our Amsterdam office. The two-day

challenge gives participants an opportunity to

engage in high-tech discussions and technical cases

with our specialists in software development and

trading, followed by a competitive hackathon.

In 2022 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 London

office in 2018, we have structurally increased our

presence at the relevant universities in the UK and

held multiple recruitment campaigns.

All our offices are designed to provide a pleasant

and ergonomically sound place to work. They are

flooded 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 benefits 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.

Following the easing of COVID-19 restrictions across

the countries we operate in, we have formally

instituted a hybrid working policy whereby certain

function have the option of working from home for 2

days a week. To facilitate this we have continued to

invest in people’s home office environments by

granting a budget for buying equipment.

FLOW TRADERS | ANNUAL REPORT 2022 37

We are a fast growing company, which creates good

jobs across a variety of departments. In 2022 we

welcomed 206 new hires (2021: 165), resulting in a

8% 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 offices from abroad.

We help with finding a home, applying for a visa and

getting to know the local culture. We also offer our

international employees based in Amsterdam the

opportunity to attend Dutch language classes. In

2022, 62 employees took advantage of this offer and

attended a Dutch language class. At the start of this

year, we once again had to onboard a large part of

our new hires online, as we were limiting presence

in the offices by having the majority of our staff

working from home for a prolonged period of time

due to the COVID-19 pandemic.

FLOW TRADERS | ANNUAL REPORT 2022 38


FTE PER BUSINESS UNIT/NATIONALITIES ON 31 DECEMBER 2022
	Dutch	American	Indian	British	Russian	Romanian	Chinese	Italian	French	German	Other	Total
Trading	71	32	5	17	1	1	8	8	5	4	55	207
Technology	42	22	35	9	24	21	6	6	3	5	89	262
Risk	5	5	1	3	—	—	1	—	2	1	7	25
Operations	12	2	3	1	—	—	2	1	—	1	8	30
Management Team	5	—	—	—	—	—	—	—	—	1	1	7
Supervisory Board	4	—	—	—	—	—	—	—	1	—	1	6
Legal	3	—	—	—	—	—	—	—	—	—	2	5
HR & Facilities	25	13	2	3	—	3	1	—	—	—	12	58
Finance & Tax	9	3	—	1	—	—	—	—	—	—	4	17
Compliance	5	6	1	4	1	—	—	2	2	—	7	28
Business Development	4	2	—	—	—	—	1	—	—	—	5	12
Audit	3	—	—	—	—	—	—	—	—	—	—	3
TOTAL	187	85	47	38	26	25	19	17	13	12	191	660


FTEs AS OF 31 DECEMBER 2022
	Amsterdam	Cluj	Paris	London	Milan	New York	Singapore	Hong Kong	Shanghai	Total
Female	77	5	0	3	0	25	5	13	1	128
Male	357	9	1	4	1	94	9	57	0	531
Total	433	14	1	7	1	119	14	70	1	660

FLOW TRADERS | ANNUAL REPORT 2022 39


	Culture
Informal ‘work hard-play hard’ culture ▪Casual dress code ▪Highly skilled innovative people ▪Drive, teamwork, ownership, transparency ▪Aiming to be the best ▪Playing to win ▪Enjoying life, organizing great events

	Office
Stimulating collaboration and collegiality ▪Open office spaces ▪In-house bar ▪Annual company trips

	Lifestyle
Enabling a healthy lifestyle ▪Free healthy breakfast, lunch and dinner ▪In-house gym ▪Sports programs and events ▪Personal trainers ▪Chair massage ▪Free drinks and snacks ▪Quarterly health checks ▪In-house barber

We invest in our people. For example, we provide

them with a range of excellent training programs,

benefiting 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 specific skills they need to do their job well.

All junior traders – including those hired for our

Asian and the US offices – begin their global training

program at our offices 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-specific skills or for their own

personal development. In 2022, we expanded soft

skill training opportunities and created mid-level and

advanced-level trading classes for our non-trading

staff. In addition we created a second technology

onboarding to provide a deep dive into our

technology landscape.

In total, employees undertook 10,733 training hours

during the course of 2022 which comprised of

onboarding, leadership training, mandatory training,

e-learnings and coaching programs.

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

offices and experience life and work elsewhere.

FLOW TRADERS | ANNUAL REPORT 2022 40

We believe in sharing our profits with all relevant

stakeholders, including our employees. Given good

performance, employees from any role and office

are entitled to receive variable compensation

relative to their contribution to the firm 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 profit 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

behaviour for all our staff. In addition, we promote

employee shareholding through rewarding a

significant 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 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 financial circumstances. Since IPO, we have

utilized a number of share schemes. Around the time

of the IPO, our CEO at the time and a significant

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 2022, 457 employees out of 660

(31 December 2021, 407 out of 613) employees are

active participants of various employee share plans.


SHARES HELD BY EXECUTIVE DIRECTORS OF THE BOARD
(31 December 2022)		% of outstanding total shares
Dennis Dijkstra	1,075,000	2.31
Folkert Joling	424,817	0.91
Mike Kuehnel	25,000	0.05
Total	1,524,817	3.28

The co-founders of Flow Traders, Roger Hodenius

and Jan van Kuijk, are currently non-executive

directors. The table below provides an overview of

the shares indirectly held by them on 31 December

2022 as also reflected in the relevant AFM register.


SHARES INDIRECTLY HELD BY NON-EXECUTIVE DIRECTORS OF THE BOARD
(31 December 2022)		% 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

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 2022

we incurred total corporate income taxes of €35

million (2021: €30 million) which was 22% (2021:

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 financial reporting and its relations with tax

authorities globally. With regard to financial

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 filing 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 financial 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 Profit Shifting from the

Organization for Economic Co-operation and

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

FLOW TRADERS | ANNUAL REPORT 2022 41

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 benefit 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 firms or, when appropriate, approval is

obtained from tax authorities on specific material or

complex tax matters.

The key participants in the Tax Control Framework

are well established and include the Supervisory

Board, Management Board, Finance department, Tax

department 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,

significant tax positions, including the tax strategy,

are always shared with and subject to the approval

of the Management Board.

Flow Traders pays taxes where profits 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 significant 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 14 of the

financial statements.

Note:Total taxes due shows the total amount of tax due as a result of the

financial performance of the Group in the respective year.

FLOW TRADERS | ANNUAL REPORT 2022 42

7.Societal commitments and

charities

At Flow Traders, we believe it is important to

support initiatives that contribute to society in a

positive way. We’ve done so for many years –

through the firm and via our colleagues’ personal

efforts. We support several charities, not only

financially but also by offering our knowledge,

expertise and time. Our people have always been

enthusiastic about supporting charitable initiatives,

something which is also a core part of our company

culture.

To continue giving to our communities in a more

structured manner, we established the Flow Traders

Foundation (‘the Foundation’) in 2020. Over the past

few years, we have continued to support several

global and local charities and projects. Each year we

have also focused on an annual theme, past themes

have been: COVID-19, Education and the theme for

2022 was helping the people of Ukraine.

The Board of the Foundation (Sjoerd Rietberg,

former Co-CEO of Flow Traders) retained his role as

Chairman, as did Jan van Kuijk (Treasurer) and

Roger Hodenius (Secretary) with respect to their

roles.

Flow Traders N.V. donated 175.000 Flow Traders

shares to the Foundation in 2020. The two Flow

Traders 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 five

years and which will be partially used to acquire

Flow Traders shares to ensure long-term cash flows

for the Foundation. By the end of the year 2022 the

Foundation owned 266,220 shares in the company.

These shares yielded almost €280,000 over the

year, all in the form of dividends for the benefit of

the Foundation. In addition, the Foundation has

received €435,000 in cash from Flow Traders Ltd. in

2022 as part of a yearly variable contribution.

This funding allowed the Foundation to commence

fulfilling its mission of fighting poverty through

supporting charities. At the Foundation, there is a

focus on tackling challenges faced by those in

poverty, through supporting highly transparent and

cost-effective causes that contribute to improving

people’s lives. The strategy of the Foundation is

based on and embraces the United Nations

Sustainable Development Goal 1 - No Poverty. Since

the focus in 2022 has been on helping the Ukraine,

donations were made to several projects which

support people in Ukraine and the surrounding

countries that were impacted by the war and

projects which focused on helping displaced

Ukrainian people who came to the Netherlands.

The contributions the Foundation makes to different

charities and projects are divided into three different

categories:

1.Ad-hoc contributions

2.One–year contributions, based on the annual

theme (i.e. Ukraine in 2022)

3.Long-term contributions of at least three years to

structurally support a cause

Based on these categories and the annual theme of

2022 we supported various charities and projects

across the globe. Next to this we continued our

support for our long-term projects from 2020 and

2021 such as Free a Girl, Flor Ayuda, Project

Backboard, Neighbor Share and Stichting Petje Af.

The charities we supported based on the annual

theme were: UNHCR, Netherlands for Ukraine

Foundation (NL4UA), War Child (project Team Up),

the Red Cross and several great initiatives

nominated by our employees.

8.Stakeholder engagement

Flow Traders operates in one of the most regulated

and competitive markets and is part of an innovative

industry. In the era in which we find 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 and paradigms

shift. We connect with several stakeholders and

peers to collaboratively demonstrate the benefit for

society originating from our innovative industry and

other tech-oriented companies. In addition, to be

able to take our corporate responsibility agenda to

the next level, we engage with our stakeholders on a

continuous basis to understand whether we have a

mutual vision on business developments and

essential reforms in our regulatory environment. We

consistently monitor and analyse societal and

regulatory trends and 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 financial 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 financial 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.

FLOW TRADERS | ANNUAL REPORT 2022 43

One of the main issues we addressed in our long-

term engagement with regulators marked the capital

requirement regime for investment firms. Besides

the onerous changes in capital requirements and

thresholds, the IFR/IFD implementation also

impacted other internal policies and our group

governance in 2022, 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 finance.

Aligned with this issue we campaigned along with

industry peers an alternative proposal on capital

requirements related to digital assets.

Furthermore, 2022 was characterized by intensifying

proactive work to position Flow Traders in the

discussions regarding the MiFIR Review, the new EU

Markets in Crypto Assets (MiCA) rules and Dutch

corporate and financial markets legislation. The

MiFIR review includes some important topics for

proprietary trading firms like the consolidated tape

and a review of payment for order flow (PFOF). We

have reconfirmed our position to robust market

transparency and strive for a near real time

consolidate tape, specifically in the bond market

without deferrals longer then printing the data of

large volume trades at the end of the trading day.

Because the political agreement on MiCA marks the

beginning of regulating the digital asset ecosystem,

Flow Traders will maintain its involvement in the

next phase of the legislative process and the

following implementation.

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 efficient financial 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, demonstrates our positive impact to

society and ultimately improve our business. As part

of our collaborative strategy, we contribute to

representative bodies like the EU Consolidated Tape

Expert Group and the Foreign Exchange Contact

Group at the ECB and advisory committees of

exchanges. We are an active member of several

trade associations and are participating specifically

in the board of the Dutch Association of Proprietary

Traders (APT) and the Executive Committee of the

European Proprietary Traders Association (FIA-

EPTA). In our trade associations we have

representation on several committees regarding

market structure, prudential regulation, digital

assets and DeFi, sustainable finance and ESG,

diversity and well-being. Flow Traders is also a

member of Holland Fintech, the International Capital

Markets Association (ICMA) and participates in

several other professional networks.

Our Board and management engage with

shareholders, prospective investors and other

stakeholders throughout the year and had 381

engagement meetings in 2022 either one-on-one, in

market intelligence meetings or at a (virtual)

conference and high level seminars. 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 and the

update of our holding structure. In addition, our

employees contribute to our engagement efforts,

providing their knowledge and expertise to better

inform our stakeholders, improve regulation and

safeguard fair markets. Together, as a team, we

serve society by improving financial markets,

supporting innovation and inspiring people.

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 offices 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 first time of its carbon footprint in

2020 which serves as the baseline. In 2021 and

2022 we carried out the yearly carbon footprint

analyses. In 2022 we applied improved

measurement models as part of our approach for

continuous improvement. The right data informs the

decision making process. This was particularly

relevant for the electricity consumption in our

buildings using primary data (scope 2). Flow

Traders will focus in the coming years on reducing

its carbon footprint. In the meantime, during 2020

and 2021 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.

FLOW TRADERS | ANNUAL REPORT 2022 44

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 4741 tons CO2eq (2021: 1287 tons

CO2eq) that may be split as following:

▪scope 1 = 241 tons CO2eq representing 5% of

Flow Traders’ global carbon footprint, which are

direct emissions from buildings;

▪scope 2 = 2,956 tons CO2eq representing 62%

of Flow Traders’ global carbon footprint, which

comprise. electricity consumption from buildings;

▪scope 3 = 1,545 tons CO2eq representing 33%

of Flow Traders’ global carbon footprint, which

currently calculated through business flights and

the use of servers but exclude our strategic

investments which have additional carbon

footprints.

Flow Traders’ primary GHG emissions arise from

energy use in its offices 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 67% 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 offices and data centres 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 significantly. When refurbishing our offices,

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.

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

efficient 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 field

▪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 benefit the firm as a whole

▪We always give back to society and the

communities we live in

These values are a reflection 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 another, is

encouraged to share. This is part of the open,

FLOW TRADERS | ANNUAL REPORT 2022 45

informal and diverse culture that makes us who we

truly are.

Nurturing our inclusive and equal

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 firm-wide events and company

outings as well as regular all-staff updates. In

addition, a bi yearly engagement survey is

offered to ensure open communication and

enable employees to raise their voice

▪Business departments - providing specific

trainings or learning sessions towards our people

through which we actively stimulate their

personal and career development.

▪Colleagues themselves - reinforcing the strength

of our culture by organizing their own events,

competitions, and charitable endeavours.

▪Societal commitments and charities - Supporting

multiple charities, also through our own Flow

Traders Foundation, not only financially but also

by offering access to our knowledge and

experience.

To guarantee the safe and inclusive environment

Flow Traders lays emphasis on several strong

enablers to make all employees feel included and

safe.

▪A group of internal and external ‘trusted persons’

to discuss challenges and difficulties in private in

case desirable.

▪A proven zero-tolerance policy in case of

unacceptable behaviour in any form whatsoever

and clear follow up procedures towards all

stakeholders.

▪Ability to always work in the office to connect and

thrive together.

▪Ability to work from home at dedicated moments

per week to maintain the flexibility to perform in

the best way possible if that means working from

a remote location.

▪A non-hierarchical working culture in which all

employees can easily contact each other without

any hierarchical boundaries (e.g., MB members

and senior leadership always approachable,

instilling ownership and accountability).

▪A wide range of global and local company events

in which all employees from all backgrounds can

participate if they like to.

▪A focus on healthy lifestyle for employees to

participate in voluntarily (gym with personal

programs, hairdresser, massages, healthy

kitchen meals and nutrition advise, etc.).

Outstanding behaviour in 2022

There have been many individual examples of

outstanding behaviour which has reinforced Flow

Traders’ strong culture. Examples worth highlighting

include:

▪Various colleagues continue to give up their

valuable spare time to assist with the ongoing

operation of the Flow Traders Foundation.

▪Annual Sinterklaas toy donations in Amsterdam

▪Climbing Kilimanjaro to raise money for charity

▪Support for Project Backboard and

NeighborShare by colleagues in our New York

office

FLOW TRADERS | ANNUAL REPORT 2022 46

Sustainable Development Goals

The United Nations (UN) has identified 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.

FLOW TRADERS | ANNUAL REPORT 2022 47

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 relevant reporting standards as well as setting

targets and associated KPIs. We will also develop

and adopt specific policies, including human rights

policy, environmental policy and supply chain policy.

Given the EU Taxonomy is relatively new and

contains some significant uncertainties around

specific implementation, Flow Traders will continue

to assess the eligibility and the extent of the

Taxonomy alignment during the course of 2023.

Accordingly, this may impact the way in which Flow

Traders addresses EU Taxonomy reporting in 2023.

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 2022 financial statements. In reaching

these conclusions, the Group’s financial position as

at 31 December 2022 and the strong free cash flow

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 flows, financial position and liquidity

for the year ended 31 December 2022 is set out in

the section notes to the consolidated financial

statements. The Group’s capital position is strong

and therefore the Management Board believes that

Flow Traders is well prepared for the future.

Capital metrics


Own Funds Requirements		Excess Capital
€274		€264
million		million
2021: €243 million		2021: €240 million

Own Funds Ratio
196%
2021: 199%

Capital management

The Board’s policy is to maintain a strong capital

base well above the required margins in order to

maintain investor, creditor and market confidence

and to sustain future development of the business.

The Executive Committee 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 sufficient

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 sufficient levels of risk allowances) and have

different limits structure, pre-funding possibilities

and cut-off times for wiring capital.

FLOW TRADERS | ANNUAL REPORT 2022 48

The aggregate capital that the prime brokers require

is significantly 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

efficient 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
	2022	2021
Net liquidity at clearings/ prime brokers	642,367	605,642
Cash at bank	8,612	4,949
Net trading capital	650,979	610,591

Regulatory capital requirements

In 2022, Flow Traders as a group and our subsidiary

Flow Traders B.V. were 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 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, fines, 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.

Following the completion of the update of our

corporate holding structure on 13 January 2023,

group consolidated capital requirements are no

longer applicable. Accordingly, CET1 and the Own

Funds Requirement will no longer exist at the group

level. Our regulated subsidiaries will continue to hold

regulatory capital as required by their respective

individual regulators.

FLOW TRADERS | ANNUAL REPORT 2022 49

Our Pillar III disclosures pursuant to IFR/IFD can be

requested through our website www.flowtraders.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 few months.

Management and control

Our global capital position is managed on a daily and

intra-day level by the Risk and Mid-Office

department. The Risk and Mid-Office 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 12-month forecast for

our capital positions, every month.

As part of our regulatory capital management cycle,

the Risk and Mid-Office 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 final part of the internal risk management and

capital cycle is the annual Internal Capital and

Liquidity Adequacy Assessment Process (ICLAAP) for

our largest trading entity, Flow Traders B.V.. 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 for Flow Traders

B.V. based on this report.

FLOW TRADERS | ANNUAL REPORT 2022 50

Our risk management

Flow Traders’ Enterprise Risk

Management Framework (ERMF) forms

the foundation of our approach to

managing risks. The ERMF is

documented in Flow Traders’ Enterprise

Risk Management Policy and is

reviewed annually by our Management

Board.

Where possible, we identify, assess, monitor,

quantify and document potential risks which are

inherent to trading in an automated market-making

firm. In the fast and dynamic environment of

automated trading we designed our ERMF in such a

way that it is robust, efficient and transparent. In

the figure below, we present the stakeholders that

have an interest and place value in how our

framework operates.

Our ERMF helps us to ensure that we have adequate

systems and controls including the management of

our liquidity and capital. This is delivered through a

consistent, continuous and careful method for

addressing, managing and prioritising our key risks

in the context of our Group's strategic objectives.

FLOW TRADERS | ANNUAL REPORT 2022 51

Enterprise Risk Management

We aim for a good balance between our business

activities, return on capital and related risks taken.

Flow Traders’ Enterprise Risk Management (ERM)

approach to ensure that our risk appetite and profile

are integrated in our day-to-day operations and

strategic 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 deliver on the risk activities set out in our annual

Risk Management cycle to ensure that the residual

risk profile is (and remains) in line with our set risk

appetite. In order to achieve this, we perform risk

control self-assessments (RCSAs) 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

Our risk taxonomy is split into three broad risk

categories - Strategic, Operational and Financial risk

- each with their own specific sub-risks:


Risk	Description
BUSINESS AND STRATEGIC
Strategic	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 profitability are primarily a function of the level of trading activity, or trading volumes, in the financial instruments in which we trade.
Concentration	Probability of loss arising from heavily lopsided exposure to a particular group of counterparties or products. Concentration risk also includes supplier dependency risks.
Project management	The risk of inaccurate project management leading to inadequate realization of project objectives.
COMPLIANCE AND ETHICAL
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 affiliate 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 affiliate 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	Failure to comply with any legal or regulatory obligations that are not captured through other risks.
Reputation	The reputation risk is the risk of loss resulting from negative exposure to stakeholders.
FINANCIAL
Prudential	The risk the entity is not able to cover the cumulative net cash outflow or available capital (e.g. needed trading capital or regulatory capital) over a certain period.
Market	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.
Credit	Credit risk is the risk of a counterparty and/or issuing institution involved in trading in or issuing a financial instrument defaulting on an obligation. ESG risks are also having an increasing impact here.

FLOW TRADERS | ANNUAL REPORT 2022 52


OPERATIONAL
Business continuity	The risk of failure to provide and maintain appropriate business continuity management (BCM), including inadequate business continuity plans.
Trading execution	The risk of losses due to errors in the execution.
People	The risk that the entity is not able to develop, retain and attract the necessary skills and diverse capabilities in our workforce to realise strategic objectives.
Model	The risk of incorrect model design, improper implementation of a correct model, or inappropriate application of a correct model.
Legal	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	The risk of not being able to report adequately to stakeholders (e.g. annual financial report, regulatory reporting).
Taxation	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	The risk of failing to manage third-party relationships and related risks appropriately.
Trade settlement	The risk of ineffective trading leading to financial 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	The risk that the IT strategy is not described, unclear or incomplete and thereby not sufficient contributes to IT and business objectives. This includes the risk of the strategy not being properly executed.
Technology system	Risk of loss of information caused by failure, loss of confidentiality, integrity and/or availability of information and/or systems.
Data management	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 delivery	The risk of inaccurate project management leading to inadequate realization of project objectives.

FLOW TRADERS | ANNUAL REPORT 2022 53


	Category Definition	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 would crystalise in Flow Traders’s potential exposure to legal fines, financial penalties and substantial loss, resulting from its failure to act according to industry laws and regulations, internal policies or industry best practices. Ethical risk refers to dealing with the negative consequences of acting unethically.	Considering the advance notice regulated firms get from their regulators about new regulations, Flow Traders has a low risk appetite for this risk as it directly impacts our reputation. It is mitigated by our Compliance department, who tracks new regulations, and supports adherence on "Day 1" when they come into force. Furthermore, we hold ourselves responsible for acting with honesty, integrity and respect, that is a part our Code of Conduct; in addition to adhering to applicable laws and regulations in the jurisdictions that we operate.
Financial risk	Risk relating to positions in our Trading Book, including risks primarily related to Market Risk, Liquidity Risk and Credit Risk.	We manages our financial risk carefully by applying a strict set of criterion in our interactions with counterparties, issuers and other relevant financial institutions. In addition, we manage our financial positions through sound risk management principles as set out in our risk management policies.
Operational risk	The risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes legal risk, but excludes strategic and reputational risk.	Flow Traders is naturally exposed to operational risk, as a result of conducting its business operations. Any firm can not completely eliminate this risk as this would not allow a firm to achieve its business objectives. These risks have to be mitigated, accepted or deferred.
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. As part of our active risk mitigation, Flow Traders spend significant effort to maintain our residual technology risk at a low level.

FLOW TRADERS | ANNUAL REPORT 2022 54

Risk Management Governance

The effectiveness of risk management is linked to

commitment and integrity. It is therefore crucial that

the Management Board, the global and local

department heads, and all employees are aware of

the risks that the company faces and their

responsibilities in managing it efficiently.

Our risk management is organised along three lines

of defence.

The first line of defence is comprised of Trading,

Technology and Operations. These departments are

critical for managing 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 defence 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 defence 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 findings 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.

FLOW TRADERS | ANNUAL REPORT 2022 55

Enterprise Risk Management roles and

responsibilities

The role of the Risk Committee of the Board is to:

▪Supervise the Executive Directors and Executive

Committee with respect to:

▪Identifying and analysing the risks associated

with the strategy and activities of the company

and its affiliated 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;

▪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 together with

the Audit Committee.

▪Advise, and where applicable supervise, the

Executive Directors and Executive Committee

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 Officer.

▪Review, in relation to the company’s internal risk

management and control systems:

▪the company’s overall risk assessment processes

that inform the Executive Committee’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 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 findings regarding the

company’s internal risk management for

purposes of the meetings of the Board or the

Audit Committee;

▪Review, and where applicable monitor, the

Executive Committee´s responsiveness to the

reports, findings and recommendations of the

Chief Risk Officer.

The role of the Audit Committee of the Board is to:

▪Supervise the Executive Committee with respect

to discussing the effectiveness of the design and

operation of the internal risk management and

control systems.

The Executive Directors and Executive Committee

are responsible for:

▪Setting company-wide 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 significant risks

related to Flow Traders’ strategy;

▪Discussing current risk developments with the

standing risk committee of the Executive

Committee. The Executive Committee invites

stakeholders within the firm to report on new and

existing risk exposures;

▪Reporting on the outcomes of the risk

management activities to the Risk Committee of

the Board.

Flow Traders’ Managing Directors are responsible

for:

▪Setting local department targets and objectives

in line with company-wide objectives together

with the Global Heads;

▪Supporting the company in the identification,

handling, monitoring of risks related to its

objectives;

▪Identifying and evaluating the significant 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 Executive Committee.

FLOW TRADERS | ANNUAL REPORT 2022 56

Flow Traders’ Global/Local Heads are responsible

for:

▪Setting global/local department targets and

objectives in line with company-wide 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.

Flow Traders’ Risk Department is responsible for:

▪Monitoring, improving and developing the ERM;

▪Triggering risk self-assessments for all

departments;

▪Gathering the necessary information and creating

risk reports for internal stakeholders and the

Executive Committee.

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.

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 figure shows the ERM cycle of Flow

Traders:

FLOW TRADERS | ANNUAL REPORT 2022 57

The annual risk management cycle follows the below

risk management framework:

Every year the Executive Committee sets its

business targets following the strategic goals. The

strategic goals are generally formulated in

November/December. The Board approves the

strategic goals and business targets.

Additionally, the 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 company-wide,

departmental and individual goals and discussed in

an annual meeting with the Executive Committee

and all relevant Managing Directors.

Based on the targets and objectives, the Executive

Committee 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 manage our residual risk profile to

remain in line with our risk appetite. To help achieve

this, we perform Risk Self Assessments to identify

and assess current or emerging risks. Following the

Risk Self Assessments, department heads in

cooperation with the Executive Committee will

decide on the appropriate risk response. The effects

of the chosen risk responses will be monitored and

the actual residual risk profile will be mapped versus

the appetite annually.

FLOW TRADERS | ANNUAL REPORT 2022 58

Risk reporting

Flow Traders have a standing Risk Committee that

continuously assesses the risks we face in our

business, and is comprised our Global Head of Risk

and certain members of the Executive Committee.

Aside from regular ongoing communication, there is

a formal monthly meeting in which we discuss all

risk assessments and risk proposals related to

position limits, strategies, procedures, liquidity and

capital requirements and other requests from prime

brokers and due to market developments. Any

material change to our risk profile, systems,

strategies and limits must subsequently be approved

by the Executive Committee.

In addition to this standing Risk Committee, we have

a Risk Committee of the Board. All members of the

Board are members of this Risk Committee. The

Executive Committee informs the Risk Committee of

the 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.

The tasks of the Risk Committee of the Board

includes supervision and monitoring, as well as

advising the Executive Committee on the operation

of the company’s internal risk management and

control systems. The Risk Committee is also

responsible for providing advice to the Executive

Committee on the company’s development,

performance, and sustainability of its trading

strategies, as well as reviewing the risk of the

company.

It also 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".

The monitoring of the company’s internal risk

management and control systems was previously

identified as a priority. This is a joint responsibility of

the Supervisory Board and its committees. Good

progress has been made and the Board continue to

oversee progress on this matter.

All risks relevant to each of the committees of the

Board are monitored in the Risk Committee of the

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 the Board

in 2022, as all members of the 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

unfavourable market movements in various drivers

of a security’s price that may result in a financial

loss for its holder.

For illustration, the value of a financial instrument

may fluctuate because of changes in factors such as

equity prices, currency rates, future dividend

expectations, interest rates and volatilities.

Our hedging strategies (typically implemented by a

combination of underlying securities and vanilla

derivatives) along with our continuous monitoring of

our positions aim to minimise this risk.

Our trading philosophy is that we hedge our

positions as perfectly as possible to minimise our

market risk exposures.

Market activity risk (business risk)

Our NTI and profitability are primarily a function of

the level of trading activity, or trading volumes, in

the financial instruments in which we trade, and the

bid-ask spreads (which largely determine the profit

on the trade, or margins, we capture).

Trading volumes in securities, derivatives,

currencies, commodities, digital assets and other

financial 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

finance, regulatory requirements, actions by central

banks, and changes in the markets in which such

transactions occur.

To cope with periods of low market activity, we have

diversified our trading into different products and

across multiple markets. This is to safeguard that we

are not overly dependent on market activity in one

particular asset class or product type.

A key market and counterparty credit event that

occurred in 2022 was that of the FTX platform's

collapse due to the misbehaviour by their senior

leaders and mismanagement of the firm. This

resulted in a significant test of our digital asset

trading ability and our new digital asset risk

management approach. Due to the actions of our

trading desk and risk management approach, we

reduced our exposure significantly in short order.

We suffered an immaterial impact from direct

exposure to the FTX platform and this was then

offset by gains in other parts of the digital assets

space as volatility increased.

FLOW TRADERS | ANNUAL REPORT 2022 59

Operational risk

Operational risk is defined 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. Our operational risk is

dominated by technology-related events at our

exchanges and clearing members. Therefore, the

level of our investment in technology is important to

mitigate those associated risks as well as having

resilient and robust internal systems and controls.

We operate an integrated, in-house developed, high-

performance and customised 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 any releases relating to our trading

software, or an update into our production

environment, any element of our trading software is

subjected to a review of its code, testing in a

development 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 financial instrument, followed by more

extensive testing across multiple desks and/or

trading multiple financial instruments. Each step

must be completed before the next and also

appropriately documented.

We have a monitoring system in place to control

undisrupted trading activities in real time. Multilayer

monitoring is employed to avoid errors. When an

error does occur, the relevant teams are

immediately notified via multiple different channels.

We rely on multiple third party service providers for

business and market data, which is a key part of

what is monitored.

Our risk management system is fully integrated with

our proprietary technology platform, analysing 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 that deviate from our pre-defined

risk parameters. These include price and volume

limits, which are set by our Risk Management

department. This keeps our ordering, trading and

positions well within our preset tolerance levels. Our

post-trade monitoring tools include trade-level

reconciliation of 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 internally and

externally.

Where we have a technical interface with institutions

such as 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 flagged and investigated.

We also have a disaster recovery plan in place

which, we continuously review to ensure it

adequately captures relevant scenarios. For the

lessons that we have learnt from the COVID-19

global pandemic, we have already made substantial

changes to our global approach to our site

management.

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 identification

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

We only serve institutional counterparties and do not

provide investment services or ancillary services to

third parties, our markets and nearly all aspects of

our business are highly 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

three international jurisdictions with branch offices

established in London, Milan, Shanghai and Paris. As

a Group, we currently trade on more than 180

venues worldwide as well as operating on numerous

other venues through our brokers. Our regulatory

FLOW TRADERS | ANNUAL REPORT 2022 60

landscape is broad as we have to comply not only

with our local regulations, but also the trading rules

of all venues on which we trade.

Legislators and regulators worldwide continue to

closely supervise the world financial markets in

which we operate. This places significant demand on

Flow Traders to maintain a professional, well-

structured and compliant organisation.

We are awaiting the final approval from the Financial

Conduct Authority (“FCA”) in the UK to migrate the

activities of our branch office in London to a new

legal entity.

Our Compliance department supports 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 staff training and

monitoring in order to manage the Group’s

conformance with its regulatory obligations.

Compliance together with Public Affairs monitors and

assesses any forthcoming regulations that may

impact us. During 2022 this included amongst others

matters:

▪The EC review of the European Central Securities

Depositories Regulation that was adopted on 16

March 2022 . Amendments on the mandatory

buy-in regime in the Settled Discipline Regime

(SDR) by proposing a "two-step approach". We

will continue to monitor the future impact of

mandatory buy-ins and to manage the two-way

flow of cash penalties for failed transactions.

▪The official response from the EP to the MiFID/

MiFIR review that was announced by ESMA in

2021 has been published. This review aims to

further improve the framework introduced by

MiFID II. One of the key components is the post-

trade consolidated tape that should be real-time

and not include any deferrals. We are and have

engaged with regulators and various

stakeholders to continue our push for

transparency in all markets we are active in.

▪We have implemented IFR/IFD and submitted our

first ICLAAP under this new prudential regime to

the DNB. We have received minor pointers from

the DNB and AFM around a few points that they

would like to be set out in a clear way in our next

ICLAAP. We will continue to implement best

practice in this area where possible. Such

conversations with our regulators and our peers

are ongoing and will continue as this regulation

matures along with any further interpretation by

the EBA and DNB.

▪Digital Assets and related forthcoming

regulations such as the prudential BIS paper,

MiCA and DORA remain a topic that garners

significant attention. There is still a spread of

approaches taken by various governments and

regulators from around the globe for this

developing asset class. As a world-class liquidity

provider we continue to following these

developments closely and remain an active

contributor to key regulatory consultations. We

anticipate the regulatory uncertainty will continue

for into 2023 and beyond. We are engaging with

regulators on a global and local level to push for

a clear and fair regulatory framework as that

should lead to a mature ecosystem with

sustainable growth for this asset class.

The Compliance, Risk and Operations departments

have promulgated and implemented controls,

internal rules and processes that have been

pragmatically developed following applicable

regulatory requirements, guidelines from market

authorities, and industry best practices.

Nevertheless, it is worth remembering that laws and

regulations are subject to change and will be

interpreted differently in practice over time.

Actual or alleged non-compliance with applicable

laws or regulatory requirements could adversely

affect our reputation and in turn our long-term

profitability and future business prospects. This may

also be the case to a lesser degree for differences in

interpretation or lack of timely or complete

implementation of regulatory requirements.

Sanctions could include fines, penalties,

disgorgements and censures, suspension or

expulsion from trading venues or the revocation or

limitation of licenses.

We aim to minimise such risks by focusing

considerable management attention to choose the

most appropriate strategic approach,

employing ;highly-qualified compliance and risk

professionals to allow the deployment of staff

training; to efficiently update of our monitoring and

reporting systems; and to be able to continuously

evaluate the impact of current and upcoming

regulations on our operations to find the optimal

path to evolve our processes.

Notwithstanding such efforts and given the highly

regulated nature of our business, we remain subject

to routine (and more targeted) inquiries and audits

from our global regulators and our trading venues.

The outcome of such inquiries are difficult to predict

and manage, however we aim to be as transparent

as possible in the spirit of cooperation to facilitate a

better understanding of how we manage risk.

FLOW TRADERS | ANNUAL REPORT 2022 61

Information on the remuneration of the Board

members can be found in the chapter

"Remuneration".

Environmental risk

While Flow Traders considers its overall impact on

the environment to be low due to the office-oriented

nature of our business, we have nonetheless

identified certain environmental risks:

▪Physical environmental risks such as

earthquakes, forest fires and floods 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 have and will

mitigate this risk by having a widely distributed

server infrastructure with a high degree of

system redundancy. In addition, recent forest

fires in South East Asia have led to the closure of

our Singapore office. This was mitigated by

activities transferring to other office locations.

▪Future regulation may also affect Flow Traders

financially by putting a price on CO2 and other

greenhouse gas emissions, In addition, CO2

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

financial markets ecosystem we are a part of, we

recognise that should any of the risks referenced

within this section materialise, there could be a

negative impact on various external third parties.

Specifically, market and operational risk events

could negatively impact key parties within our value

chain; namely our counterparties and our prime

brokers. There could limit 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

similar risks.

Compliance and transparency

Focus on anti-bribery, anti-corruption

and anti-money laundering

Flow Traders continues to be a strong proponent of

effective, efficient and equal regulation and we

contribute to the regulatory dialogue in our key

jurisdictions to campaign for 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.

Especially important are the rules around anti-

corruption, anti-bribery and anti-money laundering.

Integrity and transparency is central to the way we

run our business regardless of their seniority or role.

The company encourages everyone, from our

Management Board and Supervisory Board to all our

staff, to speak up and participate in our firm's open

culture. This inclusive culture supports our

employees in complying with the applicable laws,

regulations and our internal policies.

We believe that each employee of Flow Traders has

an individual as well as collective responsibility for

ensuring an honest and ethical conduct of business

within the company. Our Code of Conduct, which

forms part of our employment documentation, is the

formalisation of our behavioural values.

Ensuring adherence with our Code of Conduct is the

responsibility of the Executive Committee. Any

reported potential breaches are investigated fully by

the Executive Committee and other members of our

senior management team in accordance with

existing clearly laid out procedures and policies.

Our Code of Conduct can be found on our website

www.flowtraders.com.

We also 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 financial instruments for our own

account and own risk only. We do not maintain

production facilities or source raw materials.

Nevertheless, our staff receives training in anti-

bribery, anti-corruption and AML practices, as the

Management Board would like to reinforce the

importance of these policies.

Key to our anti-bribery and anti-corruption policy is

that officials or counterparties that we work with

may never be placed in an uncomfortable position.

Therefore, no gifts nor favours that may lead (or

have the appearance to lead) to obligations or

embarrass any recipient, and no gifts nor favours of

any substantial value may be given to any

authorities or counterparties that we interact with.

Any form of facilitation payments are strictly not

permitted under any circumstances. We provide

clear and recurring guidance on a regular basis 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.

FLOW TRADERS | ANNUAL REPORT 2022 62

We have zero tolerance approach towards bribery

and corruption and we actively ensure that no such

behaviour occurs. No cases of bribery or corruption

were reported in 2022.

Whistleblowers

In addition to our culture of openness, transparency

and participation, we also have a mature and

detailed 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, 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 their usual reporting lines. We also

provide employees with a safe way of reporting any

suspected misconduct within our organisation and

offers robust protection to them.

The Whistleblower Policy has wide applications,

including in respect of topics such as fraud, market

abuse, corruption, anti-money laundering, theft,

bribery, dishonouring the organisation, global tax

policy and any other structural misconduct that

threatens the integrity and proper business conduct.

The Whistleblower Policy also provides any

whistleblower with anonymity, confidentiality, 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. Our

Whistleblower Policy can be found on our website

www.flowtraders.com.

Internal audit

The Internal Audit (IA) Function seeks to enhance

and protect organisational value by providing risk-

based and objective assurance, advice, and insight.

An efficient and effective IA contributes to strong

internal controls and to a robust governance

structure, which can address key structural risks.

The scope of IA's work includes the examination and

evaluation of the adequacy and effectiveness of our’

risk management, control and governance

processes. It also includes quality assurance work

reviewing our performance in carrying out assigned

responsibilities to achieve our stated goals and

objectives.

Our Group Internal Audit Charter defines the IA’s

purpose, authority, responsibility and position within

the organisation. This charter is aligned with the

Corporate Governance Code and with guidance

provided by the Institute of Internal Auditors.

The IA 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 our external auditor and reports its audit results

to the Management Board, the Audit Committee and

informs the external auditor.

The Management Board assesses the way in which

the IA function fulfills its responsibility annually and

takes the opinion of the Audit Committee into

account.

Flow Traders Internal Audit Function conforms to the

International Professional Practice Framework (IPPF)

of the Institute of Internal Auditors (IIA) and was

externally certified in 2022.

FLOW TRADERS | ANNUAL REPORT 2022 63

Governance

As of 13 January 2023, our governance

structure is organized as a one-tier

board, as at the date of this report

consisting of two Executive Directors

and five Non-Executive Directors. The

Board shall manage the company and

the associated business and may

exercise all powers of the Company,

except those powers that are required

by the Companies Act or the Bye-Laws

to be exercised by the shareholders.

The Executive Directors are responsible

for the day-to-day management of the

Company and developing, proposing to

the Board and implementing the

Company's strategy, including ESG

priorities. The Non-Executive Directors

supervise and advise the Executive

Directors. Together they are

accountable to the General Meeting for

the performance of their duties.

Our governance is reflected in our internal rules and

regulations, including our Bye-laws, Board Rules and

Committee Charters. 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, as

defined in the Bye-laws.

FLOW TRADERS | ANNUAL REPORT 2022 64

Our Board

Throughout 2022, we operated a two-tier board governance structure, consisting

of a Management Board and a Supervisory Board. As at 31 December 2022, the

composition of our Management Board and Supervisory Board was as follows:


Management Board			Supervisory Board
▪Dennis Dijkstra (Chief Executive Officer)			▪Rudolf Ferscha (Chairman)
▪Mike Kuehnel (Chief Financial Officer)			▪Jan van Kuijk (Vice-Chairman)
▪Folkert Joling (Chief Trading Officer)			▪Olivier Bisserier
			▪Roger Hodenius
			▪Ilonka Jankovich
			▪Linda Hovius

Since the update of the corporate holding structure, which became effective on

13 January 2023 from a corporate perspective and with retrospective effect on 1

January 2023 from an accounting perspective, we are operating a one-tier board

governance structure. As at the date of this report, the Board comprises of the

following Executive Directors and Non-executive Directors:


Executive Directors			Non-Executive Directors
▪Mike Kuehnel (Chief Executive Officer)			▪Rudolf Ferscha (Chairman)
▪Folkert Joling (Chief Trading Officer)			▪Jan van Kuijk
			▪Olivier Bisserier
			▪Roger Hodenius
			▪Linda Hovius

Executive Directors




		Mike Kuehnel			Folkert Joling
		Age: 45 (1977)			Age: 43 (1979)
		Gender: male			Gender: male

		Mike Kuehnel was appointed Chief Executive Officer (CEO) in February 2023 and serves as Executive Director on the Board. As CEO, Mike is responsible for driving the overall strategic and growth agenda of Flow Traders. Mike joined Flow Traders in August 2021 and was appointed as member of the Management Board and Chief Financial Officer (CFO) of Flow Traders N.V. in September 2021. Mike has over twenty years of investment banking and strategy consulting experience in the global financial 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 holds an 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.			Folkert serves as Chief Trading Officer (CTrO) and Executive Director on the Board. As Chief Trading Officer, Folkert is responsible for the development and realization of Flow Trader’s trading strategies, business development, trading processes and daily trading operations. He was appointed to the Management Board of Flow Traders N.V. as Chief Trading Officer in 2018. Folkert joined Flow Traders in 2006 as a Trader, becoming Head of Trading in 2011 and Global Head of Trading in 2016. Folkert holds a Master’s degree in Applied Mathematics from the Twente University.

FLOW TRADERS | ANNUAL REPORT 2022 65

Non-Executive Directors

Rudolf Ferscha, Chairman

Jan van Kuijk

Olivier Bisserier

Roger Hodenius

Linda Hovius

Gender: male

Gender: female

Age: 61 (1961)

Age: 56 (1966)

Age: 55 (1967)

Age: 50 (1972)

Age: 61 (1961)

Nationality: Austrian

Nationality: Dutch

Nationality: French

Nationality: Dutch

Third term (2021 - 2023)

Third term (2022 - 2024)

Third term (2022 - 2023)

Second term (2019 - 2023)

First term (2021 - 2025)

Rudolf serves as Non-Executive Director

and Chairman of the Flow Traders Ltd.

Board. He is a member of the

Remuneration & Appointment Committee,

the Trading & Technology Committee, the

Audit Committee and the Risk Committee.

Rudolf was first appointed as a member of

the Supervisory Board of Flow Traders in

July 2015, re-appointed for a second term

in 2018 and a third term in 2021. Rudolf

was appointed Chairman of the Supervisory

Board in March 2021.

Originally a corporate finance and capital

markets lawyer, he has over 25 years’

board-level experience at international

financial 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.

Rudolf is currently a partner at Gledhow

Capital Partners and Chairman of the

Advisory Board at Mainberg Asset

Management GmbH.

Jan serves as Non-Executive Director on

the Flow Traders Ltd. Board and is Chair of

the Trading & Technology Committee. He is

also member of the Audit Committee, the

Risk Committee, and the Remuneration &

Appointment Committee. Jan is one of the

co-founders of Flow Traders and served as

its Co-CEO from its inception in 2004 until

2014. He was appointed Vice-Chairman of

the Supervisory Board of Flow Traders in

July 2015.

Until 1996, Jan served as a partner at

Optiver, a proprietary trading firm and was

involved in setting up their first electronic

trading activities at Deutsche Börse in

1993. He co-founded Newtrade Financial

Group in 1997, which was an options

market-making firm before being

discontinued after he co-founded Flow

Traders.

Olivier serves as Non-Executive Director on

the Flow Traders Ltd. Board and is Chair of

the Risk and Chair of the Audit Committee.

He also serves on the Trading & Technology

Committee. Olivier was appointed member

of the Supervisory Board of Flow Traders in

July 2015 and subsequently re-appointed in

2019 for a second term. In 2022, Olivier

was re-appointed for a third term of one

year expiring in 2023.

Until March 2019, Olivier Bisserier was the

CFO of Booking.com. He has over 25 years

of experience in international financial

roles. He was a senior manager for PwC

until 2000, then had finance director roles

and served as European CFO of TNS, a LSE-

listed market research group.

Roger serves as Non-Executive Director on

the Flow Traders Ltd. Board. He is also

member of the Risk Committee, the Trading

& Technology Committee and the

Remuneration & Appointment Committee.

Roger is one of the co-founders of Flow

Traders and served as its Co-CEO from its

inception in 2004 until 2014. He was

responsible for developing Flow Traders’

vision and culture, trading strategies and

the trading floor. Roger was appointed

member of the Supervisory Board of Flow

Traders in July 2015. In 2019, he was re-

appointed for a second, four year, term.

Roger served on the Supervisory Board of

ThinkCapital Holding B.V. between 2010

and 2012.

Linda serves as Non-Executive Director on

the Flow Traders Ltd. Board and is Chair of

the Remuneration & Appointment

Committee. She is also member of the Risk

Committee and the Trading & Technology

Committee. Linda was appointed member

of the Supervisory Board of Flow Traders in

April 2021.

Linda has more than 30 years of experience

in managing professional organizations,

setting strategic direction and implementing

change. In 2012, Linda founded Aberkyn –

Change Leadership Partners, with its head

office 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, KPMG

Netherlands, 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.

FLOW TRADERS | ANNUAL REPORT 2022 66

Functioning of the Board

The Board is responsible for the continuity of the

company and is guided by the interests of the

company and its associated 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, as defined in the Bye-laws as

stakeholder interests. This ensures decisions are

made in a balanced manner.

The Executive Directors are primarily charged with

the Company's day-to-day operations, subject to the

limitations set out in the Companies Act and the

Bye-laws. Two Executive Directors can jointly

represent the company, reflecting the four-eyes

principle we operate across the company: two

persons must sign off on business decisions. The

Board may further allocate the duties of the

Executive Directors among the Executive

Directors.The Executive Directors may submit

resolutions that can be adopted on behalf of the

Board by one or more Executive Directors, or be

delegated by the Board in accordance with the Bye-

Laws to the Executive Committee.

The Non-Executive Directors are primarily charged

with the supervision of the performance of the duties

of the Directors and assist the Executive Directors by

providing advice and direction. The Non-Executive

Directors' duties specifically include the supervision

of how the Executive Directors implement the

Company's strategy. The Board Rules include further

detail on the implementation of responsibilities and

tasks of the Non-Executive Directors, amongst

others with respect to decision-making of the Board

on several matters, inter alia, nomination of

Directors, remuneration of Directors and selection

and nomination of the external auditor.

The Board appointed Rudolf Ferscha as Chairman.

The Chairman shall act as main contact for the

Directors regarding the functioning of the Board. The

Chairman is primarily responsible for the functioning

of the Board and its committees and is responsible

for ensuring the proper conduct of business at

meetings of the Board in order to promote a

meaningful discussing at meetings. As a general

rule, the Chairman presides over the General

Meeting.

In case of a conflict of interest, under the N.V.'s

governance structure, the Supervisory Board was

responsible for the decision-making on how to

handle conflicts of interest. In 2022, there have

been no cases of conflicts 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.

At least annually, the Board shall evaluate – without

the presence of the Executive Directors – the

functioning of the Board, the committees and the

functioning of the individual Directors, shall discuss

the conclusions of such evaluations, and shall

identify aspects where the Directors require further

training or education.

At least annually, the Executive Directors shall

evaluate their own functioning. The Executive

Directors may invite one or more Non-Executive

Directors to participate in the evaluation or part

thereof.

The composition of the Supervisory Board of Flow

Traders N.V. did not undergo any changes

throughout the financial year 2022. The composition

of the Management Board of Flow Traders N.V.

changed twice throughout the financial year 2022,

with Thomas Wolff having resigned from his position

as per 29 April 2022 and Britta Achmann having

resigned from her position as per 30 November

2022. Following 2022 year-end, the composition of

the Supervisory Board of Flow Traders N.V. changed

as a result of Ilonka Jankovich having resigned from

her position as per 13 January 2023. Finally,

following 2022 year-end the composition of the

Board changed as a result of Mr. Dennis Dijkstra

having decided not to seek reappointment as Chief

Executive Officer and Executive Director after having

been part of Flow Traders since 2009. Effective 1

February 2023, Mike Kuehnel assumed the role of

Chief Executive Officer.

Nomination, Election, Suspension and

Removal of Directors

Executive Directors

As set out in more detail in our Bye-Laws and Board

Rules, nominations can be made at any meeting of

the Shareholders either (i) by the Board or (ii) by

shareholders, providing these shareholders hold

three per cent (3%) of the Company's outstanding

share capital or such lower number as is prescribed

by the Companies Act. Following a nomination by

the Board, a Director shall be elected by a simple

majority of votes cast representing more than one-

third (1/3) of the then outstanding shares that are

entitled to vote on the matter. If two or more

nominees receive the same number of votes in

favour, the nominee receiving the highest

percentage of votes in favour shall be elected. If

equal percentages are cast, no nominee shall be

elected. Following a nomination by shareholders, a

Director shall be elected by a simple majority of the

votes cast, representing at least half (1/2) of the

then outstanding shares that are entitled to vote on

the matter. The term of a proposed election shall not

exceed four years, however, a proposal may provide

that the term shall expire at the close of the first

annual meeting of shareholders held after the

FLOW TRADERS | ANNUAL REPORT 2022 67

expiration of the four year term. There is no

limitation in the duration of an Executive Director's

entire service.

In connection with a proposed (re-)appointment of

an Executive Director, he or she will need to be

assessed by the Dutch Central Bank on integrity and

reputation in view of the qualified interest that Flow

Traders Ltd. holds in Flow traders B.V.

The shareholders, on proposal of the Board may

remove or suspend a Director from office. An

Executive Director may also be suspended by the

Board, which suspension shall end if three (3)

months in aggregate have lapsed without a decisions

taken on the termination of the suspension or

removal. In case the removal or suspension is

resolved on by shareholders but not on a proposal of

the Board, such removal or suspension will require a

simple majority of the votes cast, representing at

least half (1/2) of the then outstanding shares that

are entitled to vote on the matter, unless a

Reflection Period is invoked. In case the removal or

suspension is proposed by shareholders or is

included on the agenda of a general meeting by a

competent court, the Board may invoke a reflection

period as further described in the Bye-Laws.

Non-Executive Directors

The nomination, election, suspension and removal

from office of Non-Executive Directors follow the

same rules as noted above for Executive Directors,

with the exception of the following.

The consecutive term of a Non-Executive Director

shall expire at the closing of the first annual general

meeting held after twelve (12) years have passed

since their election. Following such expiration, a

Non-Executive Director shall not be eligible for re-

election. Such consecutive term shall not apply to

Non-Executive Directors elected in accordance with

the nomination right provided for in the Relationship

Agreement.

Non-Executive Directors may not be suspended by

the Board without involvement of the shareholders.

Independence of Non-Executive

Directors

Best practice in terms of corporate governance

prescribes that at most one of the members of the

non-executive directors qualifies as a non-

independent and that the total number of non

independent Non-Executive Directors should account

for less than half of the total number of Non-

Executive Directors. Jan van Kuijk and Roger

Hodenius, as founders of the company, were

attracted to their role as Non-Executive Directors

(former Supervisory Board members) because of

their specific business-related expertise. They did

not qualify as independent under the provisions of

the Corporate Governance Code as they are former

members of the Management Board of the

Company, and because they represent shareholders

of the Company owning an interest of over ten

percent.

Independence of Committee members

As Jan van Kuijk and Roger Hodenius did not qualify

as independent Non-Executive Director as set out

above, this also affected two committees of which

they were members throughout 2022. Best practice

in terms of corporate governance prescribes 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

were independent throughout 2022.

Board Committees

The Board may from time to time establish

permanent or ad-hoc committees. As at the date of

this report, the Board has established four

committees: the Audit Committee, the

Remuneration and Appointment Committee, the Risk

Committee and the Trading and Technology

Committee. The way that each of the four

committees operate is governed by their respective

Committee Charters, which are publicly accessible

on our website. Each of the committees has a

preparatory and/or advisory role to the Board. The

Committee Charters provide for the possibility of the

Board to delegate decision-making in writing to the

Committees on matters that fall within their

respective tasks and responsibilities.

Audit Committee

The Audit Committee undertakes preparatory work

for the Board’s decision-making regarding the

supervision of the integrity and quality of the

Company’s financial reporting and the effectiveness

of the Company’s internal risk management and

control systems, where applicable together with the

Risk Committee and / or the Trading and Technology

Committee.

The Audit Committee shall consist of at least two

members. All members of the Audit Committee must

be Non-Executive Directors. More than half of the

members of the Audit Committee should be

Independent Directors.

The Audit Committee shall be chaired by an

Independent Director. The Audit Committee shall not

be chaired by the Chairman or by a former Executive

FLOW TRADERS | ANNUAL REPORT 2022 68

Director of the Company or former member of the

management board of Flow Traders N.V.

Remuneration and Appointment

Committee

The Remuneration and Appointment Committee

undertakes preparatory work for the Board’s

decision-making concerning amongst others the

following subject matters: the Remuneration Policy

for the members of the Board, the Remuneration of

the individual Directors, selection criteria and

appointment procedures, succession planning and

Diversity, Equity & Inclusion.

The Remuneration and Appointment Committee shall

consist of at least two members. All members of the

Remuneration and Appointment Committee must be

Non-Executive Directors. More than half of the

members of the Remuneration and Appointment

Committee should be Independent Directors.

The Remuneration and Appointment Committee shall

be chaired by an Independent Director. The

Remuneration and Appointment Committee shall not

be chaired by the Chairman or by a former Executive

Director of the Company or former member of the

management board of Flow Traders N.V

Risk Committee

The Company should have adequate internal risk

management and control systems in place. The

Board is responsible for identifying and managing

the risks associated with the Company’s strategy

and activities. The Risk Committee's duties include

amongst others the supervision of the Executive

Directors with respect to identifying and analysing

the risks associated with the strategy and activities

of the company and its affiliated 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, 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.

The Risk Committee shall consist of at least two

members. All members of the Risk Committee must

be Non-Executive Directors. More than half of the

members of the Risk Committee should be

Independent Directors.

The Board shall appoint one of the members of the

Risk Committee as chairman of the Risk Committee.

Trading and Technology Committee

The Trading & Technology Committee's duties

include amongst others the review of annual

investments and expenses on technology, the

preparation of advice to the Board regarding the

technology budget, assessing the current state of

technology in terms of competitiveness and

functionality, the supervision of the Board on the

operation of the Company's security systems and

related risks, advising the Board on appointment

and/or dismissal of the Global Head of Technology

and reviewing the Company's trading activities.

FLOW TRADERS | ANNUAL REPORT 2022 69

Executive Committee

In September 2022 a global Executive Committee

was installed, with the purpose of supporting the

implementation of our strategic priorities across the

organization. The Executive Committee brings

operational decision-making and execution closer to

the various business areas, increases collaboration

and drives operational efficiencies across the

organization globally. The Executive Committee

comprises of the Executive Directors and certain

employees representing key competencies, business

focus areas and regions within Flow Traders. As at

the date of this report, the members of the

Executive Committee are Mike Kuehnel and Folkert

Joling as Executive Directors who form part of the

Executive Committee, as well as Cam Colella,

Matheus Haserick-Lara, Marc Jansen, Philip

Kaufmann, Alex Kieft, Quinten Koekenbier, Matt

O'Neill, Fabian Rijlaarsdam and Coen van

Sevenhoven.

FLOW TRADERS | ANNUAL REPORT 2022 70

Executive Committee (cont'd)

Philip Kaufmann

Alex Kieft

Quinten Koekenbier

Matt O'Neil

Fabian Rijlaarsdam

Coen van Sevenhoven

Global Head of HRM and

Recruitment

Global Head of Trading (Equity)

Head of Trading performance

Global Head of Corporate Strategy

Managing Director APAC

Head of Trading Strategy

Philip joined Flow Traders in 2022,

as the Global Head of HRM &

Recruitment. He is responsible for

the global HRM & Recruitment

strategy and associated

implementations. Prior to joining

Flow Traders, Philip worked as a

strategy consultant at McKinsey &

Company and in various roles at

bol.com, a Dutch ecommerce

platform.

Philip holds a master’s degree in

Hydraulic Engineering from the TU

Delft and an MBA from INSEAD.

Alex joined Flow Traders as a Trader

in 2014, with a focus on trading

delta one Equity Index products

(ETFs, futures & derivatives), before

being promoted to Head of Trading

for EMEA in 2019 and to Global

Head of Trading in 2022. Alex is

responsible for the development and

execution of the equities trading

strategy globally and oversees the

daily trading operations and

processes in Europe.

Alex holds a master's degree in

Theoretical Physics from the

University of Amsterdam.

Quinten joined Flow Traders in

November 2009. In 2012, Quinten

was promoted to technical lead of

the R&D desk and subsequently

became product owner for

proprietary algorithmic trading

applications. In 2016, he also

became responsible for the speed,

networking & infrastructure and the

FPGA teams. In 2018, he was

promoted to Head of Trading

Performance and is responsible for

performance, monitoring, R&D and

analysis of trading performance.

Quinten holds a master's degree in

Finance and Business Administration

from VU university Amsterdam.

Matt joined Flow Traders in

December 2022 as Global Head of

Corporate Strategy and is

responsible for the firm’s strategic

growth, partnerships, prime

brokerage and bank strategy, M&A

activities, investor relations, public

affairs and our venture capital unit,

Flow Traders Capital.

Prior to joining Flow Traders, Matt

was a Managing Director at

Goldman Sachs with a focus on

Global Markets strategic

partnerships and investments. He

also worked for Morgan Stanley

within the prime brokerage business

in Asia.

Matt holds a bachelor’s degree from

The University of Nottingham.

Fabian joined Flow Traders in 2018

as Team Lead for the EMEA

Exchanges team and subsequently

became the Head of Business

Development for the EMEA region.

In 2020, he relocated to Hong Kong

and was appointed Managing

Director APAC. He is responsible for

expanding APAC operations,

developing the regional strategy

and partnerships. Prior to joining

Flow Traders, Fabian spent five

years at Deutsche Boerse’s Eurex

group, where he focused on market

microstructure research, academic

engagement, and trading system

design.

Fabian holds a master’s degree in

Finance from the University of

Groningen.

Coen joined Flow Traders as a

Trader in 2010 and relocated to

Singapore. Whilst in Singapore,

Coen supported the development of

strategies covering equity ETFs,

commodity ETPs and structured

products in the APAC region. In

2017, Coen relocated to the US and

was promoted to Head of Trading

and Managing Director AMER. Coen

was appointed Head of Trading

Strategy in 2019. He works closely

with the Executive Directors and is

responsible for strengthening the

trading business as well as new

strategic initiatives to expand Flow

Traders’ footprint.

Coen holds a master’s degree in

Finance from the Erasmus

University Rotterdam.

FLOW TRADERS | ANNUAL REPORT 2022 71

Diversity, Equity & Inclusion

On 21 September 2022, the Supervisory Board of

Flow Traders N.V. approved and adopted the

Company's Diversity, Equity & Inclusion policy (the

"DEI Policy"), thereby replacing the Company's

Equal Opportunity policy. The DEI Policy describes

our culture and the values that we stand for.

Additionally, it contains a set of targets and KPIs,

some of which are included in our Bye-laws and are

based on Dutch law (e.g. the 'wet ingroeiquotum en

streefcijfers'), and some that are discretionary

targets and/or KPIs which we feel strongly about.

In our view, the policy contributes to good

governance, as it reflects 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 firm believer in the benefits of a

diverse workplace and does not make any

concessions to quality. The objective is to provide

equal employment opportunities to all qualified 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 true

for the Executive Directors and Non-Executive

Directors. When it comes to diversity in the Board,

Flow Traders adheres to the same principle of equal

opportunity as set out above. 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. Our DEI Policy is publicly

accessible via our website.

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.

In accordance with the Bye-laws and subject to the

provisions of the Companies Act, the Company's

Board shall convene and the Company shall hold

General Meetings as Annual General Meetings not

later than six months after the end of the financial

year. The Board may, whenever it thinks fit, and

shall, when requisitioned by shareholders pursuant

to the provisions of the Companies Act, convene

General Meetings other than Annual General

Meetings which shall be called Special General

Meetings, at such time and place as the Board may

appoint.

Subject to the Companies Act, a resolution may only

be moved and put to a vote at a General Meeting if

(i) it is proposed by or at the direction of the Board,

(ii) it is proposed at the direction of a competent

court, (iii) it is proposed on the requisition in writing

by eligible shareholders, and (iv) the chairman of

the meeting in their absolute discretion decides that

the resolution may properly be regarded as within

scope of the meeting.

Save as otherwise provided in the Bye-laws, at least

two shareholders present in person or by proxy and

entitled to vote on the matter representing the

holders of at least twenty per cent, or the highest

amount required from time to time by any stock-

exchange on which any of the shares are listed, of

the issued share entitled to vote on the matter at

such meeting shall be a quorum. Increased quorum

requirements apply for the passing of certain

resolutions requisitioned by shareholders or the

resolution to elect, suspend or remove a Director.

Each shareholder present in person at a General

Meeting shall be entitled to vote on any question to

be decided on a show of hands or by a count of

votes received in the form of electronic record

(including by proxy), and each shareholder present

in person or by proxy shall be entitled on a poll to

vote for each share held by them. Each share carries

one vote at a General Meeting. The AGM is the

perfect place for shareholders and the Board to

interact. At an AGM, shareholders can ask questions

directly to the Board. Our Board strongly

encourage shareholders to interact.

After a virtual AGM in 2021 due to COVID-19

measures, the 2022 AGM was held physically again

on 29 April 2022 at the Company's registered

address. During this AGM, all but one proposal on

the agenda was adopted. The proposals adopted by

the General Meeting related to: the adoption of the

annual accounts, the determination of dividend, the

2021 Remuneration Report, the discharge of

Management Board and Supervisory Board

members, the reappointments of Folkert Joling, Jan

van Kuijk and Olivier Bisserier, the authority to issue

shares, to restrict or exclude pre-emptive rights, to

acquire own shares and to cancel own shares, and

lastly, the proposal to reappointed the external

auditor. Even though a majority of the votes cast

were cast in favour of the proposal to introduce a

renewed remuneration policy, unfortunately, the

proposal was not adopted because of the

requirement to reach a 75% supermajority for this

specific agenda item.

FLOW TRADERS | ANNUAL REPORT 2022 72

The Company held an Extraordinary General Meeting

on 2 December 2022 in connection with the update

of the corporate holding structure. The EGM agenda

contained two proposals up for vote, (i) a proposal

to amend the articles of association of the Company

and (ii) a proposal for Flow Traders N.V. to enter

into s cross-border merger with Flow Traders S.A.

The former voting item was adopted with 95.75% of

the votes cast and the latter proposal was adopted

with 95.90% of the votes cast.

The Company's next AGM is scheduled to be held on

26 April 2023. More information will become

available on our website in due course.

Alteration of the Bye-laws

The Bye-Laws may be revoked or amended only by

the Board, which may from time to time revoke or

amend them in any way by a resolution of the Board

passed by a majority of the Directors then in office

and eligible to vote on that resolution, but no such

revocation or amendment shall be operative unless

and until it is approved at a subsequent general

meeting of the Company by the Shareholders by

Resolution passed by a majority of votes cast.

Issue of shares

Subject to the provisions of the Bye-Laws, the

Company may only allot or issue shares, or grant

rights to subscribe for shares (other than treasury

shares) as authorised by a shareholders’ resolution

and within the limits of such authorisation, which

authorisation cannot be withdrawn, unless

determined otherwise at the time of the adoption of

the resolution.

During the 2022 AGM, our shareholders renewed the

authority of the Management Board of Flow Traders

N.V., subject to the Supervisory Board of Flow

Traders N.V.’s approval, to issue ordinary shares or

to grant rights to subscribe for ordinary shares up to

and including 29 October 2023 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 29 October 2023.

At our 2023 AGM, the 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 2023

AGM for any purposes.

Purchase and cancellation of shares

The Board may, after prior authorisation by

shareholders’ resolution and within the limits of such

authorisation, authorise the purchase by the

Company of its own shares upon such terms as the

Board may in its discretion determine, provided

always that such purchase is effected in accordance

with the provisions of the Companies Acts. Subject

to the provisions of the Bye-Laws, any shares of the

Company held by the Company as treasury shares

shall be at the disposal of the Board, which may hold

all or any of the shares, dispose of or transfer all or

any of the shares for cash or other consideration, or

cancel all or any of the shares

During the 2022 AGM, our shareholders renewed

the authority of the Management Board of Flow

Traders N.V. to, subject to the Supervisory Board of

Flow Traders N.V.’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 29 October 2023, 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.

Flow Traders announced one share repurchase plan

in 2022. Several share buy backs were conducted

over the course of 2022 in accordance with the

share buyback program originally announced on 22

July 2022 and subsequently increased as per the

announcement made on 27 October 2022. The total

number of shares repurchased in 2022 was 917,999

at an average price of €20.89 for a total

consideration of €19.2 million.

During the 2022 AGM, our shareholders voted for

the authorization of the Management Board of Flow

Traders N.V. to, subject to the Supervisory Board of

Flow Traders N.V.’s approval, cancel shares in the

share capital of the company. However, following

the update of the corporate holding structure, any

shares of the Company held by the Company as

treasury shares shall be at the disposal of the Board,

which may hold all or any of the shares, dispose of

or transfer all or any of the shares for cash or other

consideration, or cancel all or any of the shares.

At the 2023 AGM the Board intends to propose to

the General Meeting to renew its authorization to

repurchase shares in the company.

FLOW TRADERS | ANNUAL REPORT 2022 73

Major shareholders

The following shareholders filed 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

2022). A shareholder must file 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

notifications by directors and members of the

supervisory board, the table below shows the most

accurate information. 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.flowtraders.com. Our Bilateral Contacts Policy

can also be found on our website.


SHAREHOLDINGS ON 31 DECEMBER 2022
	Filing/notification date
J.T.A.G. van Kuijk (Javak Investments B.V.)	12.22%	2/5/2018
R. Hodenius (Avalon Holding B.V.)	10.07%	7/12/2018

The shares indirectly held by Roger Hodenius

(Avalon Holding B.V.) and Jan van Kuijk (Javak

Investments B.V.) are long-term investments.

Relationship agreement

Avalon Holding B.V. and Javak Investments B.V.

entered into a relationship agreement with the

company.

The relationship agreement currently amongst

others grants each of Avalon Holding B.V. and Javak

Investments B.V. a specific right to nominate one

Non-executive Director for appointment (and

replacement). This right expires, in respect of each

relevant party, if such party ceases to, directly or

indirectly, hold more than five 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 five 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 stipulates that the

Board shall procure that for as long as Avalon

Holding B.V. and Javak Investments B.V.

(independently or together) have the right to

nominate a Non-executive Director, each of the

Remuneration & Appointment committee as well as

the Audit Committee, will include at least the Non-

Executive Director nominated by Avalon Holding B.V.

and/or Javak Investments B.V. (as the case may

be).

The relationship agreement shall cease to bind

Avalon Holding B.V. or Javak Investments B.V. if and

when Avalon Holding B.V. or Javak Investments

B.V., respectively, no longer has the right to

nominate (or co-nominate) a Non-executive

Director. The relationship agreement shall

furthermore terminate on the first day any of the

following conditions shall be met: (i) the Company

having become subject to insolvency proceedings,

(ii) a resolution of the shareholders of the Company

to liquidate the Company having become

unconditional (iii) the Company having ceased to

exist as a legal entity as a result of a legal merger or

spin-off where the Company is the disappearing

entity; or (iv) a termination of the listing of the

Company's shares on Euronext Amsterdam takes

effect, provided that the shares are not listed on any

other stock exchange

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

As a listed company with registered seat in the

Netherlands, Flow Traders N.V. was subject to the

Corporate Governance Code, which defines a

company as a long-term form of collaboration

between the principal corporate bodies of a

company. During the financial year 2022, for Flow

Traders in its former two-tier governance structure,

these corporate bodies included the Management

Board, the Supervisory Board and the General

Meeting. The 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. Following the

update of the corporate holdings structure, the

FLOW TRADERS | ANNUAL REPORT 2022 74

Corporate Governance Code will continue to be one

of the guiding resources for Flow Traders Ltd.'s

corporate governance related practices. As the

Corporate Governance Code is not directly applicable

to Flow Traders Ltd., it is not intended that Flow

Traders Ltd. will report on any deviations from the

Corporate Governance Code.

Corporate governance statements

Dutch decree on the content of the

Board report

(besluit inhoud bestuursverslag)

The information required by section 2a of the Decree

is included in the chapters Our governance and the

Board Report:

▪our compliance with the Corporate Governance

Code throughout the financial year 2022 can be

found in the chapter Our governance;

▪the main features of our internal risk

management and control systems relating to the

financial 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 Board and

its Committees can be found in the chapters

Supervisory Board Report and Our governance;

▪the diversity policy regarding the composition of

the Board including its aims, how it is being

effected and the results can be found in the

chapters Our governance and the 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).

Board in control statement

The Executive Directors of Flow Traders are

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 Executive Directors, 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 efficiency of operations;

▪Reliability of financial and non-financial

information;

▪Compliance with laws, regulations and internal

policies,

▪Safeguarding of assets, identification and

management of liabilities; and

▪Strategic goals of the Flow Traders group.

The Risk Management section as part of the Report

of the Board elaborates on Flow Traders’ identified

financial and non-financial risks and how these risks

are managed. These chapters provide insight into

the potential impact on the results of Flow Traders

that come forth from these identified 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 financial and

non-financial 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 department assessed the

controls in this process and reported its findings to

the Board. These findings have been evaluated by

the Executive Directors and Non-Executive Directors.

This view allows the Executive Directors 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 with due observance

of the limitations stated below, we confirm that to

the best of our knowledge:

▪The annual report provides sufficient 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 financial 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 justified that the financial

reporting is prepared on a going concern basis

(see chapters Value creation and strategy, Our

performance and Financial statements); and

▪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 as to the realisation of

financial 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, 23 February 2023

FLOW TRADERS | ANNUAL REPORT 2022 75

The Executive Directors (former

Management Board)

Mike Kuehnel, Chief Executive Officer

Folkert Joling, Chief Trading Officer

Conformity statement

The Executive Directors of Flow Traders are required

to prepare the Annual Accounts and the Annual

Report of the Company in accordance with Title 9 of

Book 2 of the Dutch Civil Code (due to its status as a

formeel buitenlandse vennootschap) 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 Executive Directors of Flow Traders are

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 financial

information is known to the Management Board, so

that the timeliness, completeness and correctness of

the external financial reporting are assured.

As required by section 5:25c paragraph 2(c) of the

Dutch Financial Supervision Act, each of the

signatories hereby confirms that to the best of his

knowledge:

▪The Flow Traders 2022 Annual Accounts give a

true and fair view of the assets, liabilities,

financial position and profit or loss of Flow

Traders N.V. and the enterprises included in the

consolidation taken as a whole; and

▪the Flow Traders 2022 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 financial year 2022 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 is

being confronted with.

Amsterdam, 23 February 2023

The Executive Directors (former

Management Board)

Mike Kuehnel, Chief Executive Officer

Folkert Joling, Chief Trading Officer

FLOW TRADERS | ANNUAL REPORT 2022 76

Meetings of the Supervisory Board and its Committees throughout

2022

During 2022, the Supervisory Board of Flow Traders

N.V. held 25 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 variety of

topics were discussed, including but not limited to

the following:

The Company’s strategy

The Management Board remained focussed on long-

term value creation and involved the Supervisory

Board in setting strategic priorities and executing on

its strategic agenda. The Supervisory Board

regularly discussed strategic matters, including

execution, implementation and any associated risks.

Considerable effort was dedicated to assessing and

discussing strategic initiatives and the Company's

strategic growth agenda. An important example of

such strategic initiatives is the Update of the

Corporate Holding Structure, which was a regularly

recurring topic due to its significance to not only the

Company but also to the Company's stakeholders.

Strategy-associated risks

Reviewing the company’s risk assessment processes

and the monitoring of the company’s internal risk

management and control systems continued to be a

priority and joint responsibility of the Supervisory

Board and all committees throughout the year 2022.

The review amongst others entailed an overview of

all relevant risks the company is exposed to, the

internal controls in place to address these risks, and

the Management Board’s views on such risks.

Succession planning and diversity

The term of both Jan van Kuijk and Olivier Bisserier,

as Supervisory Board members, and the term of

Folkert Joling as Management Board member

expired in 2022. At the 2022 AGM, Jan van Kuijk

was reappointed for another two year term, Olivier

Bisserier was reappointed for another one year term

and Folkert Joling was reappointed for another four

year term (the chart below shows the terms and

upcoming reappointments of the non-executive

directors, i.e. the rotation schedule).

On 29 April 2022, Thomas Wolff resigned from his

position as member of the Management Board, and

on 30 November 2022, Britta Achmann resigned

from her position as a member of the Management

Board. As such, succession planning of the

Management Board has been an important topic.

When discussing succession planning, the company’s

Equal Opportunity Policy and Diversity, Equity &

Inclusion Policy was always taken into account.

FLOW TRADERS | ANNUAL REPORT 2022 77

Culture, values, DEI

Company culture continued to be a meaningful item

on the Management Board's and Supervisory Board's

agenda and as such has been periodically discussed

in Remuneration & Appointment Committee

meetings and Supervisory Board meetings.

Noteworthy topics that have been discussed within

the Supervisory Board in respect of Company culture

and core values are e.g. the replacement of the

Company's Equal Opportunity Policy with the

Company's Diversity, Equity & Inclusion Policy and

the in-depth review of the annual employee

satisfaction survey.

New legislation and regulation

The Supervisory Board was regularly updated on and

discussed upcoming regulation and implementation

of regulation. This includes the implementation of

the "wet ingroeiquotum en streefcijfers" as per 1

January 2022 and the introduction of the updated

Dutch Corporate Governance Code as per 20

December 2022.

Financial results

The Supervisory Board was updated on the

company’s financial, 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

On 13 January 2023, as part of the Update of the

Corporate Holding Structure, all of the company's

governance documents and policies have been

adopted by the new one-tier Board. During the year

2022, the Supervisory Board regularly discussed

these governance documents and policies in

preparation of the Update of the Corporate Holding

Structure.

Industry-related updates

Relevant updates and educations sessions were

provided by the heads of specific departments and

external advisors. This included updates and

education sessions on e.g. digital assets & digital

asset security as well as on one-tier Board

dynamics, specifically in the context of the Bermuda

legal regime (in preparation of the Update of the

Corporate Holding Structure).

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.

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 2022 have

been discussed and followed up during 2022.

FLOW TRADERS | ANNUAL REPORT 2022 78

Attendance Supervisory Board and its

Committees

The table on the right shows statistics concerning

attendance at Supervisory Board and Committee

meetings, reflected as number of meetings attended

out of the total number of meetings held. The

attendance rate during the year 2022 was 97% for

Supervisory Board meetings and 96% including

committee meetings. The Management Board also

attended each meeting in full or in part.


	Supervisory Board	Audit Committee	Remuneration & Appointment Committee	Risk Committee	Trading & Technology Committee
Rudolf Ferscha	25/25	5/5	7/8	4/4	2/2
Olivier Bisserier	25/25	5/5		4/4	2/2
Roger Hodenius	24/25		8/8	3/4	1/2
Jan van Kuijk	23/25	5/5	8/8	4/4	2/2
Linda Hovius	23/25		8/8	4/4	2/2
Ilonka Jankovich	25/25	4/5		4/4	1/2

FLOW TRADERS | ANNUAL REPORT 2022 79

Evaluation of the Supervisory Board

The Supervisory Board discussed the outcome of the

2021 self-evaluation, and the follow-up on

conclusions of that self-assessment. As a result of

the conclusions of the 2021 self-assessment, it was

agreed within the Supervisory Board to engage more

regularly with the Management Board on strategic

matters as well as more intensely monitor the

Management Board’s strategy development

initiatives.

In the fourth quarter of 2022, the Supervisory Board

evaluated its own functioning and that of its

Committees and individual members, this time

guided by external consultants who are subject

matter experts in respect of Corporate Governance

and Boardroom Dynamics. As a result of the

conclusions of the 2022 self-assessment, it was

agreed within the Supervisory Board to further

cultivate productive and efficient board dynamics,

including the effective distributions of roles and

responsibilities. The 2022 self-assessment also

included an independence-assessment which was led

by Rudolf Ferscha as Chairman of the Supervisory

Board and Linda Hovius as Chairwoman of the

Remuneration and Appointment Committee. As a

result of this independence-assessment, the

Supervisory Board re-confirmed the independence of

Olivier Bisserier, Rudolf Ferscha, Linda Hovius and

Ilonka Jankovich. Roger Hodenius and Jan van Kuijk

were considered non-independent Supervisory Board

members.

Evaluation of the Management Board

The performance of all members of the Management

board has been discussed among the Supervisory

Board and with each member of the Management

Board individually, twice throughout the year 2022.

During performance discussions, the representatives

spoke with the Management Board members

individually and with the Management Board as a

whole. Guiding structures for these conversations

included the Management Board KPI overview, the

strategic agenda set for 2022, culture and team

performance. Based on these discussions the

Remuneration and Appointment Committee provided

feedback regarding its view on the Management

Board’s performance to the Supervisory Board, to

guide year-end discussions on variable

remuneration.

FLOW TRADERS | ANNUAL REPORT 2022 80

Committees

During the entire financial year 2022, the

Supervisory Board operated four committees: the

Audit Committee, the Remuneration & Appointment

Committee, the Trading & Technology Committee,

and the Risk Committee. For more information on

the functioning and on the responsibilities of the

committees, please refer to the chapter Governance.

The composition of each committee during the entire

financial year 2022 did not change and is reflected in

table below.


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 reported 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 meeting.

Audit Committee

The Audit Committee met five times in 2022. Other

attendees besides the Committee members included

the CEO, the CFO, the Global Head of Finance, the

Investor Relations Officer, the the Global Head of

Internal Audit, the Global Head of Tax, the Global

Head of Compliance 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 include e.g. significant new and proposed

legislative initiatives related to accounting, auditing

and financial reporting, tax planning, tax strategy

and monitoring, assessing whether there were

significant deficiencies and material weaknesses in

internal control over financial reporting, the

company’s financing 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. Topics

discussed with the external auditor included the

financial statements over the financial year 2021,

recommendations on the basis of the annual report,

their audit plan for the financial year 2022 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 evaluated the performance of the

external auditor and discusses this with the Board

and subsequently with the external auditor. In light

of this, the Audit Committee advised the Board

about the reappointment of the external auditor,

before the Board determined EY's nomination for the

appointment of the external auditor to the General

Meeting of 2023. 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.

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 financial statements and

issued an unqualified review report. The Audit

Committee evaluated the qualifications, 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 confirmed 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 2022.

Subsequently, EY was reappointed by the General

Meeting as external auditor for the financial year

2022.

FLOW TRADERS | ANNUAL REPORT 2022 81

Internal audit function

The Internal Audit Function (IAF) executed audits

that form part of the internal audit plan, approved

by the Supervisory Board. Focus areas in the 2022

audit plan included amongst others trading, risk

management, IT systems and adherence to

regulatory requirements. The Audit Committee and

the Global Head of Internal Audit discussed the audit

results from 2022 (findings, observations,

recommendations, management feedback and

follow-up). The IAF also delivered an updated

Internal Audit Charter as well as a risk based audit

plan for 2023. The Audit Committee maintains

regular dialogue with the IAF, particularly in relation

to ongoing audits and outstanding audit items. More

information can be found in the chapter Governance.

Remuneration & Appointment

Committee

The Remuneration & Appointment Committee met

eight times in 2022. 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 the annual 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 findings 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 twice in

2022. As the core business of the company is

discussed in this committee, all of the Supervisory

Board members formed part 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 and also

addresses technology topics, e.g. digital asset

security for example and other developments

concerning the crypto and broader digital asset

space..

Risk Committee

The Risk Committee met four times in 2022.

Invitees of the meeting were the Management Board

members and the Global Head of Risk or the Head of

Risk EMEA. 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

ICLAAP 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.

Financial statements and dividend

The 2022 financial statements were prepared by the

Board. They were discussed with the Audit

Committee, in attendance of EY. The financial

statements were audited by EY, who issued an

unqualified auditor’s report. Reference is made to

the auditor’s report of the financial statements. The

Board approved the financial statements as audited

by EY, including the company’s dividend proposal.

We invite the General Meeting to adopt the financial

statements for 2022.

Information on the remuneration of the Executive

Directors can be found in the chapter Remuneration.

Thank you

Finally, the Board would like to thank the Executive

Directors and all of the Flow Traders’ employees for

their considerable efforts and achievements

throughout the year 2022.

Amsterdam, 23 February 2023

Rudolf Ferscha

Linda Hovius

Olivier Bisserier

Jan van Kuijk

Roger Hodenius

FLOW TRADERS | ANNUAL REPORT 2022 82



Flow Traders Capital is Flow Traders' venture capital unit and was established in 2022.	What is Flow Traders Capital and why was it created? Flow Traders Capital is a dedicated venture capital unit launched by Flow Traders to expand its involvement in emerging technologies that accelerate growth and create greater transparency in global financial markets. With an initial committed fund of €50 million, Flow Traders Capital actively invests in the Fintech and Digital Asset space. The venture capital unit provides us with a unique platform and ability to gain valuable exposure to emerging ecosystems and innovative technologies as well as creating synergies with our core business	What is the investment strategy? We make early-stage investments that enable market infrastructure development. Our key focus areas are the development of platforms, data, and connectivity. When making an investment, we need to see a clear strategic fit with Flow Traders. Core to our investment strategy is who we work with; we partner with founders who are creative and ambitious, and who share the same values as Flow Traders. Since formalizing Flow Traders Capital, we have made, for example, investments in equities and tokens in both decentralized finance and infrastructure which we link back to our main business through trading, connectivity, specific-use cases and by providing liquidity	What does Flow Traders Capital offer its investments? We are proud to have a dedicated team of experts who support our portfolio companies with both financial and intellectual capital. We offer expertise in product design and development, capital market knowledge, go-to-market strategies, and market insights. When supporting our portfolio companies, we can leverage almost two decades of experience in trading and providing liquidity. Moreover, we have a very strong institutional network of over 2,200 institutional counterparties, which we can activate, along with providing access to our existing broad portfolio companies, founders and projects. We are passionate about working with like minded founders, at Flow Traders we like to work with creative and out of the box thinkers.

FLOW TRADERS | ANNUAL REPORT 2022 83



INTERVIEW (continued)	What is next for Flow Traders Capital? We have made several strategic investments to date that support our core business and have realized a successful exit. In the years ahead, we will continue investing in areas where we can play an active role, that support our core business and that support innovation in financial markets. Long term, we aim to shape the future of financial markets by actively contributing to greater transparency, by having exposure and alignment, and by providing added value to our portfolio companies.	When supporting our portfolio companies, we can leverage almost two decades of experience in trading and providing liquidity. quote for the design
"The venture capital unit provides us with a unique platform and ability to gain valuable exposure to emerging ecosystems and innovative technologies"

FLOW TRADERS | ANNUAL REPORT 2022 84


	Remuneration report
	86	Letter from the Chairman of the Remuneration & Appointment Committee
	89	Flow Traders’ remuneration philosophy
	91	Remuneration for the Management Board

FLOW TRADERS | ANNUAL REPORT 2022 85

Letter from the Chairman of the

Remuneration & Appointment

Committee

Dear Shareholder,

On behalf of the Remuneration & Appointment

Committee, I am pleased to present our 2022

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 2022 in accordance with

this policy. The remuneration report reflects the

reporting requirements originating from the updated

EU Shareholder Rights Directive and the Dutch

implementation of this Directive.

Additionally, following the completion of the update

to the corporate holding structure, this report has

been amended and simplified compared to previous

years to align with this new international context. To

aid transparency, this report provides additional

information on our remuneration philosophy

together with retrospective details of the new

Management Board corporate scorecard introduced

to assess performance more holistically. Historically,

we have not disclosed any targets or actual

achievement levels for our performance criteria.

However, given the importance of this as expressed

by our shareholders and the proxy advisors, we are

now disclosing these levels for the KPIs identified in

our scorecard. We anticipate that the new format

and additional disclosures will help investors see the

strong link between our remuneration philosophy

and policy design.

Furthermore, this report provides the main proposed

updates to our executive remuneration policy that

we will submit to the 2023 AGM. The proposed

remuneration policy contains several important

changes compared with our current policy, while

remaining aligned with our company culture and

remuneration philosophy. We are proposing to

enhance long-term value creation by formally

introducing share-based compensation and

enhanced deferral and vesting provisions. For an

overview of the proposed changes please refer to

page 88.

Stakeholder engagement following

2022 AGM

In 2022, we put forward our revised remuneration

policy for the Management Board and our 2021

remuneration report (advisory vote) for the AGM’s

approval. 60% of shareholders voted in favour of the

remuneration report. The revised policy for the

Management Board was approved by 57% of our

shareholders, meaning it did not obtain the required

75% supermajority from the AGM. As a result, we

have continued to operate under the Remuneration

Policy as approved in 2016.

Following this voting result, the Committee has

undertaken consultations with shareholders and

proxy advisors. We have summarized the main

feedback received together with how we have acted

on this feedback below.

In addition, we have enhanced the disclosures

around Management Board performance and the

vesting schedules for deferred awards in this 2022

remuneration report.

We strongly believe in the proposed remuneration

policy and have taken steps to ensure it is reflective

of feedback received from our stakeholders. You will

have an opportunity to vote on the proposals at the

2023 AGM. If the policy does not receive the 75%

support required, we will be obligated to continue

with our existing policy as described in our policy at

a glance section on page 90.

"We take our stakeholders

views very seriously and

welcome an open dialogue

on all aspects of

remuneration"

FLOW TRADERS | ANNUAL REPORT 2022 86

Main feedback from stakeholders

Ensuring long-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

significant portion of variable remuneration

(62.5%) for a multi-year period (up to 4 years).

A significant portion (50%) of variable

remuneration is paid out in equity and is subject

to a holding period of one year post-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 executive directors to retain

50% of the shares granted as part of their

remuneration (after tax) until cessation of

employment.

Formally capping variable compensation

▪It is in our corporate DNA to share our profits

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) in

2022 was capped at a maximum of 32.5% of

operating result. We also propose to retain the

hard cap on individual executive director total

remuneration award levels (20 times versus

average FTE total remuneration levels).

▪This translated into a hard cap of €4,718,000

total remuneration for each member of the

Management Board in 2022. 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

philosophy behind our policy

Improved transparency and disclosure

▪Following shareholder feedback, we introduced a

KPI scorecard for the Management Board with

both financial and nonfinancial performance

measures. The financial measures will allow for

any remuneration awarded to consider multiple

aspects of financial performance and not just

operating profit, while non-financial measures

will be selected to encourage sustained long-term

performance.

▪For each KPI identified, we are now

retrospectively disclosing the targets and actual

achievement levels.

▪We have restructured our remuneration report,

with the aim to better explain the operation of

our variable remuneration plan. We have

included more details on deferred variable

remuneration and real value received in

comparison to the theoretical value of the yearly

Management Board remuneration awards.

▪We believe that these changes will increase

transparency and certainty for shareholders.

Company performance and

remuneration in 2022

Flow Traders delivered an improved financial and

trading performance in 2022 compared to 2021

reflecting a more active market environment. We

recorded Normalized Total Income in 2022 of €460.6

million and demonstrated a healthy Normalized

EBITDA margin of 45% with Normalized EBITDA of

€208.2 million. Ultimately, we recorded a

Normalized Net Profit of €150.2 million with

Normalized Basic EPS of €3.45. This, along with our

strong capital position, allowed the company to pay

a total dividend of €1.50 per share to shareholders.

The Supervisory Board, in close consultation with,

and supported by, the Management Board has

decided that the 2022 firm-wide variable

remuneration pool will be €86.6 million (2021: €83.3

million), corresponding to 32.5% of operating result

in 2022.

The Supervisory Board has also determined the

2022 variable remuneration awards to the members

of the Management Board in line with the

recommendation from the Remuneration Committee

(in accordance with the remuneration policy adopted

at the 2016 AGM and being cognizant of the new

policy proposed at the 2023 AGM).

The performance of the Management Board has

been reviewed against the corporate KPI scorecard,

which includes both quantitative and qualitative

targets as well as achievement of individual

performance objectives. As a result of this review,

the Supervisory Board has decided that 6.1% of the

variable remuneration pool should be allocated to

the Management Board.

FLOW TRADERS | ANNUAL REPORT 2022 87

Changes for 2023

As a result of a thorough legal and capital structure

review and to support our aims in becoming more

competitive as a global multi-asset liquidity provider,

we completed an update to our corporate holding

structure which includes a top holding company in

Bermuda. We have retained our existing global

footprint with no change to day-to-day operations.

This includes a substantial presence in the

Netherlands as well as maintaining a listing on

Euronext Amsterdam.

Our Board remuneration shareholder approval

requirements remain unchanged through the holding

structure changes. We continue to uphold the

requirement to obtain 75% of shareholder approval

for our Board remuneration policy which will be put

to a vote at the 2023 AGM.

Following the updates to our holding structure, as

required by Bermuda law, the top holding company

now has a one-tier Board, comprised of executive

and non-executive directors, including an

independent Chairman.

On behalf of the Committee, I thank all shareholders

for their constructive feedback, and we are looking

forward to continuing our dialogue in 2023.

Linda Hovius

FLOW TRADERS | ANNUAL REPORT 2022 88

Flow Traders’ remuneration philosophy

We believe in operating a single & straightforward

policy, where we reward all our employees, including

the Management Board, based on the same

remuneration policy. We do so, based on our

remuneration philosophy and according to several

defined principles. While we recognize that the

corporate governance landscape has evolved in

recent years, we believe that the principles that

underline our approach remain relevant. The defined

principles as described below guide the

Remuneration and Nomination Committee when

making decisions on the remuneration policy and its

implementation.

Profit sharing

It is in our corporate DNA to share our profits fairly

with our shareholders and employees, and we have

done so since we were founded. Given good

performance employees from any role and office are

entitled to receive variable remuneration relative to

their contribution to the firm as a whole.

We share one singular firm-wide variable

remuneration pool. The total profit pool available for

all employees and the Management Board is 32.5%

of operating profit, the residual portion allocated to

our shareholders.

Rewarding for exceptional performance

Our remuneration consists of a relatively modest

base salary and a variable remuneration component.

Positive company performance enables employees in

any role to receive variable compensation relative to

their contribution to the firm. The variable

remuneration profit share that is paid out is partly in

equity that directly reflects company and personal

performance.

The pay-mix is skewed towards variable

remuneration in good (financial) years. At the same

time, if we make no profit, we do not pay-out

variable remuneration – and reclaim outstanding

deferrals if we sustain a loss.

Guarding long-term interests &

stimulating risk awareness

We align employee pay with the interests of

shareholders and our financial performance. Where

Flow Traders is successful, the profits are shared

with all stakeholders, including our employees. As

such, variable pay is only possible in a year when a

profit is made, and a significant part of any profit

sharing (62.5%) is deferred for a multi-year period

(up to 4 years) that remains at risk in full during this

period. The cash component of the profit share vests

on a pro-rata basis over a two-year period, with the

first tranche vesting on the date of award. This

aligns the interests of the company and its

shareholders with those of our employees by

building long-term value and creating ‘skin in the

game’ as well as continued loyalty.

Where Flow Traders is less successful, there is a

corresponding downwards impact on variable

remuneration levels creating a risk aware culture

and creating larger alignment with long term growth

and reward (as deferred variable remuneration

remains at risk until vesting).

Emphasizing share ownership

We see the advantages of employee ownership,

ranging from positive effects on employee

commitment (attracting and retaining employees),

corporate innovation, our business performance

(productivity and profitability as well as

competitiveness to our peers), through greater work

effort of employees and a more cooperative and

entrepreneurial corporate culture.

Social responsibility

The company and its management believe in being a

socially responsible company. Enabling equal

opportunities and fostering ownership is embraced

across all areas of how we do business.

Flow Traders’ approach to Management

Board 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. We aim to provide

total remuneration that is competitive with our

predominantly international, and in many cases

privately-owned, competitors and design our

remuneration structures to encourage our

employees to stay with us for the longer term. Our

Management Board remuneration policy reflects our

mission, corporate identity and values and fosters

our unique Flow Traders culture.

We provide our members of the Management Board

a remuneration package that consists of fixed

remuneration and variable remuneration. The

Management Board does not receive material

ancillary benefits beyond variable remuneration. As

permitted by the remuneration policy, total

remuneration of Management Board members is

voluntarily capped at a multiple of the average

employee total remuneration. We present detailed

insights into our Management Board remuneration

policy in the next section.

FLOW TRADERS | ANNUAL REPORT 2022 89

Management Board Remuneration at a glance

In accordance with our Remuneration Philosophy, we provide members of the

Management Board with a remuneration package that consists of fixed

remuneration, in the form of a relatively modest base salary, and variable

remuneration that is aligned with company performance.

While our current policy has been last approved in 2016, we have since then

made improvements within that policy. In 2021 and 2022 we have already

reduced the policy maximum 40% of Flow Traders’ operating profit over the

performance year being available for variable remuneration and in 2022 we have

introduced a balanced scorecard to assess Management Board members’

performance. Within our proposed 2023 policy, we hope to formally implement

these and other adjustments.

The table on the right provides further insight into the main elements of our

existing remuneration policy, for an overview of our proposed remuneration

policy please refer to page 91.


Base Salary	▪Relatively modest base salary
Variable Pay	Policy ▪Management Board Members are awarded a variable remuneration entitlement in the form of a percentage of the firm-wide variable remuneration pool ▪No variable remuneration pool will be available where Flow Traders was not profitable in a performance year ▪Maximum 40% of Flow Traders’ operating profit - minus applicable adjustments - over the performance year is available for variable remuneration ▪The policy maximum of 40% was reduced to 35% for 2021 and to 32.5% for 2022. Operation ▪Performance is measured over a one-year performance period ▪Variable remuneration awards are predominantly based on Flow Traders’ operating profit, which determines the volume of the profit pool ▪Scores against the company balanced scorecard introduced in 2022 as well as individual performance of the board members are used as input to determine the percentage of the profit pool available for Management Board members. Deferral and Vesting ▪Variable remuneration is paid out fully in cash or share-like instruments ▪Above a certain threshold, variable remuneration is paid out in two or more tranches

FLOW TRADERS | ANNUAL REPORT 2022 90

2022 Remuneration for the

Management Board

Introduction

The remuneration (and other arrangements) for the

members of the Management Board are determined

by the Supervisory Board (following proposals from

the Remuneration & Appointment Committee). The

Supervisory Board has assessed the remuneration of

the Management Board members based on their

performance - both individual and as a team- and in

accordance with company performance in 2022. A

detailed explanation of the assessment is included in

the "Performance assessment" section on page 93.

Total remuneration

The table below shows the total remuneration

awarded to individual members of the Management

Board in 2022.

▪Flow Traders delivered an improved financial and

trading performance in 2022 compared to 2021

reflecting a more active market environment. We

recorded Normalized Total Income in 2022 of

€460.6 million and demonstrated a healthy

Normalized EBITDA margin of 45% with

Normalized EBITDA of €208.2 million. Ultimately,

we recorded a Normalized Net Profit of €150.2

million with Normalized Basic EPS of €3.45.

▪We made significant progress in terms of

executing our strategic growth agenda with the

further expansion single bond market making

activities, broadening and deepening our digital

assets footprint and completing 16 strategic

investments via Flow Traders Capital.

▪The improved financial performance translated

into a larger variable remuneration pool in 2022

compared to 2021. The firm-wide variable

remuneration pool in 2022 represents 32.5% of

the operating result, in line with the existing

remuneration policy. The Management Board has

been awarded 6.1% of the variable remuneration

pool in 2022.

▪In line with the proposed cap on total

remuneration in the 2022 remuneration policy,

the hard cap on total remuneration for each

Management Board member in 2022 is

€4,718,000. The cap is based on average

employee total pay of €235,900, calculated

according to the recommendation of the Dutch

Monitoring Commission.

FLOW TRADERS | ANNUAL REPORT 2022 91


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 fixed/variable
Name	Base salary		Cash				Company share-like instruments								Variable
	2022	2021	2022		2021		2022	2021	2022	2021	2022	2021	2022	2021	2022	2021
			Upfront	Deferred	Upfront	Deferred
Dennis Dijkstra, CEO (2014 - 2022)	95	95	425	425	363	363	850	725	—	—	—	—	1,795	1,545	5%/95%	6%/94%
Mike Kuehnel, CFO (2021 - 2022)	95	40	425	425	250	250	850	500	—	—	—	—	1,795	1,040	5%/95%	4%/96%
Folkert Joling, CTrO (2018 - )	95	95	425	425	363	363	850	725	8	8	—	—	1,803	1,553	5%/95%	6%/94%
Thomas Wolff, CTO (2018 - 2022)	32	95	—	—	200	—	—	400	8	8	—	—	40	703	80%/20%	14%/86%
Britta Achmann, CRO (2020 - 2022)	183	200	50	50	94	94	—	47	—	97	—	—	283	532	65%/35%	38%/62%
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 Officer Folkert Joling and Chief Technology Officer 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 five-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. Thomas Wolff stepped down as member of the Management Board as of 29 April 2022. The remuneration granted in capacity as CTO is shown in the table above. Given the resignation, the deferred cash award granted in 2021 in the amount of €200,000 has been forfeited. No variable remuneration has been granted in 2022.
4. Britta Achmann stepped down as member of the Management Board as of 30 November 2022. The remuneration granted in capacity as CRO is shown in the table above. Given the resignation the share-like instruments awarded in 2022 were forfeited and only 25% of the unvested share-like instruments of the prior year grants will vest before the vesting date.

FLOW TRADERS | ANNUAL REPORT 2022 92

Base salary

None of the members of the Management Board

received a base salary increase during 2022. The

Chief Executive Officer, Chief Financial Officer and

Chief Trading Officer continued to receive a modest

annual base salary for the size of their role and

responsibilities of €94,608, while the Chief Risk

Officer received an annual base salary of €200,000.

Variable remuneration

The design of our variable remuneration reflects our

remuneration principles. We operate a single

incentive plan that drives and rewards both annual

and long-term performance with a significant 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 firm-wide

variable remuneration pool as all other employees.

This pool of variable remuneration is primarily a

function of operating 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 the

highest calibre.

Management Board performance

assessment

To determine the Management Board's variable

remuneration awards, the Supervisory Board

conducts a holistic assessment of the performance of

each Management Board member and the

Management Board as a whole in accordance with a

defined scorecard. In this holistic performance

assessment, the Supervisory Board considers

performance against company targets, which

includes both financial and non-financial key

performance indicators (KPIs). To ensure a balanced

assessment, our KPIs do not have pre-determined

weightings, allowing the Remuneration Committee to

determine the overall outcome and ensure

appropriateness in wider circumstances. Objectives

for the KPIs included in the scorecard are set prior to

the beginning of the year and where appropriate

quantitative targets are predefined to ensure the

assessment is robust. Individual performance is

assessed alongside company performance to

determine the final variable compensation outcomes.

Below we present the company KPIs and the

explanation on the performance assessment as

conducted for 2022.

Performance assessment

Flow Traders introduced in 2022 a scorecard which

demonstrates company performance through six

specific performance criteria. The criteria were

chosen to align with our business, our strategy and

include a range of financial and non-financial

metrics.

During the course of numerous engagement

sessions with stakeholders around executive

remuneration, it was indicated that information

should be provided in order for executive

performance and the resulting remuneration

outcomes to be assessed more thoroughly.

Accordingly, in addition to providing insights into the

specific performance criteria applied, we have also

presented the targets and actual results for 2022 on

the defined performance criteria.

The criteria were set ahead of the performance

period, ensuring that the achievement of targets is

challenging, and were as follows:

1. Median daily net trading income

(NTI) normalized for volatility:

We believe that the median daily NTI normalized by

volatility provides a statistically clean picture of

overall business growth. The distribution of daily NTI

is not normally distributed but more shaped like a

Poisson or Gamma distribution with a few negatives

days and more higher profitability days. Due to the

fact that the higher profitability days are

independent, a simple average of daily NTI is

statistically less relevant than the median of the

daily NTI. It is Flow Traders’ ambition to increase

this median NTI for equal volatility scenarios.

Therefore, it is necessary to normalize the observed

daily NTI by the volatility. Since volatility does not

have a linear effect, but a moderately exponential

FLOW TRADERS | ANNUAL REPORT 2022 93

impact, it has been determined that the most

appropriate calculation option is to divide the daily

median NTI by the root of the volatility.

This exercise has been performed on the last 56

quarters and the average VIX value has been used

to normalize the NTI. It is important to note that for

a business with a global footprint which is exposed

to multiple different asset classes, VIX is a simplified

proxy for overall volatility (VIX is the implied

volatility of the S&P500). However, it does provide a

measure of general market sentiment. The target

value set by the company is to have this metric

increase by 10 points every year which equals an

increase of approximately €50,000 per trading day

for the daily median for a volatility environment like

the one seen in Q4 2022.

The target for this metric was set at 227 for 2022

and we achieved an actual result of 277. Moreover,

during the course of 2022, this metric was above the

target in all four quarters with Q1 experiencing the

largest level of outperformance.

2. Normalized EBITDA margin

Normalized EBITDA margin is a profitability ratio

that measures how much in earnings a company is

generating before interest, taxes, depreciation, and

amortization, as a percentage of Net Trading

Income. Normalized EBITDA and margin are based

on the relevant profit share percentage of operating

result for the relevant financial period without any

IFRS 2 adjustments for share-based payments.

On the cost side, Normalized fixed operating

expenses increased to €161.6 million in 2022 (2021:

€122.1 million). The main drivers of the increase in

fixed expenses related to USD strengthening, base

compensation increases, technology investments to

support diversification initiatives as well as new

hires. FTEs increased by 8% percent to 660.

Normalized variable employee expenses increased to

€90.8 million (2021: €86.5 million) which reflects

the improved overall financial performance of the

business during the year and the adjusted profit

sharing percentage of 32.5% which was

implemented to ensure the base compensation

increases were income statement neutral.

A target Normalized EBITDA of 40% was set for

2022. This is reflective of prior annual outcomes and

is at a level which ensures a sustainable and

growing business for all internal and external

stakeholders. Flow Traders delivered a Normalized

EBITDA margin of 45% (2021:46%) with Normalized

EBITDA of €208.2 million (2021: €178.5 million).

which was the result of the income and cost

dynamics described above. Flow Traders continued

to demonstrate strong operational leverage in 2022.

3. Average return on shareholders’

equity

The average return on shareholders’ equity shows

how much money is returned to our shareholders as

a percentage of the money that has been invested

or retained in Flow Traders. It is calculated by

dividing Flow Traders normalized net profit for the

year by the average total shareholders’ equity for

the year (i.e. the average of the opening and closing

shareholders equity balances, expressed as a

percentage).

In 2022, Flow Traders recorded average return on

equity of 27% reflecting normalized net profit of

€150.2 million and average shareholders’ equity of

€557.2 million. This compares to 24% average

return on shareholders’ equity delivered in 2021.

The realization of a 27% average return on equity is

the result of a NTI performance during the year as

well as the operating expenses dynamics which

reflect both fixed operating expenses as well as

variable employee remuneration which is determined

by the 32.5% profit share arrangement.

The target for executives has been set at 15% which

is an approximation of Flow Traders’ cost of equity

and steers towards delivering a return on

shareholders’ equity that is greater than the

company’s cost of equity.

4. Business development and

diversification index

It is an ongoing goal of the company to further grow

and diversify our trading activities each year,

particularly in the context of the broader market

volumes. An important component of our trading is

off-exchange with institutional counterparties and

these relationships are critically important as we

diversify our trading into fixed income and across

CCC which are products that are almost exclusively

traded off exchange. Value traded, both ETP and

non-ETP, indicate how we have grown and

diversified our trading activities. Accordingly, we

have developed a business development index which

seeks to demonstrate how the business has

developed and diversified over the relevant

performance year.

This business development and diversification index

provides a relative score based on an algorithm

comprised of several input levers including the

number of active counterparties, our own ETP value

traded as well as non-ETP value traded and total

market ETP value traded. At the end of 2022, Flow

Traders had 1,165 active institutional counterparties

compared to 1,082 at the end of 2021. In 2022,

Flow Traders ETP value traded amounted to €1,775

billion (2021: €1,541 billion) and Flow Traders non-

ETP value traded amounted to €4,989 billion (2021:

FLOW TRADERS | ANNUAL REPORT 2022 94

€4,209 billion). Global ETP market value traded was

€51,811 billion in 2022 (2021: €36,835 billion).

Given these inputs and developments, Flow Traders

scored 1.52 with regards to this index. This

compares to a target of 1.45 (2021 index score).

5. Compliance awareness score

The metric represents incidents that Compliance was

made aware of on a timely basis that resulted in

further action (e.g., document, escalation, and or

remedial measures) and categorized by level of

materiality.

Incident management was successful overall; issues

were identified and escalated through transparent

channels. Opportunities remain for improvement

with respect to implementing cross-departmental

enhancements and structural solutions rather than

ad hoc improvements.

Flow Traders achieved a 100% outcome with respect

to its compliance awareness score which is in line

with the target set for the executives. All incidents

were reported on a timely basis and Flow Traders

relies on the procedures and training of the

Compliance team to ensure any breach of

obligations are sufficiently escalated and acted upon.

6. Engagement score

This is the average score given by our employees in

response to the main engagement question in our

annual global employee engagement survey.

Engagement is a measure of how committed and

enthusiastic employees are about their work and the

organization. When people are engaged, they feel

more comfortable being themselves at work.

Different factors contribute to employee

engagement, including organizational culture, work

environment, work relationships, and development

opportunities.

On the engagement score, a 7.4 was scored, slightly

below the target of 7.6. We do see it as our goal to

increase the score vs the benchmark next year but

also feel comfortable as the score is close to the set

target only missing target with a few decimals.

2022 performance summary

Following from the above, the performance on the

company scorecard in combination with the

Management Board member’s individual

performance has determined the individual variable

compensation outcome. As mentioned, our KPIs do

not have pre-determined weightings, allowing the

Remuneration and Nomination Committee to

determine the overall outcome and ensure

appropriateness in overall circumstances. As such

we believe the variable compensation determined is

set at a justified level. Aligned with our

remuneration philosophy and our aim of long-term

value creation, the variable compensation is partly

paid out in share-like instruments deferred over

multiple years.

FLOW TRADERS | ANNUAL REPORT 2022 95

Management Board performance

Following from the above, the performance on the

company scorecard in combination with the

Management Board member’s individual

performance has determined the individual variable

compensation outcome. As mentioned, our KPIs do

not have pre-determined weightings, allowing the

Remuneration and Nomination Committee to

determine the overall outcome and ensure

appropriateness in overall circumstances. As such

we believe the variable compensation determined is

set at a justified level. Aligned with our

remuneration philosophy and our aim of long-term

value creation, the variable compensation is partly

paid out in share-like instruments deferred over

multiple years.

2023 scorecard

The non-executive directors of the Board have

determined that the six KPIs used to assess

executive director performance in 2022 will be

retained for the 2023 performance year. The specific

targets relating to each of these KPIs are

commercially sensitive and accordingly the target

ranges and actual performance outcomes achieved

will be disclosed retrospectively together with

appropriate commentary in the next annual report.

FLOW TRADERS | ANNUAL REPORT 2022 96

Deferral and vesting of variable pay

We believe in creating a culture of ownership, risk

awareness and entrepreneurial spirit and we

embrace an approach which truly connects our

people to the business in sharing profit and risk. To

ensure that the variable remuneration award of the

Management Board is aligned with our beliefs and

contributes to long-term value creation and

shareholder experience, 50% of the 2022 award to

the Management Board is paid out in share-like

instruments deferred over multiple years. This

approach allows us to take a longer-term outlook on

remuneration. The remaining 50% is settled in cash,

paid in equal instalments in 2023 and 2024. As

shareholders have not approved granting awards

over 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 performance of the

Flow Traders’ share price from the date of grant to

vesting. Further, any outstanding variable

remuneration (deferred or unvested) remains at risk

in full for future years. All equity-based awards are

subject to a holding period of one-year post-vesting.

These accord with our culture and remuneration

philosophy of encouraging management and

employee share ownership, creating alignment with

the company’s long-term success.

FLOW TRADERS | ANNUAL REPORT 2022 97


YEARS OF VESTING FOR SHARE-LIKE INSTRUMENTS IN THOUSANDS OF EURO
Member of the Management Board	2022	2023	2024	2025	2026	2027
Dennis Dijkstra, CEO
2020	963	963	963	963	—	—
2021	—	181	181	181	181	—
2022	—	—	213	213	213	213
Mike Kuehnel, CFO
2021	—	125	125	125	125	—
2022	—	—	213	213	213	213
Folkert Joling, CTrO
2020	963	963	963	963	—	—
2021	—	181	181	181	181	—
2022	—	—	213	213	213	213
Thomas Wolf, CTO(1)
2021	481	481	481	481	—	—
2022	—	100	100	100	100	—
Britta Achmann, CRO(2)
2020	60	60	60	60	—	—
2021	—	12	12	12	12	—
1.Thomas Wolff stepped down as member of the Management Board as of 29 April 2022. As such, no variable compensation has been granted in 2022.
2.Britta Achmann stepped down as member of the Management Board as of 30 November 2022. As such the share-like instruments awarded in 2022 were forfeited and only 25% of the unvested share-like instruments of the 2020 and 2021 grants will vest. In addition, 2020 unvested sign-on share were forfeited.

FLOW TRADERS | ANNUAL REPORT 2022 98

Comparative overview of company

performance and remuneration

The long-standing foundation of our remuneration

policy reflects a relatively modest base salary and

variable remuneration that is aligned with company

performance – which varies each year depending on

successful or less successful (financial) 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 over the last 5 years. In addition, the

table illustrates for the CEO what the actual amounts

received were in each given year. As a noteworthy

part of the remuneration is deferred over multiple

years plus the fact of differences in share prices at

vesting vs. originally awarded years, the actual

amounts received by our executives differs from the

total remuneration awarded significantly.

Internal pay ratios

The 2022 pay ratio (CEO total pay vs average total

employee pay) is 7.61 compared to 6.80 in 2021.

This is well below the cap of 20 times average total

employee pay.

Comparative remuneration table on remuneration and company performance over the last five years


IN THOUSANDS OF EURO	2018	2019	2020	2021	2022
Management Board: Total Remuneration awarded (Actuals)
Dennis Dijkstra, CEO (2014 - 2022)	3,015	695	7,795	1,545	1,795
Mike Kuehnel, CFO (2021 - 2022)	—	—	—	1,040	1,795
Folkert Joling, CTrO (2018 - )	3,015	695	7,803	1,553	1,803
Thomas Wolff, CTO (2018 - 2022)	2,092	545	3,953	703	40
Britta Achmann, CRO (2020 - 2022)	—	—	2,283	532	283
Comparative Company Performance (Comparative)	2017:2018	2018:2019	2019:2020	2020:2021	2021:2022
Net Trading Income (NTI)	131%	(44%)	331%	(59%)	20%
Normalized EBITDA	103%	(36%)	251%	(86%)	17%
Basic EPS	307%	(67%)	10568%	(98%)	11%
FTE Total Remuneration	2017:2018	2018:2019	2019:2020	2020:2021	2021:2022
Average FTE total remuneration	185%	(50%)	306%	(59%)	4%


Management Board: Total remuneration paid (Actuals) (1)
CEO	913	1,886	1,368	3,293	3,375
(1) Actuals include base salary for the year together with prior years deferred variable compensation (all SARS paid in cash) due in the current year.

FLOW TRADERS | ANNUAL REPORT 2022 99

Scenario analyses

The Remuneration Committee conducts an annual

scenario analysis when determining the structure

and level of Executive Board remuneration, in

accordance with the Dutch Corporate Governance

Code.

No pensions, loans and other benefits

In 2022, no personal loans, guarantees or related

benefits 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 2022.

We have not reserved nor accrued any amounts to

cover pension claims or retirement claims. We do

not provide any other ancillary benefits for any

member of the Management Board.

Clawback variable remuneration

Malus and clawback provisions are in place that are

comprehensive, irreversible and substantially exceed

regulatory requirements. No variable remuneration

has been clawed back during 2022.

Temporary deviations from the

remuneration policies

No temporary deviations took place from the

respective policies in 2022.

Shares held by employees and

Management Board members

We have a long-standing philosophy of encouraging

management and employee share ownership,

creating alignment between the company’s long-

term success and individual personal financial

circumstances. Since IPO, we have utilized a number

of share schemes. In connection with the IPO, our

CEO and a significant 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 for the award up to 50%

of variable remuneration in shares (or share-like

instruments).


31 December 2022	Total number of shares	% of outstanding total shares
Dennis Dijkstra (CEO)	1,075,000	2.31
Folkert Joling (CTrO)	424,817	0.91
Mike Kuehnel (CFO)	25,000	0.05
Total	1,524,817	3.28

2023 executive remuneration policy

At the 2023 AGM we will be submitting a proposed

executive remuneration policy. We believe that our

proposed remuneration policy is reflective of the

feedback received at our stakeholder consultations

while maintaining our core remuneration principles

which aim to attract, retain and motivate the right

talent from both listed and non-listed companies.

Considering the feedback received, we are proposing

to:

▪Formally introduce share-based compensation;

▪Enhance deferral and vesting provisions;

▪Encourage share ownership;

▪Formally introduce a cap (max. 20x average

employee total compensation) on individual

Executive board member remuneration;

The full proposed policy will be published in

combination with our 2023 AGM convening notice on

our website.

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 fixed compensation

awarded to the individual members of the

Supervisory Board.

FLOW TRADERS | ANNUAL REPORT 2022 100

Supervisory Board remuneration


REMUNERATION OF THE SUPERVISORY BOARD			COMMITTEE FEES, ANNUALIZED (€)
	Chair	Board fee (€)	Audit	Remuneration & Appointment	Risk	Trading & Technology	Total annualized fees (€)	Actual fees paid, 2022 (€)
Rudolf Ferscha		100,000	7,500	7,500	7,500	7,500	130,000	130,000
Jan van Kuijk	Trading & Technology	70,000	7,500	7,500	7,500	10,000	102,500	102,500
Olivier Bisserier	Audit and Risk	70,000	15,000		10,000	7,500	102,500	102,500
Roger Hodenius		70,000		7,500	7,500	7,500	92,500	92,500
Ilonka Jankovich		70,000	7,500		7,500	7,500	92,500	92,500
Linda Hovius	Remuneration & Appointment	70,000		15,000	7,500	7,500	100,000	100,000
Total 2022		450,000	37,500	37,500	47,500	47,500	620,000	620,000

FLOW TRADERS | ANNUAL REPORT 2022 101

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 equivalent benefits 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 benefits for any member

of the Supervisory Board.

The co-founders of Flow Traders, Roger Hodenius

and Jan van Kuijk, are currently members of the

Board. The table below provides an overview of the

shares indirectly held by them on 31 December 2022

as also reflected in the relevant AFM register.


SHARES INDIRECTLY HELD BY MEMBERS OF THE SUPERVISORY BOARD
31 December 2022		% 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

FLOW TRADERS | ANNUAL REPORT 2022 102

Remuneration for other employees

Variable Remuneration

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 twice during

an annual cycle.

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’

behaviour and fostering collaboration and teamwork.

Flow Traders does not base variable remuneration

directly on financial results achieved individually.

The Supervisory Board approves the awarding of

variable remuneration.

If awarded, variable remuneration is paid in cash,

company shares and company share linked

instruments in one, two, three or four annual

instalments, depending on the amount of variable

remuneration awarded. The deferred variable

component acts as a first 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 behaviour,

focusing on the long-term objectives of the company

and alignment with our risk appetite. We deem the

deferral period sufficient given the company’s risk

profile and horizon, see for further details of our

remuneration philosophy on page 89.

▪Variable remuneration components may become

subject to reduction or claw back if it is

determined that the relevant employee did not

meet adequate norms of competence and

appropriate behaviour or was responsible for

behaviour 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 first

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 fulfilment 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 equivalent benefit

as part of their compensation package. We do

not provide any other ancillary benefits for any

employee. We have not reserved or accrued any

amounts to cover pension claims or retirement

claims.

Emphasizing share ownership

One of our core values is ownership, both in terms

of mindset, behaviour as well as a share in the

ownership of the company. 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, we have a history of offering

our employees the opportunity to become

shareholders. From 2017 untol 2019, we promoted

shareholding through the Flow Cash Incentive Plan

(FCIP). From performance year 2020 onwards, we

have begun rewarding employees directly in

company shares. The higher the variable

remuneration an individual receives, the higher the

proportion of variable compensation paid out in

shares.

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

cannot be forfeited by 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

offices we offer schemes that are driven by country-

specific practices and regulations.

FLOW TRADERS | ANNUAL REPORT 2022 103

Variable compensation granted

In 2022, the total amount of variable remuneration

awarded to all employees including members of the

Management Board was €86.6 million (2021: €83.3

million).

In 2022, company wide average compensation

(includes salary, social security costs and variable

remuneration) paid per average FTE was €235,900

(2021: €227,200), while variable remuneration per

average FTE amounted to 57.2% of total

compensation in 2022. This excludes any

Management Board remuneration. In 2022, 18

employees, including the Management Board, were

awarded remuneration of €1 million or more

(2021:16).


	Number of employees to whom an annual total remuneration of €1 million or more was awarded
Business Unit	2022	2021
Europe	12	13
Americas	5	3
Asia	1	0
Total	18	16

Changes in regulation

Remuneration regulations are naturally subject to

change. For example, as of 22 November 2021, the

European Banking Authority published a final report,

setting out the “Guidelines on sound remuneration

policies under Directive (EU) 2019/2034” which

became applicable to investment firms, such as ours

from 30 April 2022. These guidelines are intended to

implement sound and gender neutral remuneration

policies for all staff with specific provisions applying

to certain identified staff. For such identified staff,

the guidelines emphasizes that their variable

remuneration must be aligned with the investment

firm’s risk profile. We have reviewed these

guidelines and have already determined that we are

largely compliant, and as such, any impact on us will

be minor. Nonetheless, we remain continually

vigilant to any new changes as they may have a

significant 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.

FLOW TRADERS | ANNUAL REPORT 2022 104


	Financial statements
	106	Consolidated financial statements
	155	Company financial statements

FLOW TRADERS | ANNUAL REPORT 2022 105


CONSOLIDATED STATEMENT OF FINANCIAL POSITION IN THOUSANDS OF EURO		As at 31 December
	Note	2022	2021
Assets
Cash and cash equivalents	15	8,612	4,949
Financial assets held for trading	16	4,876,590	4,501,097
Trading receivables	17	6,022,355	6,160,238
Other assets held for trading	18	58,347	78,122
Other receivables	19	24,708	14,727
Investments fair value through OCI	20	19,839	9,282
Investments fair value through PL	21	1,928	1,716
Investments in associates	22	4,958	2,670
Property and equipment	23	77,081	39,609
Intangible assets	24	1,967	2,345
Current tax assets	14	2,800	1,340
Deferred tax assets	14	5,503	7,628
Total assets		11,104,688	10,823,723
Liabilities
Financial liabilities held for trading	25	2,956,640	2,138,072
Trading payables	26	7,326,169	7,969,972
Other liabilities held for trading	27	32,115	25,771
Lease liabilities	28	54,100	16,175
Other liabilities	29	115,730	162,117
Current tax liabilities	14	11,246	1,014
Deferred tax liabilities	14	2,372	2,433
Total liabilities		10,498,372	10,315,554
Equity
Share capital	30	162,871	4,653
Share premium	30	2,372	161,974
Treasury shares	30	(103,536)	(105,644)
Share based payment reserve	30	56,865	50,523
Retained earnings	30	460,804	379,904
Currency translation reserve	30	24,899	15,510
Fair value reserve	30	2,040	1,249
Total Equity		606,315	508,169

Total equity and liabilities		11,104,687	10,823,723

The section notes to the consolidated financial statements are an integral part of these consolidated financial statements.

FLOW TRADERS | ANNUAL REPORT 2022 106


CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME IN THOUSANDS OF EURO		For the year ended 31 December
	Note	2022	2021
Gross trading income		677,205	542,351
Fees related to the trading activities		113,491	95,160
Net financial expenses related to the trading activities		103,523	63,150
Net trading income	10	460,191	384,041
Other Income	11	(1,518)	—
Total Income		458,673	384,041

Employee expenses	12	176,837	157,073
Depreciation of property and equipment	23	16,274	14,738
Amortization of intangible assets	24	542	549
Write off of (in) tangible assets	23/24	161	20
Other expenses	13	102,497	67,519
Operating expenses		296,311	239,899

Operating result		162,362	144,142
Result/(impairment) of equity-accounted investees	22	(631)	585
Profit before tax		161,731	144,727

Tax expense	14	34,904	29,793
Profit for the year attributable to the owners of the Company		126,827	114,934

Other comprehensive income (loss)
Items that are or may be reclassified to profit or loss
Foreign currency translation differences - foreign operations	30	9,389	9,434
Items not reclassified to profit or loss
Changes in fair value through other comprehensive income		791	2,244
Other comprehensive income for the year (net of tax)		10,180	11,678
Net other comprehensive income for the year attributable to the owners of the Company		137,007	126,612

Earnings per share
Basic earnings per share	9	2.92	2.63
Diluted earnings per share	9	2.76	2.52

The section notes to the consolidated financial statements are an integral part of these consolidated financial statements.

FLOW TRADERS | ANNUAL REPORT 2022 107


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY IN THOUSANDS OF EURO								2022

	Share capital	Share premium	Treasury shares	Share based payment reserve	Currency translation reserve	Fair value reserve	Retained earnings	Total
Balance at 1 January 2022	4,653	161,974	(105,644)	50,523	15,510	1,249	379,904	508,169
Profit							126,827	126,827
Total other comprehensive income					9,389	791		10,180
Total comprehensive income for the period	—	—	—	—	9,389	791	126,827	137,007

Transactions with owners of the Company
Conversion of share premium to share capital	158,218	(158,218)						—
Dividends							(45,927)	(45,927)
Repurchase of shares		—	(15,046)					(15,046)
Share based payments		(1,384)	17,154	6,342				22,112
Total transactions with owners of the company	158,218	(159,602)	2,108	6,342	—	—	(45,927)	(38,861)
Balance at 31 December 2022	162,871	2,372	(103,536)	56,865	24,899	2,040	460,804	606,315

FLOW TRADERS | ANNUAL REPORT 2022 108


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY IN THOUSANDS OF EURO								2021

	Share capital	Share premium	Treasury shares	Share based payment reserve	Currency translation reserve	Fair value reserve	Retained earnings	Total
Balance at 1 January 2021	4,653	162,234	(45,188)	45,821	6,076	(995)	417,337	589,938
Profit							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
Conversion of share premium to share capital
Dividends							(152,367)	(152,367)
Repurchase of shares		—	(74,100)					(74,100)
Share based payments		(260)	13,644	4,702				18,086
Total transactions with owners of the company	—	(260)	(60,456)	4,702	—	—	(152,367)	(208,381)
Balance at 31 December 2021	4,653	161,974	(105,644)	50,523	15,510	1,249	379,904	508,169

The section notes to the consolidated financial statements are an integral part of these consolidated financial statements.

FLOW TRADERS | ANNUAL REPORT 2022 109


CONSOLIDATED STATEMENT OF CASH FLOWS IN THOUSANDS OF EURO		For the year ended 31 December
	Note	2022	2021
Cash flows from operating activities
Profit for the year		126,827	114,934
Adjusted for:
Depreciation of property and equipment	23	16,274	14,738
Amortization of intangible assets	24	542	549
Write off of (in) tangible assets	23/24	161	20
Result/(impairment) of equity-accounted investees (net of tax)	22	631	(585)
Share-based payment transactions	12	33,253	23,242
Share donation to Flow Traders Foundation	13	—	2,005
Tax expense	14	34,904	29,793

Changes in working capital
▪(increase)/decrease financial assets held for trading	16	(375,493)	(627,953)
▪(increase)/decrease trading receivables	17	137,883	(1,526,770)
▪(increase)/decrease other assets held for trading	18	19,775	(59,438)
▪(increase)/decrease other receivables	19	(9,980)	(537)
▪increase/(decrease) financial liabilities held for trading	25	818,568	177,841
▪increase/(decrease) trading payables	26	(643,803)	2,168,970
▪increase/(decrease) other liabilities held for trading	27	6,344	24,946
▪increase/(decrease) other liabilities	29	(48,065)	(27,520)
▪Corporate income tax paid	14	(24,068)	(69,476)
Cash flows from operating activities		93,753	244,759

Cash flows from investing activities
Investments and acquisitions of financial assets held at FVOCI or FVPL or in associates and joint ventures	20-22	(14,062)	(7,080)
Disposals or sales of financial assets held at FVOCI or FVPL or in associates and joint ventures	20-22	1,941	—
Acquisition of property and equipment	23	(7,444)	(5,503)
Acquisition of intangible assets	24	(156)	(1,252)
Cash flows from investing activities		(19,721)	(13,835)

Cash flows from financing activities
Dividend paid	30	(45,927)	(152,367)
Payments of lease liabilities	28	(9,613)	(8,152)

FLOW TRADERS | ANNUAL REPORT 2022 110


Repurchases of shares	30	(15,046)	(74,100)
Cash flows from financing activities		(70,586)	(234,619)

Effect of movements in exchange rates on cash and cash equivalents		217	299
Change in cash and cash equivalents		3,663	(3,396)

Change in cash and cash equivalents
Cash and cash equivalents at opening	15	4,949	8,345
Cash and cash equivalents at close	15	8,612	4,949
Change in cash and cash equivalents		3,663	(3,396)

The section notes to the consolidated financial statements is an integral part of these consolidated financial statements.

FLOW TRADERS | ANNUAL REPORT 2022 111

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 an 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 2022 incorporate financial information of Flow Traders N.V., its

subsidiaries and associates. The annual financial statements were authorized for

issue by the Company’s Board on 23 February 2023 subject to adoption by the

General Meeting of shareholders.

As of 13 January 2023 Flow Traders N.V. has been legally merged via a cross

border legal merger into Flow Traders S.A., following this merger Flow Traders

S.A. converted into a Bermuda Limited company, Flow Traders Limited with

Flow Traders Limited as the legal successor as reporting entity of Flow Traders

N.V.. Please refer to note 35 on subsequent events for further details.

2.Going concern

These consolidated 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)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.

c)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

digital 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 changes in

presentation, note 8 fair values of financial instruments and other assets and

liabilities held for trading and note 34 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.

d)Principles for the preparation of the consolidated

statement of cash flows

The cash flow from operating activities of the consolidated statement of cash

flows is based on the indirect method, the cash flow from investing and

financing of the consolidated statement of cash flows is based on the direct

method.

FLOW TRADERS | ANNUAL REPORT 2022 112

The cash flows are split into cash flows from operations, trading activities,

investment activities and financing activities. Receivables from and payables to

clearing organizations are included in the cash flow 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 flows from operating activities. Investment activities are

comprised of acquisitions, sales and redemptions in respect of financial

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 financial debt, including financial 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 financial 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 financial 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.

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 financial statements of subsidiaries are

included in the consolidated financial 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 profit 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 significant influence, but

not control or joint control, over its financial and operating activities. Control or

significant influence follows from facts and circumstances, but there is a

rebuttable presumption that significant influence 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 financial statements include the Group’s share of the profit or

loss and other comprehensive income of equity accounted investees, from the

date that significant influence commences until the date that significant

influence 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.

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 identifiable net assets acquired.

Any goodwill that arises is tested annually for impairment. Any gain on a

bargain purchase is recognized in profit 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 profit or loss.

FLOW TRADERS | ANNUAL REPORT 2022 113

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 is recognized in profit or loss. Differences arising on

the translation of investments measured at fair value through other

comprehensive income 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.

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, significant

influence or joint control is lost, the cumulative amount in the translation

reserve related to that foreign operation is reclassified to profit 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 insignificant 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 financial instruments (including regular-way purchases and

sales of financial 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 financial asset or financial liability is measured initially at fair value plus or

minus, for an item not at fair value through profit or loss, transaction costs that

are directly attributable to its acquisition or issue.

Classification

The Group classifies its financial assets into the following categories:

▪trading receivables, measured at fair value through profit and loss;

▪investments measured at fair value through other comprehensive income;

▪investments measured at fair value through profit and loss;

▪financial assets held for trading at fair value through profit and loss; and

▪other financial assets at amortized costs.

The Group classifies its financial liabilities, other than financial guarantees and

loan commitments, into the following categories:

▪trading payables, measured at fair value through profit and loss;

▪financial liabilities held for trading at fair value through profit or loss; and

▪other financial liabilities measured at amortised 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 profit.

Trading assets and liabilities are initially recognized and subsequently measured

at fair value in the statement of financial position, with transaction costs

recognised in profit or loss. All changes in fair value are recognized as part of

net trading income in profit or loss. Trading assets and liabilities are not

reclassified subsequent to their initial recognition.

FLOW TRADERS | ANNUAL REPORT 2022 114

Trading receivables and payables

Such assets are recognized initially at fair value with any directly attributable

transaction costs recognized in profit or loss.

Equity investments measured at fair value through other

comprehensive income ('OCI')

Equity investments measured at fair value through other comprehensive income

are non-derivative financial assets that the Group considers long-term

investments of strategic relevance for the growth of the company. Equity

investments measured at fair value through other comprehensive income 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 reclassified into profit or loss.

Subsequent to initial recognition, they are measured at fair value and changes

therein, other than foreign currency differences on fair value through other

comprehensive income 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 reclassified to profit

or loss.

Equity investments measured at fair value through profit and loss

('PL')

Equity investments measured at fair value through profit and loss are non-

derivative financial assets that the group holds for long term trading purposes.

Equity investments measured at fair value through profit and loss are

recognized initially at fair value. Transaction costs are recognized in the profit

and loss as part of the change in fair value, any re-measurement of the

investments is classified to profit or loss.

Subsequent to initial recognition, they are measured at fair value and changes

therein, are recognized in profit and loss. When an investment is derecognized,

the gain or loss is classified to profit or loss.

Other financial liabilities

Non-derivative financial liabilities are recognized initially at fair value less any

directly attributable transaction costs. Subsequent to initial recognition, these

financial liabilities are measured at amortized cost using the effective interest

method. The Group derecognizes a financial 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 profit 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 profit 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 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 reflects 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 sufficient frequency and

volume to provide pricing information on an ongoing basis.

The best evidence of the fair value of a financial 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

financial instrument is initially measured at fair value, adjusted to defer the

difference between the fair value at initial recognition and the transaction price.

FLOW TRADERS | ANNUAL REPORT 2022 115

Subsequently, that difference is recognized in profit 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 profit or loss account. Those

theoretical prices can differ from quoted market prices. The Group’s Risk and

Mid-Office department monitors whether all differences can be substantiated.

Portfolios of financial assets and financial 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.

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 profit 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 participants 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 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 profit or loss.

Subsequent expenditure is capitalized only when it is probable that the future

economic benefits associated with the expenditure will flow 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

profit or loss over the estimated useful lives of each component.

The estimated useful lives for the current and comparative years of significant

items of property and equipment are as follows:

▪hardware: 5 years;

▪office fixtures: 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

FLOW TRADERS | ANNUAL REPORT 2022 116

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

financial position.

g)Intangible assets

Recognition and measurement

Intangible assets are amortized on a straight-line basis in profit or loss over the

estimated useful lives of each component. The estimated useful life of

significant 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.

Goodwill is tested annually for impairment.

h)Impairment

Non-derivative financial assets

The allowance for expected credit losses (“ECL allowance”) for all loans and

other debt financial assets not held at fair value through profit and loss,

together with loan commitments and financial guarantee contracts, in this

section all referred to as ‘financial 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 significant increase in credit risk since

origination, in which case, the allowance is based on the 12 months’ expected

credit loss (12mECL).

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 profit or loss, and is reversed if there has

been a favourable change in the estimates used to determine the recoverable

amount.

For other receivables, the Group applies a simplified 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 specific to the debtors and the

economic environment.

The Group considers a financial asset in default when contractual payments are

90 days past due. However in certain cases, the Group may reconsider a

financial 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

financial asset is written off when there is no reasonable expectation of

recovering the contractual cash flows.

Non-financial assets

The carrying amounts of the Group’s non-financial assets, other than deferred

tax assets, 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 indefinite-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 cost of disposal. In assessing value in use, the estimated

future cash flows are discounted to their present value using a pre-tax discount

rate that reflects current market assessments of the time value of money and

the risks specific to the asset or CGU. For the purpose of impairment testing,

assets are grouped together into the smallest group of assets that generates

cash inflows from continuing use that are largely independent of the cash

inflows 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 reflects 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

benefit from the synergies of the combination.

Impairment losses are recognized in profit or loss. Impairment losses

recognized in respect of CGUs are allocated first to reduce the carrying amount

FLOW TRADERS | ANNUAL REPORT 2022 117

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 benefits

Short-term employee benefits

Short-term employee benefit 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 (profit-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.

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

fulfilled (the vesting period). The awards vest in tranches on various dates over

a total period of three to five years. Graded vesting is applied where needed.

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 reflects

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 profit 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 reflected 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 reflected 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 satisfied,

provided that all other performance and/or service conditions are satisfied.

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 fulfilled (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 profit 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 9).

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 profit

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 outflow of economic benefits will be required to settle the obligation.

Provisions are determined by discounting the expected future cash flows at a

pre-tax rate that reflects current market assessments of the time value of

money and the risks specific to the liability. The unwinding of the discount is

recognized as finance cost.

m)Lease liabilities

At the commencement date of the lease, the Group recognizes lease liabilities

on the statement of financial 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

FLOW TRADERS | ANNUAL REPORT 2022 118

commencement date. After the commencement date, the amount of lease

liabilities is increased to reflect 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 modifications.

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 financial

expenses related to the trading activities.

The fees and net financial expenses are directly linked to the trading activity

and are therefore directly recognized in the profit and loss account under

trading income.

o)Tax

Tax expense comprises current and deferred tax. Current tax and deferred tax

are recognized in profit 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 financial reporting purposes and

their tax bases. Deferred tax is not recognized for:

▪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 profit or loss;

▪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.

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

profits 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

profit 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.

FLOW TRADERS | ANNUAL REPORT 2022 119

q)Non-current assets held for sale

The Group classifies 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

classified 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 finance costs

and income tax expense.

The criteria for held for sale classification 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 significant 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 classification. Assets and liabilities classified as held for

sale are presented separately as current items in the statement of financial

position.

A disposal group qualifies as discontinued operation if it is a component of an

entity that either has been disposed of, or is classified 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 identified 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, trading activities in Jersey and IT

activities in Romania. Americas consists of the subsidiaries in the USA. Asia

contains our subsidiaries in Hong Kong and Singapore. Hong Kong has a

Chinese representative office in Shanghai. The management board considers

this segmentation to be relevant to understand the group financial 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, profit

before tax and net profit. Significant 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 affiliated 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 financial

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 23 and 24.

FLOW TRADERS | ANNUAL REPORT 2022 120


SEGMENT REPORTING	For the year ended 31 December 2022
	Europe	Americas	Asia	Total
Gross trading income	427,136	173,711	76,359	677,205
Fees related to the trading activities	65,098	37,397	10,996	113,491
Net financial expenses related to the trading activities	46,534	46,827	10,163	103,524
Net trading income	315,504	89,487	55,200	460,191
Other income	(89)	(1,429)	—	(1,518)
Total Income	315,415	88,058	55,200	458,672
Intercompany recharge	17,183	—	—	17,183
Total revenues	332,598	88,058	55,200	475,856
Employee expenses	112,436	42,829	21,572	176,837
Intercompany recharge	—	7,191	9,992	17,183
Other expenses	66,902	23,998	11,597	102,497
Total operating expenses	179,338	74,018	43,161	296,517
EBITDA	153,260	14,041	12,039	179,339
Depreciation of property and equipment	7,794	4,579	3,900	16,273
Amortization of intangible assets	482	44	16	542
Write off of (in) tangible assets	7	132	23	162
Operating result	144,977	9,286	8,100	162,362
Result/(impairment) of equity-accounted investees	(568)	(63)	—	(631)
Profit before tax	144,409	9,223	8,100	161,731
Tax expense	32,842	1,517	545	34,904
Profit for the year	111,567	7,706	7,555	126,828

FTE	456	119	85	660

Assets	440,603	263,499	83,734	787,836

Capital expenditure	1,982	520	1,154	3,657
Liabilities	87,196	69,231	25,094	181,521

FLOW TRADERS | ANNUAL REPORT 2022 121


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 financial 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
Other income	—	—	—	—
Total 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
Personnel 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
Profit before tax	122,684	10,343	11,700	144,727
Tax expense	26,702	1,820	1,271	29,793
Profit for the year	95,982	8,523	10,429	114,934

FTE	422	111	80	613

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

FLOW TRADERS | ANNUAL REPORT 2022 122

6.New standards and interpretations

All accounting policies are the same as those applied in the Group’s consolidated

financial statements for the year ending 31 December 2021 except the

presentation of the treasury shares reserve in the balance sheet and in the

changes in equity.

Material accounting policy information

In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice

Statement 2. The amendments to IAS 1 require companies to disclose their

material accounting policy information rather than their significant accounting

policies. The amendments to IFRS Practice Statement 2 provide guidance on

how to apply the concept of materiality to accounting policy disclosures. The

amendments are effective for annual periods beginning on or after January 1,

2023. The Group does not anticipate that the application of these amendments

will have an effect on the future consolidated financial statements.

7.Changes in presentation

Accounting for treasury shares

IFRS does not mandate a specific method of presenting treasury shares within

Shareholders Equity. Until 2021 Flow Traders reported the treasury shares

reserve within the Shareholders Premium Account. As from 2022 in order to

provide more relevant information about the transactions in treasury shares and

the group financial position we adjusted our disclosures by having a separate

line item treasury shares reserve in the balance sheet and a separate column in

the consolidated statement of change in equity. As a result the comparative

numbers for 2021 were restated for presentation purposes.

Several other amendments and interpretations apply for the first time in 2022,

but do not have an impact on the consolidated financial statements of the

Group.

8.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 specific to

that asset or liability.

Valuation models

The objective of valuation techniques is to arrive at a fair value measurement

that reflects 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 Group measures fair values using the following fair value hierarchy,

depending on the inputs used for making the measurements.

▪Level 1: fair value of financial 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 significant 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

significant effect on the instrument’s valuation. This category includes

instruments that are valued based on quoted prices for similar instruments

but for which significant unobservable adjustments or assumptions are

required to reflect differences between the instruments, for example unlisted

equity securities.

The fair values of financial assets and financial 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 financial instruments, the Group determines fair values using other

valuation techniques.

The Group uses widely recognized valuation techniques and models for

determining the fair value of common, simple financial 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

FLOW TRADERS | ANNUAL REPORT 2022 123

rates, equity and equity index prices and expected price volatilizes 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 specific events and general conditions in the

financial markets.

When the Group measures portfolios of financial assets and financial 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 specific to the portfolio.

Similarly, when the Group measures portfolios of financial assets and financial

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 significant fair value measurements. The

daily reconciliation of the positions and prices between the prime brokers and

the Trading department is most important.

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 financial assets and liabilities are

classified as Level 1.

A substantial part of the financial 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 reflect price adjustments primarily caused

by the fact that the Group continuously prices its financial 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

financial 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 financial assets and liabilities are

classified as Level 2.

For offsetting (delta neutral) positions, the Group uses mid-market prices to

determine fair value.

b.Trading receivables and payables

Trading receivables and payables are measured on a fair value basis and

designated at fair value though profit and loss. 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 firms and the net amount

receivable or payable for securities transactions pending settlement are included

in this category. The group maintains portfolio financing facilities with its prime

brokers to facilitate its trading activities to finance the purchase and settlement

of financial 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 profit or loss.

c.Investments measured at fair value through other

comprehensive income ('OCI')

The fair value of Investments measured at fair value through other

comprehensive income is determined by reference to their quoted closing bid

price at the reporting date, or if unquoted, determined using a valuation

technique and are classified as Level 2 or level 3, conditional upon the regular

availability of quoted closing bid prices.

d.Investments measured at fair value through profit and loss

The fair value of Investments measured at fair value through profit and loss is

determined by reference to their quoted closing bid price at the reporting date,

FLOW TRADERS | ANNUAL REPORT 2022 124

or if unquoted, determined using a valuation technique and are classified as

Level 3.

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-dealer. The group applies IAS 2 for its digital assets

and these are measured at fair value through profit and loss, 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 classified 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 profit or loss as the company uses its own fair value models based on

quoted prices or observable inputs for the valuation of the borrowed digital

assets, these liabilities are classified as level 2 and level 3.

g.Fair Value hierarchy

The following table shows the carrying amounts and fair values of financial

assets and liabilities according to their fair value hierarchy.

FLOW TRADERS | ANNUAL REPORT 2022 125


FAIR VALUE HIERARCHY	At 31 December 2022
	Level 1	Level 2	Level 3	Total
Long positions in equity securities- trading	96,214	4,337,438		4,433,652
Long positions in debt securities- trading	—	434,853		434,853
Mark to market derivatives assets	274	7,811		8,085
Financial assets held for trading	96,488	4,780,102	—	4,876,590
Trading receivables	6,020,511	1,844		6,022,355
Other assets held for trading	—	58,347		58,347
Investments measured at fair value through PL			1,928	1,928
Investments measured at fair value through OCI		1,381	18,458	19,839
Total long positions	6,116,999	4,841,674	20,386	10,979,059

Short positions in equity securities- trading	33,671	2,483,631		2,517,302
Short positions in debt securities- trading	—	431,195		431,195
Mark to market derivatives liabilities	66	8,077		8,143
Financial liabilities held for trading	33,737	2,922,903	—	2,956,640
Trading payables	7,323,970	2,199		7,326,169
Other liabilities held for trading	—	19,889	12,226	32,115
Total short positions	7,357,707	2,944,991	12,226	10,314,924

FLOW TRADERS | ANNUAL REPORT 2022 126


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


Due to the short holding period between acquisition and sale, there are no transfers between Level 1 and Level 2 during the reporting period.

FLOW TRADERS | ANNUAL REPORT 2022 127

Level 3: Movement during the year

In 2022, no transfers in or out of level 3 took place (2021: nil). The following

table show the movement in level 3 assets, please also refer to note 20 & 21.

The fair value of the level 3 investments is determined based on the latest

transaction price. The fair value is reassessed based on internal reviews of the

investments' milestone performance and runway.


Financial Assets	At 31 December 2022
	FVPL	FVOCI	Total
Net book amount 1 January	1,716	8,209	9,925
Additions	1,936	9,114	11,050
Disposals	(310)	(1,622)	(1,932)
Price movements	(1,518)	2,283	765
Effect of movement in FX	104	474	578
Net book amount 31 December	1,928	18,458	20,386


Financial Assets	At 31 December 2021
	FVPL	FVOCI	Total
Net book amount 1 January	—	2,861	2,861
Additions	1,725	2,911	4,636
Disposals			—
Price movements	(44)	2,214	2,170
Effect of movement in FX	35	223	258
Net book amount 31 December	1,716	8,209	9,925

Hedge of net investments in foreign operations

Included in financial liabilities held for trading at 31 December 2022 was a

borrowing of USD 19.9 million (2021: USD 37.0 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 other comprehensive income 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 ineffectiveness will arise when the

amount of the investment in the foreign subsidiary becomes lower than the

amount of the borrowing. The hedging gain recognized in other comprehensive

income before tax is equal to the change in fair value used for measuring

effectiveness. There is no ineffectiveness recognized in profit or loss.

The impact of the hedging instrument recorded in financial liabilities held for

trading on the statement of financial position is as follows:


FOREIGN CURRENCY DENOMINATED BORROWING
For the year ended 31 December 2022
Notional amount (US$000)	Carrying amount (€000)	Change in fair value used for measuring ineffectiveness for the period(€000)
19,900	18,646	7,555


FOREIGN CURRENCY DENOMINATED BORROWING
For the year ended 31 December 2021
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

FLOW TRADERS | ANNUAL REPORT 2022 128


NET INVESTMENT IN FOREIGN SUBSIDIARIES
	For the year ended 31 December 2022
	Change in fair value used for measuring ineffectiveness (€000)	Foreign currency translation reserve (€000)
Investment in Foreign Subsidiaries	7,555	7,555


NET INVESTMENT IN FOREIGN SUBSIDIARIES
	For the year ended 31 December 2021
	Change in fair value used for measuring ineffectiveness (€000)	Foreign currency translation reserve (€000)
Investment in Foreign Subsidiaries	6,340	6,340

9.Earnings per share

The calculation of the basic earnings per share is based on profit 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
	2022	2021
Profit for the year	126,827	114,934
Profit attributable to ordinary shareholders	126,827	114,934

Weighted average number of ordinary shares	43,476,991	43,699,300
Dilutive effect of share-based payments	2,435,078	1,921,736
Weighted average number of ordinary shares for diluted net profit	45,912,069	45,621,036

Basic earnings per share	2.92	2.63

Diluted earnings per share	2.76	2.52

10.Net trading income

Gross trading income comprises the realized and unrealized income on financial

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 financial 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.

11.Other income

Other Income includes gains and losses from investments measured at fair

value through profit and loss. For further details please refer to note 21.

FLOW TRADERS | ANNUAL REPORT 2022 129

12.Employee expenses


For the year ended 31 December
	2022	2021
Wages and salaries	56,224	41,433
Social security charges	5,834	4,970
Recruitment and other employment costs	11,104	8,201
Variable compensation paid in cash	70,420	79,227
Variable compensation paid in shares	33,253	23,242
Employee expenses	176,837	157,073

The wages and salaries of the Group increased in line with the FTE development

from 613 as per 31 December 2021 to 660 as per 31 December 2022. Overall

employee expenses increased by 13% as a result of the overall increase in

variable compensation and wages and salaries paid to employees. The decrease

in variable compensation is also reflected in the decrease in other liabilities. The

amount of variable compensation payable is based on the operational profit of

the company.

The amounts recognized in profit and loss during 2022 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, as part

of their sign-on package or as part of their variable compensation. The shares

awarded under the 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 as part of the variable compensation 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 outflows are covered by the selling of part of the Treasury Shares kept in

the Share Premium Account.


SHARE BASED PAYMENTS PER PLAN	For the year ended 31 December
	2022	2021
Variable remuneration share plans	31,169	20,894
Company loyalty and sign-on package share plans	2,085	2,348
Total expenses arising from equity settled share-based payments	33,253	23,242
Expenses arising from cash settled share-based payments	3,554	9,605
Total expenses arising from cash settled share-based payments	3,554	9,605
Total	36,807	32,847

a)Company loyalty and sign-on package share plans - equity

settled

Under the 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 one to five 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

2022 the company awarded employees shares based on a fixed monetary value

of €2.0 million (2021:€0.6 million), reflecting a weighted average fair value of

shares granted of €26.80 (2021: €32.51). 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 €2.1 million (2021: €2.3 million).

FLOW TRADERS | ANNUAL REPORT 2022 130

Number of shares


For the year ended 31 December
	2022	2021
Outstanding at 1 January	162,471	167,080
Granted during the year	74,700	20,100
Changes due to dividend reinvestment	4,559	33,895
Vested during the year	(65,376)	(56,104)
Forfeited during the year	(12,936)	(2,500)
Outstanding at 31 December	163,418	162,471

b)Variable remuneration share plans

Under the variable remuneration share plans, shares are granted to employees

as part of their variable compensation. The shares vest in four equal

instalments during the first quarter of the subsequent 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 granted to employees as part of the 2022 variable

remuneration is estimated at grant date at €27.4 million. Employees are

granted shares based on a fixed monetary value. The final number of shares will

be determined based on the volume weighted average price (VWAP) of the first

open period of 2023 and is not final. Therefore, the number of shares included

in the table below is based on the fixed variable compensation amount awarded,

divided by the fair value at grant date of €23.26. The exercise price of the share

option is equal to the market price of the underlying shares on the date of

grant.

Prior year variable remuneration plans have been adjusted as follows:


Variable remuneration share plan year	2021	2020
Fixed monetary value	20,943	96,318
Fair value share price at grant date	€33.10	€28.58
VWAP share price of first open period	€28.91	€32.20

The following table illustrates the number of shares and movements in share

awards during the year. The expense recognized during the year was €31.2

million (2021: €20.9 million).

Number of shares


For the year ended 31 December
	2022	2021
Outstanding at 1 January	2,601,716	3,370,127
Granted during the year	1,179,378	633,026
Changes due to dividend reinvestment	78,977	191,681
Vested during the year	(859,556)	(661,762)
Forfeited during the year	(179,347)	(128,967)
Changes in shares recalculated based on final VWAP	114,448	(802,390)
Outstanding at 31 December	2,935,616	2,601,715

Total share awards outstanding per plan


For the year ended 31 December
	2022	2021
Company loyalty and sign-on package share plans	163,418	162,471
Variable remuneration share plans	2,935,616	2,601,715
Outstanding at 31 December	3,099,034	2,764,186

c)Share appreciation rights

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 five 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

2022 was €10.4 million (2021: €10.4 million). The expense recognized during

the year was €3.6 million (2021: €9.6 million).

FLOW TRADERS | ANNUAL REPORT 2022 131

13.Other expenses


OTHER EXPENSES	For the year ended 31 December
	2022	2021
Technology	61,171	49,769
Housing	3,718	3,142
Regulatory costs	3,073	2,607
Advisors and assurance	4,910	3,026
Strategic advisory costs	14,057	—
Fixed exchange costs	8,161	5,338
Travel expenses	2,634	1,078
Various expenses	4,774	2,550
Other expenses	102,497	67,511

Technology expenses increased due to initiatives to optimize our infrastructure.

The company incurred significant strategic advisory costs in 2022 in relation to

optimization of the Group legal entity and regulatory structure and further

balance sheet review efforts. Please refer to note 35 on subsequent events for

further details.

14.Taxation


TAX EXPENSES	For the year ended 31 December
	2022	2021
Tax recognised in profit or loss	34,904	29,793
Current tax expense	33,402	33,615
Movement deferred tax asset	2,125	(2,343)
Movement deferred tax liability	60	(1,296)
Adjustment for prior years	(684)	(183)
Tax expense excluding share of tax of equity-accounted investees	34,904	29,790

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
	2022	2021
Profit before tax	161,730	144,727
Dutch standard tax rate	25.8%	25.0%
Income tax expected	41,727	36,182
Actual income tax charge	34,904	29,793
In percentage	21.6%	20.6%
Difference in tax expense	(4.2)%	(4.4)%


RECONCILIATION OF EFFECTIVE TAX RATE		For the year ended 31 December
	2022 (€)	2022	2021 (€)	2021
Dutch standard tax rate	41,727	25.8%	36,182	25.0%
Different weighted average statutory rate of group	(1,749)	(1.1%)	(1,896)	(1.3%)
Income (partly) exempted	(10,401)	(6.4%)	(9,387)	(6.5%)
Other non deductible costs	5,327	3.3%	4,894	3.4%
Subtotal	(6,823)	(4.2%)	(6,389)	(4.4%)
Effective tax rate	34,904	21.6%	29,793	20.6%

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 2022
	Statutory tax rate	Effective tax rate
Europe	25.8%	22.7%
Americas	21.0%	16.4%
Asia	16.6%	6.7%
Group	25.8%	21.6%

FLOW TRADERS | ANNUAL REPORT 2022 132


EFFECTIVE TAX RATE PER COUNTRY	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%


CURRENT TAX ASSETS AND LIABILITIES PER REGION	For the year ended 31 December
CURRENT TAX ASSETS AND LIABILITIES PER REGION	2022	2021
Assets
Europe	622	136
Americas	2,036	773
Asia	141	431
Total current tax assets	2,800	1,340

Liabilities
Europe	10,412	635
Americas	99	108
Asia	735	271
Total current tax liabilities	11,246	1,014

Recognized deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:


RECOGNIZED DEFERRED TAX ASSETS AND LIABILITIES	For the year ended 31 December
	2022	2021
Assets
Other liabilities	5,503	7,628

Liabilities
Property and equipment	(500)	(1,177)
Investments fair value through OCI	(1,064)
Other assets	(808)
Unrealized taxable FX result on net investment hedge		(1,256)
Tax loss carry-forwards	—
Net asset/(liability)	3,131	5,195

The deferred tax asset mainly relates to US temporary differences in the

deductibility of the variable compensation instalments.

FLOW TRADERS | ANNUAL REPORT 2022 133

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 2022
	Corporate income tax	Value added tax	Payroll tax	Dividend WHT	Total
Europe	23,824	1,464	58,776	5,255	89,319
Americas	62	9	1,940	—	2,011
Asia	181	36	2	—	219
Total	24,067	1,510	60,717	5,255	91,549


TAXES PAID PER REGION		For the year ended 31 December 2021
	Corporate income tax	Value added tax	Payroll tax	Dividend WHT	Total
Europe	69,249	1,391	53,099	17,410	141,149
Americas	(2,832)	5	1,672	—	(1,155)
Asia	3,059	(1)	405	—	3,463
Total	69,476	1,395	55,176	17,410	143,457

15.Cash and cash equivalents


CASH AND CASH EQUIVALENTS	At 31 December
	2022	2021
Europe	1,837	1,643
Americas	203	1,379
Asia	6,572	1,927
Total cash and cash equivalents	8,612	4,949

Cash and cash equivalents include a bank guarantee of € 0.3 million for office

rent (2021: € 0.3 million). The other cash and cash equivalents are available on

demand.

16.Financial assets held for trading


FINANCIAL ASSETS HELD FOR TRADING	At 31 December
	2022	2021
Long position in equity securities-trading	4,433,651	4,133,510
Long position in debt securities-trading	434,853	357,847
Mark to market derivatives assets	8,085	9,740
Total financial assets held for trading	4,876,590	4,501,097

Financial assets held for trading relate to settled positions and are closely

related to financial 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 standardized amounts on regulated exchanges and are subject to

cash margin requirements. The table above shows the fair values of derivative

financial 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

specified notional amounts, in relation to movements in a specified underlying

index .The Group’s derivative assets and financial liabilities are generally not

offset in the statement of financial 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 17, 25 and 26.

17.Trading receivables


TRADING RECEIVABLES	At 31 December
	2022	2021
Receivables for securities sold	5,466,900	5,940,512
Due from brokers and exchanges	553,610	218,688
Mark to market derivatives assets	1,844	1,037
Total trading receivables	6,022,354	6,160,238

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

FLOW TRADERS | ANNUAL REPORT 2022 134

reporting date and amounts due from brokers and exchanges. Trading

receivables are measured at fair value.

Please also refer to note 16, 25 and 26.

18.Other assets held for trading


OTHER ASSETS HELD FOR TRADING	At 31 December
	2022	2021
Other assets held for trading	58,347	78,122
Total other assets held for trading	58,347	78,122

Per year end the group held other assets with a total value of €58,347.0 million

(2021 €78,122.0 million) which comprises of digital assets.

19.Other receivables


OTHER RECEIVABLES	At 31 December
	2022	2021
Prepayments	9,978	7,692
Dividend withholding tax	1,152	1,042
Security deposits	3,017	1,551
Receivable from employees	977	12
Other receivables	9,583	4,430
Total other receivables	24,708	14,727

For more information, please refer to note 34 for a maturity analysis of other

receivables.

20.Investments measured at fair value through other

comprehensive income


INVESTMENTS MEASURED AT FAIR VALUE THROUGH OCI	At 31 December
	2022	2021
Net book amount 1 January	9,282	3,622
Acquisitions / investments	9,114	2,928
Disposals	(1,622)
Unrealized gains/(losses)	2,563	2,495
Effect of movements in exchange rate	502	237
Total Investments measured at fair value through OCI	19,839	9,282

The investments of the Group in various exchanges, through participations or

“member seats”, and long-term strategic investments in companies active in

the digital assets eco-system are classified as investments measured at fair

value through other comprehensive income. 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.

In 2022 the Group made 12 new investments measured at fair value through

OCI. Investments in Osprey Funds LLC, BloXroute Inc., Membrane, Tonic

Exchange, Ondo Finance, Mariana Labs, Defi Alliances, GoGo Pool, Astaria,

Elwood Technologies, RFQ Hub Holdings and Thalex.

The disposals in 2022 pertains to the sale of our share interest Eris X to CBOE

Global Markets Inc., which was announced on 20 October 2021 and was closed

in May 2022. Flow Traders received proceeds of €1.7 million, resulting in a gain

on disposal of €1.2 million.

The 2022 unrealized gains/(losses) are largely driven by fair value revaluations

for the investment in Blockdaemon LLC and MEMX.

FLOW TRADERS | ANNUAL REPORT 2022 135

21.Investments measured at fair value through profit and

loss


INVESTMENTS MEASURED AT FAIR VALUE THROUGH PROFIT AND LOSS	At 31 December
	2022	2021
Net book amount 1 January	1,716	—
Acquisitions / investments	1,936	1,725
Disposals	(310)
Remeasurement recognized in profit or loss	(1,518)	(44)
Effect of movement in foreign exchange differences	104	35
Total Investments measured at fair value through PL	1,928	1,716

In 2022 the Group made 3 new investments at fair value through profit and

loss. Investments in Kemet, Primary Portal and Crossover markets. The

disposals in 2022 pertain to two equity investments in unlisted digital assets

trusts that listed in 2022. Pursuant these disposals the Group holds one

investment in an unlisted digital assets trust that is planning to list in 2023.

The 2022 unrealized gains/(losses) are largely driven by fair value revaluations

for the investment in the unlisted digital assets trusts The remeasurement

recognized in profit or loss is reported in the other income line.

22.Investments in immaterial associates


INVESTMENTS IN IMMATERIAL ASSOCIATES	At 31 December
	2022	2021
Net book amount 1 January	2,670	176
Investments	3,012	2,427
Cash distribution	(9)	(19)
Impairment	(354)	—
Result from associates	(298)	40
Effect of movement in foreign exchange differences	(63)	46
Total investments in immaterial associates	4,958	2,670

In 2022 the group made an additional investment in Ledger Edge Inc for

€3.0 million, a US incorporated company active in creating an ecosystem for

trading corporate bonds using a DeFi strategy. Post this additional investment

the Group holds a 7% share interest in Ledger Edge Inc and retained its board

seat.

In 2022 the group booked an impairment of €0.4 million pertaining to its

investment in Shape Q B.V., a Dutch company active in the creation of an active

market place for energy and environmental commodities. At year end the

Group's investment in Shape Q B.V. amounted to €0.1 million. In addition the

Group has provided loans in an amount of €0.2 million to Shape Q B.V., which

the Group still expects to fully recover.

In 2022 €0.02 million gain is included related to the fair value remeasurement

of contingent consideration relating to a disposed associate (2021: €0.6 million

gain).

FLOW TRADERS | ANNUAL REPORT 2022 136

23. Property and equipment


PROPERTY AND EQUIPMENT	Hardware	Office fixtures	Office space right- of-use assets	Hardware right- of-use assets	Total
Cost
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)
Exchange rate differences	863	430	1,062	199	2,554
Balance at 31 December 2021	33,911	10,214	23,401	12,586	80,113

Balance at 1 January 2022	33,911	10,214	23,401	12,586	80,113
Additions	3,017	4,426	42,041	3,085	52,570
Disposals	(3,183)	(5,140)	(1,870)	(3,381)	(13,574)
Effect of movements in exchange rates	988	573	1,266	298	3,124
Balance at 31 December 2022	34,734	10,073	64,838	12,588	122,233

Depreciation and impairment losses
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

Balance at 1 January 2022	12,777	6,410	13,277	8,040	40,504
Depreciation for the year	5,617	1,734	5,665	3,419	16,435
Disposals	(3,287)	(3,494)	(1,870)	(4,900)	(13,551)
Exchange rate differences	468	342	619	335	1,764
Balance at 31 December 2022	15,575	4,992	17,691	6,894	45,152

Carrying amounts
At 1 January 2021	21,103	5,417	9,077	5,148	40,746
At 31 December 2021	21,134	3,804	10,124	4,546	39,609
At 31 December 2022	19,159	5,081	47,147	5,694	77,081

Right-of-use assets are disclosed in more detail in note 28 and must be considered along with software right-of-use assets in note 24. Assets that have been fully

depreciated and are considered obsolete are disposed of, the Group does not generate sale proceeds from disposed assets.

FLOW TRADERS | ANNUAL REPORT 2022 137

24.Intangible assets


INTANGIBLE ASSETS IN THOUSANDS OF EURO	Software	Software right-of- use assets	Goodwill	Total
Cost
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

Balance at 1 January 2022	2,257	638	502	3,397
Additions	156	3	—	159
Disposals	(223)	(172)	—	(395)
Exchange rate differences	22	1	—	23
Balance at 31 December 2022	2,212	470	502	3,184

Depreciation and impairment losses
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

Balance at 1 January 2022	754	298	—	1,052
Depreciation for the year	432	110	—	542
Disposals	(220)	(172)	—	(392)
Exchange rate differences	15	—	—	15
Balance at 31 December 2022	981	236	—	1,217

Carrying amounts
At 1 January 2021	546	178	502	1,226
At 31 December 2021	1,503	340	502	2,345
At 31 December 2022	1,231	234	502	1,967

Right-of-use assets are disclosed in more detail in note 28 and must be

considered along with office space and hardware right-of-use assets in note 23.

Assets that have been fully depreciated and are considered obsolete are

disposed of, the Group does not generate sale proceeds from disposed assets.

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 2022 and 2021.

25.Financial liabilities held for trading


FINANCIAL LIABILITIES HELD FOR TRADING	At 31 December
	2022	2021
Short positions in equity securities-trading	2,517,302	1,804,293
Short positions in debt securities- trading	431,195	327,750
Mark to market derivatives liabilities	8,143	6,029
Total financial liabilities held for trading	2,956,640	2,138,072

Please also refer to note 16, 17 and 26.

26.Trading payables


TRADING PAYABLES	At 31 December
	2022	2021
Payables for cash market products	5,694,655	6,113,792
Borrowings	1,629,316	1,854,764
Mark to market derivatives liabilities	2,199	1,415
Total trading payables	7,326,169	7,969,972

Please also refer to note 16, 17 and 25.

Payables for securities bought

FLOW TRADERS | ANNUAL REPORT 2022 138

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.

Borrowings

The Group maintains portfolio financing facilities with its prime brokers to

facilitate the trading activities (i.e. to finance the purchase and settlement of

financial instruments). The drawn amounts on these facilities continuously

fluctuate 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 financing with Bank of America Merrill Lynch (BA ML), Goldman

Sachs, Barclays Bank, Mizrahi-Tefahot Bank. These facilities can be modified or

terminated at any time. The facilities are exclusively for the financing of

positions of the financial 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, for

our Asian operations 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

financial 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 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.

27.Other liabilities held for trading


OTHER LIABILITIES HELD FOR TRADING	At 31 December
	2022	2021
Other liabilities held for trading	32,115	25,771
Total other liabilities held for trading	32,115	25,771

Per year end the group had other liabilities held for trading with a total value of

€32.1 (2021: €25.8 million) comprising of loans denominated in digital

currencies or held with digital asset brokers.

28.Leases

The Group has lease contracts for office space, software and hardware with

lease terms between one and five 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:

FLOW TRADERS | ANNUAL REPORT 2022 139


LEASES	At 31 December 2022
	Right-of-use assets	Lease liabilities
As at 1 January 2022	15,010	16,175
Additions	45,129	43,403
Depreciation expense	(9,194)	—
Disposals	1,518	—
Interest expense	—	589
Payments	—	(9,613)
Exchange rate differences	612	3,546
As of 31 December 2022	53,075	54,100


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

In relation to the Lease Liabilities for an amount of €5.9 million (2021 €4.9

million) there are liens on the Property Plant & Equipment, mainly related to

Hardware Assets For more information, please refer to notes 23 and 24 for

further details of the right-of-use assets.

29.Other liabilities


	At 31 December
	2022	2021
Long-term variable compensation payable	27,782	30,344
Subtotal non-current liabilities	27,782	30,344

Wages and variable compensation payable	62,096	111,051
Wages tax payable	1,400	2,438
Dividend payable	—	—
Creditors and accruals	24,452	18,284
Subtotal current liabilities	87,948	131,773
Total other liabilities	115,730	162,117

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 12

- Employee expenses, note 31 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.

FLOW TRADERS | ANNUAL REPORT 2022 140

30.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
	2022	2021
In issue 1 January	46,534,500	46,534,500
Treasury shares	(3,699,872)	(3,498,134)
Total	42,834,628	43,036,366

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.

On December 2, 2022 the Company increased the issued and paid up share

capital from €4.653.450 to €162.870.750 with 46,534,500 shares with a

nominal value of €3.50 each instead of €0.10 each. The share capital increase

was carried out against the Company share premium account. During the year

the authorized capital of the Company was increased from €10 million to €350

million consisting of 100 million common shares of which 46,534,500 shares are

issued.

Treasury Shares

As at 31 December 2022 Flow Traders Ltd and its subsidiaries hold 3,699,872

(2021: 3,498,134) of ordinary shares (treasury shares). Treasury shares held

by the group are not cancelled and are recognized at cost and deducted from

Equity. 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 equity.

The purchases of treasury shares on the market are intended for hedging of our

employee share plan obligations or for capital management purposes.

We refer to note 7 on the Changes in Presentation for Treasury Shares as per

31 December 2022 as separate category in Shareholders Equity

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 reclassified reducing the Share Based Payment

Reserve and increasing the Share Premium Account. Please also refer to note

12.

Currency translation reserve

The translation reserve comprises all foreign currency differences arising from

the translation of the financial 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 other comprehensive income 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 profit for 2022 (totalling €126.8 million), an amount of € 64.9 million

shall be added to the reserves. The remaining amount of € 61.9 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 €1.50 per

share will be paid out to shareholders for the financial year 2022, subject to a

15% dividend withholding tax. An interim cash dividend of € 0.70 per share was

paid out on 19 August 2022. This means that the final cash dividend proposal to

the General Meeting of 29 April 2023 is € 0.80 per share.

31.Other contingent liabilities

Claims

The group is not involved in any significant and material legal other procedures

and/or claims.

FLOW TRADERS | ANNUAL REPORT 2022 141

Fiscal unity

The Group constitutes a fiscal unity with most of its fully owned Dutch resident

subsidiaries for Dutch corporate income tax purposes. Moreover, Flow Traders

B.V. forms part of a fiscal unity for VAT purposes, covering most of the Dutch

Group. All companies in the fiscal unity are jointly and severally liable for the

tax obligations of the fiscal unity.

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 first, second,

third, fourth and fifth year of the plan. Based on IAS 19, costs related to the

cash incentive may not be recognized until the employee fulfils the service

obligation. Therefore these costs will be recognized in future years in profit and

loss. In 2022 the company recognized €1.8 million of costs relating to this plan

(2021: €2.3 million).

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 five years subject to the condition that the employee remains

employed on the vesting date. The SARS are expenses and recognized in the

financial statements in line with the IFRS 2 Share based payment - cash settled

accounting rules (refer also to note 12 - Employee Expenses).

The contingent liability from these plans are as follows:


	2023	2024	2025	2026	2027	Total
Cash incentive plan 2019	17					17
SARs 2020		375	348	—	—	724
SARs 2021		224	305	153	—	682
SARs 2022		461	597	651	251	1,960
Total	17	1,061	1,250	803	251	3,383

Guarantees

Flow Traders B.V. and Flow Traders US Holding LLC have provided several

guarantees for the obligations of Flow Traders US Institutional Trading LLC to

external counterparties in relation to trading relationships. Obligation under the

guarantees require Flow Traders B.V. and Flow Traders US Holding LLC to fulfil

claims of Flow Traders Institutional Trading LLC once it has not fulfilled one of

its obligations directly related to the trading relationships. These guarantees are

in effect for periods ranging from 1 year to an in definitive term as of the

signing date of the agreement, which can be withdrawn with 1 week notice.

Flow Traders B.V. provided guarantees for the obligations of Flow Traders Asia

(Singapore) for a 1 year period for two prime brokers in relation to trading

relationships.

32.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. In 2022 the Group made a

prepayment of €0.9 million to one of its board members. This prepayment will

be offset against future variable compensation paid to this board member.

Key management employee and Supervisory Board

compensation

Key management employee compensation comprised the Management Board

compensation over 2022 and 2021. Base salaries and variable compensation

paid in cash is short-term in nature.


REMUNERATION MANAGEMENT BOARD AND SUPERVISORY BOARD					2022
		Variable compensation
	Base salary	Cash	Share- based payments	Extra- ordinary	Total
Management Board	499	2,650	2,650	16	5,815
Supervisory Board	620				620

FLOW TRADERS | ANNUAL REPORT 2022 142


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	5,713
Supervisory Board	620				620

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 (financial) help. During 2020 Flow Traders has put in

place the funding to make sure that a significant financial basis has been laid so

that the Foundation has the financial means to make not only an annual but

also a structural impact and meets its purpose.

In 2022 Flow Traders contributed a total value of €0.5 million (2021: €0.6

million) related to the Multiyear right to appoint charities the Foundation

supports as the main shirt sponsor of a Dutch professional football club and

donated €0.4 million of the 2021 cash bonus reserved for employees to the

Foundation. For 2022, €0.5 million of the 2022 variable remuneration pool for

employees was reserved for donation in 2023 (2021: €0.4 million).

In addition, as part of donation agreements between some of the Supervisory

Board members with the Foundation, the Foundation is obligated to invest the

donations received from these members into shares of the Group. In 2022 the

Foundation received a donation of €0.5 million from certain Supervisory Board

members, which it used to purchase 16,626 shares in Flow Traders N.V. against

a share price of €30.07.

In 2021 60,000 shares in Flow Traders N.V. with 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.

Associates

The Group has entered into transactions with associates, reference is made to

note 22.

FLOW TRADERS | ANNUAL REPORT 2022 143

33.Group companies


SUBSIDIARIES
	Country of incorporation	Ownership interest
		2022	2021
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%	100%
Flow Traders Holding B.V	Netherlands	-	100%
Flow Traders Holding LLC	USA	100%	-
Flow Traders U.S. Holding LLC	USA	100%	100%
Flow Traders U.S. LLC	USA	100%	100%
Flow Traders U.S. Institutional Trading LLC	USA	100%	100%
Flow Traders Asia Pte. Ltd.	Singapore	100%	100%
Flow Traders Hong Kong Ltd	Hong Kong	100%	100%
Flow Traders Hong Kong Services Ltd	Hong Kong	100%	100%
Flow Traders UK Services Ltd.	United Kingdom	100%	-
Flow Traders London Ltd.	United Kingdom	100%	-
Flow Traders Technologies SRL	Romania	100%	100%
Flow Traders Investment Ltd.	Jersey	100%	-
Flow Traders S.A.	Luxembourg	100%	-

Other branches

The Group has the following branches:


	Country	Trading Name
London	United Kingdom	Flow Traders B.V. (London Branch)
Paris	France	Flow Traders B.V. (Paris Branch)
Milan	Italy	Flow Traders B.V. (Milan Branch)
Shanghai representative office	China	Flow Traders Hong Kong Ltd (Shanghai)

Significant restrictions

The Group does not have significant restrictions on its ability to access or use its

assets 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.

34.Financial risk management

Overview

The Group is exposed to the following risks arising from financial 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 our liquidity and capital.

Operational risk

Operational risk is the risk of loss resulting from inadequate or failed internal

processes, people and systems or from external events.

FLOW TRADERS | ANNUAL REPORT 2022 144

Our Group Operational Risk framework contributes to raise awareness of these

risks to all our employees and promotes a risk mitigation culture in all our

processes. This includes documenting of procedures and periodically updating of

this documentation.

The risk governance and independence of the Risk team ensures that our 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 financial

loss/profit 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) across the

organisation to update what our main inherent risks are and which could be the

most impactful in order to manage them to be within our risk appetite.

Any breach of risk appetite is escalated to Management. A decision is then

made as to whether we should mitigate, defer or accept the breach. If

mitigation is considered to be the appropriate action, 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 and risk-based manner.

Credit risk

Credit risk is the risk of financial loss to the Group if a counterparty to a

financial 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 financial asset in the statement of

financial position. These amounts significantly 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 creditworthiness 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
	2022	2021
Cash and cash equivalents	8,612	4,949
Trading receivables	6,022,354	6,160,238
Other receivables	24,708	14,727

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 department that provide specific

guidelines, rules and procedures for identifying, measuring and reporting credit

risk.

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.

▪limits to exchanges

Creditworthiness of counterparties is continuously assessed and counterparty

exposures are monitored on an intra-day basis.

Offsetting financial assets and financial liabilities

The disclosures set out in this paragraph include financial assets and financial

liabilities that:

▪are offset in the Group’s statement of financial position; or

▪are subject to an enforceable master netting arrangement or similar

agreement that covers similar financial instruments, irrespective of whether

they are offset in the statement of financial position.

FLOW TRADERS | ANNUAL REPORT 2022 145

The similar agreements include derivative clearing agreements, global master

repurchase agreements, and global master securities lending agreements.

Similar financial 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 financial position.

The ISDA and similar master netting arrangements do not meet the criteria for

offsetting in the statement of financial 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 realise the assets and settle the liabilities simultaneously.

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 17 and 26 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 IFRS 9 are not met in all cases.

FLOW TRADERS | ANNUAL REPORT 2022 146


	At 31 December 2022
	Offsetting recognized on the balance sheet			Netting potential not recognized on the balance sheet		Assets not subject to netting arrangements		Maximum exposure to risk
	Gross assets/ liabilities before offset	offsetting with gross liabilities (IAS 32)	Net positions recognized on the statement of financial position	Netting Potential	Positions after consideration of netting potential	Positions not subject to netting arrangements	Positions recognized in the statement of financial position	After consideration of netting potential
Financial assets
Long positions, cash market products and amounts receivable from clearing agent	12,001,814	(1,102,869)	10,898,945	(10,282,809)	616,136		10,898,945	616,136
Other assets held for trading						58,347	58,347	58,347
Total financial assets	12,001,814	(1,102,869)	10,898,945	(10,282,809)	616,136	58,347	10,957,292	674,483

Financial liabilities
Short positions, cash market products amounts payable to clearing agents, and borrowings	11,385,678	(1,102,869)	10,282,809	(10,282,809)	—		10,282,809	—
Other liabilities held for trading						32,115	32,115	32,115
Total financial liabilities	11,385,678	(1,102,869)	10,282,809	(10,282,809)	—	32,115	10,314,924	32,115

FLOW TRADERS | ANNUAL REPORT 2022 147


	At 31 December 2021
	Offsetting recognized on the balance sheet			Netting potential not recognized on the balance sheet		Assets not subject to netting arrangements		Maximum exposure to risk
	Gross assets/ liabilities before offset	offsetting with gross liabilities (IAS 32)	Net positions recognized on the statement of financial position	Netting Potential	Positions after consideration of netting potential	Positions not subject to netting arrangements	Positions recognized in the statement of financial 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

FLOW TRADERS | ANNUAL REPORT 2022 148

Market risk

The market risk for the Group relates to the risk of the value of a financial

instrument fluctuating because of changes in factors including, but not limited

to, interest rates, volatilities, currency rates, future dividend expectations and

equity prices. The Risk department monitors market risk exposure on a

continuous intraday basis. Based on the limits set per product or the aggregated

risk for the Group, limit breaches will trigger action from the Risk department in

order to reduce the risk back to within our preset limits.

In addition to the Group’s Risk department, the trading positions are also

monitored daily by Operations. The applicable haircut and margins are

computed by the Group’s prime brokers. The Risk department computes the

haircut using internal models enabling intraday 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 financial instruments are

liquid instruments. Therefore, our portfolio can always be liquidated within a

short time frame and with a limited cost impact.

The Group seeks to hedge its trading positions to minimise its risk for adverse

price movements and does not engage in long or short only positions. The

direction of market movements, i.e. what the Group considers directional

market risk taking, is not relevant for the Group because of our market-making

trading strategy. Due to 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.

The overall market risk (including interest rate risk, credit risk, foreign currency

risk and settlement risk) of the financial 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 firms. The consolidated margin and

haircut requirements over 2022 are shown in the Capital management

paragraph. Although the positions are fully hedged, a minimum risk close to

zero remains as a result of inefficiencies 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

fluctuates 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 € 0.1 million

(2021 € 0.4 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 the

Group entities, primarily the Euro, as well as 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 financial

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 profitability of the fair value of financial

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 financial instruments are held for trading purposes 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 floating. The Group

runs a limited risk on the floating interest due to the fact that the interest is

also embedded in the funding and financing 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 other

FLOW TRADERS | ANNUAL REPORT 2022 149

comprehensive income or through profit and loss. 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 defined 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 reflects the different risk

components. The third-party haircut calculation confirms 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 the earlier "Market risk" section.

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the

obligations associated with its financial liabilities that are settled by delivering

cash or another financial asset. The Group’s approach to managing liquidity is to

ensure, as far as possible, that it will always have sufficient liquidity to meet its

liabilities when due, under 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 flows is as

follows:


	At 31 December 2022
	Carrying amount	Contractual cash flow	3 months or less
Payable for securities bought	5,694,655	5,694,655	5,694,655
Borrowings	1,629,316	1,629,316	1,629,316
Mark to market derivatives liabilities	2,199	2,199	2,199
Total trading payables	7,326,169	7,326,169	7,326,169


	At 31 December 2021
	Carrying amount	Contractual cash flow	3 months or less
Payable for securities bought	6,113,792	6,113,792	6,113,792
Borrowings	1,854,764	1,854,764	1,854,764
Mark to market derivatives liabilities	1,415	1,415	1,415
Total trading payables	7,969,972	7,969,972	7,969,972

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.

FLOW TRADERS | ANNUAL REPORT 2022 150

Maturity analysis of financial 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.


Maturity Analysis			At 31 December 2022
	Total	Receivable/ payable on demand	Within 3 months	3 months to 1 year	>1 year
Assets
Cash and cash equivalents	8,612	8,612
Financial assets held for trading	4,876,590	4,876,590		—
Trading receivables	6,022,355	6,022,355
Digital assets held for trading	58,347	58,347
Other receivables	24,707		21,366	1,153	3,392
Investments fair value through OCI	19,839				19,839
Investments fair value through PL	1,928				1,928
Investments in associates	4,958				4,958
Property and equipment	77,081
Intangible assets	1,967
Current tax assets	2,800			2,800
Deferred tax assets	5,503				5,503
Total assets	11,104,687	10,965,904	21,366	3,953	35,620
Liabilities
Financial liabilities held for trading	2,956,640	2,956,640		—
Trading payables	7,326,169	7,326,169
Digital liabilities held for trading	32,115		32,115
Variable compensation payable	84,611		53,584		31,027
Lease liabilities	54,100		1,212	4,085	48,803
Other liabilities	31,119			31,119
Current tax liabilities	11,246			11,246
Deferred tax liabilities	2,372				2,372
Total liabilities	10,498,372	10,282,809	86,911	46,450	82,202

FLOW TRADERS | ANNUAL REPORT 2022 151


Maturity Analysis	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
Lease liabilities	137,476		103,342		34,134
Variable compensation payable	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

FLOW TRADERS | ANNUAL REPORT 2022 152

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 financing, as well

as cash generated from our operating activities. As of 31 December 2022, the

Group held €8.6 million in cash and cash equivalents compared to €4.9 million

as of 31 December 2021. These balances are maintained primarily to support

operating activities, including ensuring that the Group has sufficient 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

significant portfolio financing facilities with the prime brokers in order to

facilitate trading. These facilities are secured by cash and cash equivalents, as

well as all financial assets in accounts held at the respective prime brokers. The

Group has no outstanding borrowings other than the portfolio financing facilities

with prime brokers.

Capital management

Objectives and processes of managing capital

The Company’s policy is to maintain a strong capital base well above the

required margin in order to maintain investor, creditor and market confidence

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 (DNB),

sets and monitors capital requirements for the group as a whole and for the

operating company Flow Traders B.V.. In addition, the activities of our

subsidiaries in the USA and APAC are supervised by their local regulators.

The DNB adopted the IFR/IFD capital requirements as from June 26, 2021. As

part of the IFR/IFD Capital Requirements Flow Traders N.V. is categorized as

Category II Investment Firm and applying K-factor risk model, fixed overhead

costs and minimum capital requirements as the Pillar I requirements. The DNB

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	At 31 December
	2022	2021
Shareholders Equity EU-IFRS	606,315	508,169
Proposed Dividend	(34,266)	(15,442)
Share buy backs proposed and executed after year end	(20,826)	—
Deduction for intangible assets and investments	(13,059)	(10,125)
Available Common Equity Tier 1 Capital	538,164	482,602
Required regulatory capital	274,040	242,640
Excess regulatory capital	264,124	239,962

35.Subsequent events

On 13 January 2023, the group completed the update to its corporate holding

structure. This followed receipt of shareholder approval at an Extraordinary

General Meeting held on 2 December 2022 and fulfilment of all regulatory and

other customary closing conditions. As a result of the update, the group’s top

holding company is now Flow Traders Ltd, The update of the corporate holding

structure enables Flow Traders to become more competitive as a global liquidity

provider, particularly in relation to regulatory capital management. Different

capital requirements will apply following the update of the holding structure

which are expected to expand Flow Traders' strategic growth options.

Furthermore, it will create a more level playing field with global peers with

respect to the regulatory capital framework. Flow Traders’ regulated entities will

continue to be subject to supervision by their respective regulators, however

Flow Traders will no longer be subject to consolidated supervision. Flow Traders

has obtained an unconditional declaration of no objection from the Dutch

Central Bank (DNB) in connection with the update of the corporate holding

structure.

FLOW TRADERS | ANNUAL REPORT 2022 153

As part of the change of its corporate holding structure Flow Traders N.V.

entered into a cross-border legal merger in which (i) all Flow Traders N.V.'s

assets, liabilities, rights, obligations and other legal relationships were acquired

by Flow Traders S.A. incorporated under the laws of Luxembourg, (ii) Flow

Traders N.V. ceased to exist and (iii) each Shareholder received one Flow

Traders S.A. share for each Flow Traders N.V. Share. Following this merger Flow

Traders S.A. converted into a Bermuda Limited company and changed its

registered address to Bermuda.

As Flow Traders N.V. and Flow Traders S.A. are under common control at the

time they entered into the cross-border legal merger, IFRS 3 Business

Combinations is not applicable. A predecessor value method is instead used to

determine the carrying value of all assets and liabilities that transfer as part of

the merger. As at the 13th of January 2023 the assets and liabilities of Flow

Traders N.V. are consolidated in the financial statements of Flow Traders S.A. at

their carrying amount on this date, in accordance with the predecessor value

method.

Following the completion of the update our corporate holding structure on 13

January 2023, group consolidated capital requirements are no longer applicable.

Accordingly, CET1 and the Own Funds Requirement will no longer exist at the

group level. Our regulated subsidiaries will continue to hold regulatory capital as

required by their respective individual regulators. This will be reflected in the

regulatory capital reporting going forward.

Flow Traders Limited (referred to as the “Company”) is an exempted company

limited by shares registered under the Company Act 1981 of Bermuda, as

amended (the “Companies Act”). Flow Traders Ltd was incorporated on 13

January 2023 with its registered office at Canon's Court, 22 Victoria Street, PO

Box HM 179 , Hamilton HM EX Bermuda. The principal place of business for the

Company is located at Jacob Bontiusplaats 9, 1018 LL Amsterdam, the

Netherlands. Flow Traders Ltd is registered with the Dutch Trade Register of the

Chamber of Commerce under number 88926257 as a company formally

registered abroad (“formeel buitenlandse kapitaalvennootschap”) as this term is

referred to in the Dutch Companies Formally Registered Abroad Act (“Wet op

de formeel buitenlandse vennootschappen”), which means we are deemed a

Dutch resident company for corporate reporting purposes in accordance with

applicable Dutch laws.

36. Authorization of consolidated financial statements

Amsterdam, 23 February 2023


Executive Directors			Non-Executive Directors
▪Mike Kuehnel (Chief Executive Officer)			▪Rudolf Ferscha (Chairman)
▪Folkert Joling (Chief Trading Officer)			▪Jan van Kuijk
			▪Olivier Bisserier
			▪Roger Hodenius
			▪Linda Hovius

FLOW TRADERS | ANNUAL REPORT 2022 154


PARENT COMPANY BALANCE SHEET (BEFORE RESULT APPROPRIATION) IN THOUSANDS OF EURO			As at 31 December

	Note	2022	2021
Assets
Investments in group companies	1	574,564	549,979
Total non-current assets		574,564	549,979
Receivables to related parties	2	54,663	47,826
Other receivables		880	939
Current tax assets		—	36
Cash and cash equivalents		591	15
Total current assets		56,134	48,816
Total assets		630,698	598,795

Liabilities
Liabilities to related parties	3	881	74,120
Other liabilities	5	12,485	16,239
Current tax liabilities	4	10,288	267
Total current liabilities		23,654	90,626
Deferred tax liabilities		729	—
Total non-current liabilities		729	—
Total liabilities		24,383	90,626

Equity
Share capital	6	162,871	4,653
Share premium	6	2,372	161,974
Fair value reserve	6	2,040	1,249
Currency translation reserve	6	24,899	15,510
Retained earnings	6	364,598	308,520
Treasury shares	6	(103,536)	(105,644)
Share based payment reserve	6	56,865	50,523
Results for the year	6	96,206	71,384
Total Equity before result appropriation		606,315	508,169

Total equity and liabilities		630,698	598,795

FLOW TRADERS | ANNUAL REPORT 2022 155


PARENT COMPANY INCOME STATEMENT IN THOUSANDS OF EURO		For the year ended 31 December
	Note	2022	2021
Personnel expenses	7	6,331	6,494
Other expenses	8	14,977	756
Operating expenses		21,308	7,250

Operating result		(21,308)	(7,250)

Result/(impairment) of equity-accounted investees	9	21	559
Profit before tax		(21,287)	(6,691)
Tax expense	10	(3,708)	(726)
Share in result from participating interests, after taxation		144,406	120,899
Profit for the year		126,827	114,934

FLOW TRADERS | ANNUAL REPORT 2022 156

Notes to the parent company financial 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 financial

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 financial

statements are the same as those applied for the consolidated IFRS -EU financial

statements. Participating interests over which the Company has significant

influence, 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 profit 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.

Restatement of prior period error

For the 31 December 2021 company balance sheet we presented an amount of

€33.8 million in relation to the the intercompany receivable of the treasury

shares towards group entities as both a receivable from group companies as well

as company shareholders equity of Flow Traders N.V.. In addition a gain on the

intercompany receivable of €0.7 million was reported in the profit and loss. For

the consolidated financial statements the amount of treasury shares are deducted

from shareholders equity. Transactions and/or balance sheet positions between

the parent company and its consolidated participation in which there is a 100%

interest do not lead to differences between the equity according to the separate

financial statements and the equity according to the consolidated financial

statements. The effects of intragroup transactions and/or balance sheet positions

are eliminated, with the eliminations applied in the consolidated financial

statements being the starting point for the eliminations in the separate financial

statements. Considering this €33.8 million was eliminated in the company

balance sheet from both the receivables from group companies and the equity

share premium account as per 31 December 2021. In addition the gain of €0.7

million on the intercompany receivable was eliminated.

1.Investments in group companies


	At 31 December
	2022	2021
Investments in group companies	574,564	549,979
Total investments in group companies	574,564	549,979

The movements of the investments in Group companies is as follows:


	At 31 December
	2022	2021
Balance at 1 January	549,979	617,402
Changes:
▪exchange rate differences	9,389	9,434
▪revaluation reserve	791	2,244
▪share in result of investments	144,406	120,899
▪dividend declared	(130,000)	(200,000)
Balance at 31 December	574,564	549,979

2.Receivables to related parties


	At 31 December
	2022	2021
Share based payment receivable subsidiaries	53,995	47,826
Receivables from employees	668
Balance at 31 December	54,663	47,826

Per 31 December 2022, the parent Company had mainly share based payment

receivables towards Flow Traders B.V. for € 32.9 million (2021: € 29.0 million),

Flow Traders US LLC € 12.7 million (2021: € 11.4 million) and Flow Traders Hong

Kong Services Ltd for € 5.5 million (2021: € 5.1 million).

FLOW TRADERS | ANNUAL REPORT 2022 157

3.Liabilities to related parties


	At 31 December
	2022	2021
Intercompany loans from group companies	881	74,120
Balance at 31 December	881	74,120

The liabilities to group companies pertain mainly to an intercompany loan from

Flow Traders Holding LLC of € 0.9 million (2021: € 74.1 million).

4.Current tax liabilities


	At 31 December
	2022	2021
Corporate income tax	10,288	267
Total current tax liabilities	10,288	267

5.Other liabilities


	At 31 December
	2022	2021
Long term bonus payable	6,947	6,429
Subtotal non-current liabilities	6,947	6,429

Wages and bonuses payables	4,474	9,547
Wages tax payable	33	63
Other current liabilities	1,031	200
Subtotal current liabilities	5,538	9,810
Total other liabilities	12,485	16,239

FLOW TRADERS | ANNUAL REPORT 2022 158

6.Equity


STATEMENT OF CHANGES IN EQUITY IN THOUSANDS OF EURO									2022
	Share capital	Share premium	Treasury Shares	Share based payment reserve	Currency translation reserve	Fair value reserve	Retained earnings	Net Profit / (loss)	Total
Balance at 1 January 2022	4,653	161,974	(105,644)	50,523	15,510	1,249	308,520	71,384	508,169
Profit								126,827	126,827
Total other comprehensive income					9,389	791			10,180
Total comprehensive income for the period	—	—	—	—	9,389	791	—	126,827	137,007

Transactions with owners of the Company
Conversion of share premium to share capital	158,218	(158,218)							—
Transfer to retained earnings							71,384	(71,384)	—
Dividends							(15,306)	(30,621)	(45,927)
Repurchase of shares		—	(15,046)						(15,046)
Share based payments		(1,384)	17,154	6,342					22,112
Total transactions with owners of the company	158,218	(159,602)	2,108	6,342	—	—	56,078	(102,005)	(38,861)
Balance at 31 December 2022	162,871	2,372	(103,536)	56,865	24,899	2,040	364,598	96,206	606,315

It is proposed to the General Meeting that a total cash dividend of €1.50 per share will be paid out to shareholders for the financial year 2022, subject to a 15%

dividend withholding tax. An interim cash dividend of € 0.70 per share was paid out on 19 August 2022. This means that the final cash dividend proposal to the General

Meeting of 29 April 2023 is € 0.80 per share.

FLOW TRADERS | ANNUAL REPORT 2022 159


STATEMENT OF CHANGES IN EQUITY IN THOUSANDS OF EURO									2021
	Share capital	Share premium	Treasury Shares	Share based payment reserve	Currency translation reserve	Fair value reserve	Retained earnings	Net Profit / (loss)	Total
Balance at 1 January 2021	4,653	162,234	(45,188)	45,821	6,076	(995)	(47,176)	464,513	589,938
Profit								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
Conversion of share premium to share capital									—
Transfer to retained earnings							464,513	(464,513)	—
Dividends							(108,817)	(43,550)	(152,367)
Repurchase of shares		—	(74,100)						(74,100)
Share based payments		(260)	13,644	4,702					18,086
Total transactions with owners of the company	—	(260)	(60,456)	4,702	—	—	355,696	(508,063)	(208,381)
Balance at 31 December 2021	4,653	161,974	(105,644)	50,523	15,510	1,249	308,520	71,384	508,169

FLOW TRADERS | ANNUAL REPORT 2022 160

7.Employee expenses


	For the year ended 31 December
	2022	2021
Wages and salaries	1,119	1,015
Social security charges	58	51
Recruitment and other employment costs	58	29
Variable compensation paid in cash and shares	5,096	5,399
Total employee expenses	6,331	6,494

8.Other expenses


	For the year ended 31 December
	2022	2021
Advisors and assurance	14,494	266
Regulatory costs	56	81
Shareholder meeting costs	178	114
Various expenses	249	295
Other expenses	14,977	756

9.Result of equity-accounted investments

For more information, refer to note 22 investments in associates in the

consolidated financial statements.

10.Taxation


TAX EXPENSES	For the year ended 31 December
	2022	2021
Tax recognised in profit or loss	(3,708)	(726)
Current tax expense	(4,437)	(842)
Movement deferred tax asset	—	—
Movement deferred tax liability	729	—
Adjustment for prior years	—	116
Tax expense	(3,708)	(726)


RECONCILIATION OF EFFECTIVE TAX RATE	For the year ended 31 December
	2022	2021
Profit before tax	(21,287)	(6,691)
Dutch standard tax rate	25.8%	25.0%
Income tax expected	(5,492)	(1,673)
Actual income tax charge	(3,708)	(726)
In percentage	17%	11%
Difference in tax expense	(8%)	(14%)

The effective tax rate differs from the (nominal) statutory tax rate. This

difference is mainly caused by applying the Dutch innovation box regime and by

non-deductible share plan costs.

11.Other contingent liabilities

Fiscal unity

The parent Company forms part of the Group fiscal unity for corporate income

tax purposes. All companies in the fiscal unity are jointly and severally liable for

the tax obligations of the fiscal unity. The parent Company’s tax assets or

liabilities face the tax authorities on behalf of the fiscal unity.

Cash incentive provided to employees

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 five years subject to the condition that the employee remains

employed on the vesting date. The SARS are expenses and recognized in the

financial statements in line with the IFRS 2 Share based payment - cash settled

accounting rules (refer also to note 12 - Employee Expenses).

The contingent liability from these plans are as follows:


	2023	2024	2025	2026	2027	Total
SARs 2020		236	348	—	—	584
SARs 2021		90	129	153	—	372
SARs 2022		123	194	230	251	798
Total	—	449	672	382	251	1,753

FLOW TRADERS | ANNUAL REPORT 2022 161

Claims

The Company is not involved in any significant legal procedures and/or claims.

There are no other contingent liabilities.

12.Related parties

For more information, refer to note 32 Related parties in the consolidated

financial statements.

13.Profit appropriation

For more information, refer to note 9 Earnings per share and note 30 Equity in

the consolidated financial statements.

14.Auditor fees

With reference to Section 2:382a (1) and (2) of the Netherlands Civil Code, the

following fees for the financial year have been charged by Ernst & Young

Accountants LLP and its member firms and affiliates to the Group, its subsidiaries

and other consolidated entities, which did not include tax advice:


FEES OF THE AUDITOR			2022
	Ernst & Young Accountants LLP	Other EY member firms and affiliates	Total EY
Statutory audit of annual accounts	382	78	459
Other assurance services	28	16	43
Other non audit services	49		49
Total auditor fees	458	94	552


FEES OF THE AUDITOR			2021
	Ernst & Young Accountants LLP	Other EY member firms and affiliates	Total EY
Statutory audit of annual accounts	302	76	378
Other assurance services	156	6	162
Total auditor fees	458	82	539

15.Subsequent events

For more information, refer to note 35 subsequent events in the consolidated

financial statements.

FLOW TRADERS | ANNUAL REPORT 2022 162

16.Authorization of company financial statements

Amsterdam, 23 February 2023


Executive Directors			Non-Executive Directors
▪Mike Kuehnel (Chief Executive Officer)			▪Rudolf Ferscha (Chairman)
▪Folkert Joling (Chief Trading Officer)			▪Jan van Kuijk
			▪Olivier Bisserier
			▪Roger Hodenius
			▪Linda Hovius

FLOW TRADERS | ANNUAL REPORT 2022 163


	Other information

FLOW TRADERS | ANNUAL REPORT 2022 164

Provisions in the Articles of

Association governing the

appropriation of profit:

The provisions in the Byelaws governing the

appropriation of profit read as follows:

Dividends and other payments

1.Dividends and Distributions. Subject to these

Bye-laws, the Board may from time to time

declare dividends or distributions out of

contributed surplus to be paid to the

Shareholders according to their rights and

interests, including such interim dividends as

appear to the Board to be justified by the

position of the Company. The Board, in its

discretion, may determine that any dividend shall

be paid in cash or shall be satisfied, subject to

Bye -Laws 5.2, 35.1 and 35.2, in paying up in full

shares in the Company to be issued to the

Shareholders credited as fully paid or partly paid

or partly in one way and partly the other. The

Board may also pay any fixed cash dividend

which is payable on any shares of the Company

half yearly or on such other dates, whenever the

position of the Company, in the opinion of the

Board, justifies such payment. In making any

determination regarding the declaration of a

dividend or distribution out of contributed

surplus, the Board must, in addition to any other

obligations or duties under the Companies Acts

or these Bye-Laws, consider the Stakeholder

Interests.

2.Implementation. Except insofar as the rights

attaching to, or the terms of issue of, any share

otherwise provide: (a) all dividends or

distributions out of contributed surplus may be

declared and paid according to the amounts paid

up on the shares in respect of which the dividend

or distribution is paid, and an amount paid up on

a share in advance of calls may be treated for the

purpose of this Bye-Law as paid-up on the share;

(b) dividends or distributions out of contributed

surplus may be apportioned and paid pro rata

according to the amounts paid-up on the shares

during any portion or portions of the period in

respect of which the dividend or distribution is

paid.

3.Deductions. The Board may deduct from any

dividend, distribution or other monies payable to

a Shareholder by the Company on or in respect

of any shares all sums of money (if any)

presently payable by him to the Company on

account of calls or otherwise in respect of shares

of the Company.

4.No Interest. No dividend, distribution or other

monies payable by the Company on or in respect

of any share shall bear interest against the

Company.

5.Method of Payment. (a) Subject to Bye-Law

33.5(b), any dividend, distribution or interest, or

part thereof payable in cash, or any other sum

payable in cash to the holder of shares may be

paid by cheque or warrant sent through the post

or by courier addressed to the holder at their

address in the Register or, in the case of joint

holders, addressed to the holder whose name

stands first in the Register in respect of the

shares at their registered address as appearing in

the Register or addressed to such person at such

address as the holder or joint holders may in

writing direct. Every such cheque or warrant

shall, unless the holder or joint holders otherwise

direct, be made payable to the order of the

holder or, in the case of joint holders, to the

order of the holder whose name stands first in

the Register in respect of such shares, and shall

be sent at their or their risk and payment of the

cheque or warrant by the bank on which it is

drawn shall constitute a good discharge to the

Company. Any one of two (2) or more joint

holders may give effectual receipts for any

dividends, distributions or other monies payable

or property distributable in respect of the shares

held by such joint holders. (b) All dividends,

distributions or interests in respect of shares held

by a securities depositary, including Euroclear

Nederland, shall be paid by placing those

dividends, distributions or interest at the disposal

of such securities depositary, subject to and in

accordance with the regulations of such securities

depositary.

6.Unclaimed Amounts. Any dividend or distribution

out of contributed surplus unclaimed for a period

of five (5) years from the date of declaration of

such dividend or distribution shall be forfeited

and shall revert to the Company and the

payment by the Board of any unclaimed

dividend, distribution, interest or other sum

FLOW TRADERS | ANNUAL REPORT 2022 165

payable on or in respect of the share into a

separate account shall not constitute the

Company a trustee in respect thereof.

7.In-Kind Satisfaction. The Board may also, in

addition to its other powers, direct payment or

satisfaction of any dividend or distribution out of

contributed surplus wholly or in part by the

distribution of specific assets, and in particular of

paid-up shares or debentures of any other

company, and where any difficulty arises in

regard to such distribution or dividend, the Board

may settle it as it thinks expedient, and in

particular, may authorise any person to sell and

transfer any fractions or may ignore fractions

altogether, and may fix the value for distribution

or dividend purposes of any such specific assets

and may determine that cash payments shall be

made to any Shareholders upon the footing of

the values so fixed in order to secure equality of

distribution and may vest any such specific

assets in trustees as may seem expedient to the

Board, provided that such dividend or distribution

may not be satisfied by the distribution of any

partly paid shares or debentures of any company

without the sanction of a Resolution.

Reserves

8.Reserves. The Board may before declaring any

dividend or distribution out of contributed

surplus, set aside such sums as it thinks proper

as reserves which shall, at the discretion of the

Board, be applicable for any purpose of the

Company and pending such application may, also

at such discretion, either be employed in the

business of the Company or be invested in such

investments as the Board may from time to time

think fit. The Board may also without placing the

same to reserve carry forward any sums which it

may think it prudent not to distribute.

Capitalisation of profits

9.Capitalisation. The Board may from time to time

resolve to capitalise all or any part of any amount

for the time being standing to the credit of any

reserve or fund which is available for distribution

or to the credit of any share premium account

and accordingly that such amount be set free for

distribution amongst the Shareholders or any

class of Shareholders who would be entitled

thereto if distributed by way of dividend and in

the same proportions, on the footing that the

same be not paid in cash but be applied either in

or towards paying up amounts for the time being

unpaid on any shares in the Company held by

such Shareholders respectively or in payment up

in full of unissued shares, debentures or other

obligations of the Company, to be allotted and

distributed credited as fully paid amongst such

Shareholders, or partly in one way and partly in

the other, provided that for the purpose of this

ByeLaw, a share premium account may be

applied only in paying up of unissued shares to

be issued to such Shareholders credited as fully

paid.

FLOW TRADERS | ANNUAL REPORT 2022 166

Independent auditor’s report

To: the shareholders and the board of Flow Traders Ltd, as successor of Flow

Traders N.V.

Report on the audit of the financial statements 2022

included in the annual report

Our opinion

We have audited the financial statements 2022 of Flow Traders N.V. (hereinafter

also referred to as the company of Flow Traders). The financial statements

comprise the consolidated and parent company financial statements. Flow

Traders N.V. ceased to exist on 13 January 2023 with Flow Traders Ltd.,

registered in Bermuda, being the legal successor of Flow Traders N.V.

In our opinion:

▪the accompanying consolidated financial statements give a true and fair view

of the financial position of Flow Traders N.V. as at 31 December 2022 and of

its result and its cash flows for 2022 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 parent company financial statements give a true and fair

view of the financial position of Flow Traders N.V. as at 31 December 2022

and of its result for 2022 in accordance with Part 9 of Book 2 of the Dutch

Civil Code

The consolidated financial statements comprise:

▪the consolidated statement of financial position as at 31 December 2022

▪the following statements for 2022: the consolidated statement of profit or loss

and other comprehensive income, the consolidated statements of changes in

equity and cash flows

▪the notes comprising a summary of the significant accounting policies and

other explanatory information.

The parent company financial statements comprise:

▪the parent company balance sheet as at 31 December 2022

▪the parent company income statement for 2022

▪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 financial statements

section of our report.

We are independent of Flow Traders Ltd as successor of Flow Traders N.V. in

accordance with the EU Regulation on specific requirements regarding statutory

audit of public-interest entities, the “Wet toezicht accountantsorganisaties” (Wta,

Audit firms 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 beroepsregels accountants” (VGBA, Dutch Code of

Ethics).

We believe the audit evidence we have obtained is sufficient 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 financial

statements as a whole and in forming our opinion thereon. The following

information in support of our opinion and any findings 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 is a global financial technology-enabled multi-asset class liquidity

provider with its core business in Exchange Traded Products, which includes fixed

income, currencies, digital assets and commodities. Flow Traders N.V. is

structured in components and we tailored our group audit approach accordingly.

We paid specific attention in our audit to a number of areas driven by the nature

of the group and our risk assessment.

We determined materiality and identified and assessed the risks of material

misstatement of the financial statements, whether due to fraud or error in order

to design audit procedures responsive to those risks and to obtain audit evidence

that is sufficient and appropriate to provide a basis for our opinion.

FLOW TRADERS | ANNUAL REPORT 2022 167


Materiality
Materiality	€ 8 million (2021: €7.3 million)
Benchmark applied	5% of profit before tax (rounded)
Explanation	We applied profit before tax as this benchmark is an important metric for the users of the consolidated financial statements. We determined materiality consistently with the previous financial year.

We have also taken into account misstatements and/or possible misstatements

that in our opinion are material for the users of the financial statements for

qualitative reasons.

We agreed with the audit committee of the Board (hereinafter: the Audit

Committee) that misstatements in excess of € 0,4 million, which are identified

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 is at the head of a group of entities. The financial information of this

group is included in the consolidated financial 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 profile 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 financial information or

specific items.

Our group audit mainly focused on significant group entities, Flow Traders N.V.

(parent company), Flow Traders B.V. and Flow Traders U.S. LLC, based on the

relative financial size of and risks related to these components. We have:

▪Performed audit procedures ourselves at group entities Flow Traders N.V., and

Flow Traders B.V.

▪Used the work of another (non-EY) auditor when auditing the group entity

Flow Traders U.S. LLC

▪Used the work of other EY member firms and another (non-EY) auditor to

perform specific audit procedures at other group entities and account

balances.

By performing the procedures mentioned above at components of the group,

together with additional procedures at group level, we have been able to obtain

sufficient and appropriate audit evidence about the group’s financial information

to provide an opinion on the consolidated financial statements.

Teaming and 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 financial markets. We included

specialists in the areas of IT audit, forensics, sustainability, tax, transfer pricing,

and have made use of our own actuaries and experts in the area of auditing

digital assets.

Our focus on climate-related risks and the energy transition

The Board summarized Flow Traders’ ESG (environmental, social and

governance) focus areas, and reported in the section ‘Our performance’ of the

management report how the company is addressing climate-related and

environmental risks also taking into account related regulatory and supervisory

guidance and recommendations.

As part of our audit of the financial statements, we evaluated the extent to which

climate-related risks and the effects of the energy transition are taken into

account in estimates and significant assumptions.We read the management

report and considered whether there is any material inconsistency between the

non-financial information in section ‘Our performance’ and the financial

statements.

Based on the audit procedures performed, we do not deem climate-related risks

to have a material impact on the financial reporting estimates or significant

assumptions as at 31 December 2022.

FLOW TRADERS | ANNUAL REPORT 2022 168

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 financial statements,

taken as a whole, are free from material misstatement, whether caused by fraud

or error. 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.

Our audit response related to fraud risks

We identified and assessed the risks of material misstatements of the financial

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 the Board’s process for

responding to the risks of fraud and monitoring the system of internal control and

how the Risk Committee exercises oversight, as well as the outcomes. We refer

to section ‘Enterprise risk management’ of the 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 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 financial 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 incorporated elements of unpredictability in our audit. We also considered the

outcome of our other audit procedures and evaluated whether any findings were

indicative of fraud or non-compliance.

As in all of our audits, we addressed the risks related to management override of

controls. For these risks 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 significant accounting estimates, in particular relating to fair

value measurement as disclosed in Note 8 to the financial statements. We

describe the audit procedures responsive to this risk in the description of of our

audit approach for the key audit matter ‘Fair value measurement of financial

assets and liabilities held for trading’. We have also used data analysis to identify

and address high-risk journal entries and evaluated the business rationale (or the

lack thereof) of significant extraordinary transactions. These risks did however

not require significant auditor’s attention.

We considered available information and made enquiries of relevant directors,

officers, internal audit, legal, compliance, human resources, risk management

and regional directors and the Audit Committee.

The fraud risks we identified, enquiries and other available information did not

lead to specific indications for fraud or suspected fraud potentially materially

impacting the view of the financial statements.

Our audit response related to risks of non-compliance with laws and

regulations

We performed appropriate audit procedures regarding compliance with the

provisions of those laws and regulations that have a direct effect on the

determination of material amounts and disclosures in the financial statements.

Furthermore, 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 financial statements from our general industry experience, through

discussions with the 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 operated in a regulated environment, there is an

increased risk of non-compliance with laws and regulations that may result in

fines, litigation or other consequences for the company that could have a material

effect on the financial statements, as discussed in the ‘Our risk management’

section of the Board report.

We inspected lawyers’ letters and correspondence with regulatory authorities and

remained alert to any indication of (suspected) non-compliance throughout the

audit. Finally we obtained written representations that all known instances of

non-compliance with laws and regulations have been disclosed to us.

FLOW TRADERS | ANNUAL REPORT 2022 169

Our audit response related to going concern

As disclosed in section ‘2. Going concern’ in the notes to the financial statements,

the financial statements have been prepared on a going concern basis. When

preparing the financial statements, the Board made a specific assessment of the

ability of (the successor of) the company to continue as a going concern and to

continue its operations for the foreseeable future.

We discussed and evaluated the specific assessment with the Board exercising

professional judgment and maintaining professional scepticism. We considered

whether the Board’s going concern assessment, based on our knowledge and

understanding obtained through our audit of the financial statements or

otherwise, contains all relevant events or conditions that may cast significant

doubt on the ability of (the successor of) the company to continue as a going

concern, and considered whether the update in corporate holding structure

impacted the continuation of the company’s operations. 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 financial statements or, if such disclosures

are inadequate, to modify our opinion.

Based on our procedures performed, we did not identify material uncertainties

about going concern. 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.

Our key audit matters

Key audit matters are those matters that, in our professional judgment, were of

most significance in our audit of the financial statements. We have communicated

the key audit matters to the audit committee. The key audit matters are not a

comprehensive reflection of all matters discussed.

Following the update in the corporate structure of Flow Traders, a new key audit

matter has been defined.

FLOW TRADERS | ANNUAL REPORT 2022 170


Risk	Our audit approach	Key observations
Update in corporate holding structure
On 13 January 2023, Flow Traders N.V. changed its corporate holding structure after shareholders’ approval. Following this updated structure, Flow Traders N.V. merged with Flow Traders S.A. where all of Flow Traders N.V.'s assets, liabilities, rights, obligations and other legal relationships were acquired by Flow Traders S.A. incorporated under the laws of Luxembourg. Subsequently, Flow Traders N.V. ceased to exist and each shareholder received one Flow Traders S.A. Share for each Flow Traders N.V. Share. Flow Traders S.A. was subsequently redomiciled and converted to Flow Traders Ltd., an exempted company limited by shares registered in Bermuda. For legal and tax purposes, Flow Traders Ltd inherited all rights and obligations of Flow Traders N.V. This is disclosed on note 35 of the financial statements. This event took place subsequent to the reporting date, but has a significant impact on subsequent events and other disclosures given both the impact on the company’s governance and regulatory regime and the non-routine character of this transaction. An adequate disclosure on the consequences of the updated corporate holding structure is considered significant to the 2022 financial statements of the company. Due to the matters described, we considered the update in the corporate holding structure and required disclosures to be a key audit matter.	We periodically met with the Board members (executive and non-executive) to understand the planning and progress of the updated corporate structure. We obtained an understanding of the organizational controls and the legal and regulatory framework. On a periodic basis, we inquired with the Compliance and Legal department of Flow Traders to understand and discuss impact on laws and regulations, governance and financial reporting. We examined the relevant internal reports, minutes of management and board meetings, as well as regulatory and legal correspondence to assess developments and we performed follow-up procedures to examine the company’s assessment of the impact on the financial statements and the adequacy of related disclosures. We obtained legal letters from external counsel and, where appropriate, involved our own legal and compliance specialists. Finally, we evaluated the completeness and accuracy of the disclosures related to the update in the corporate structure and whether these disclosures comply with EU-IFRS requirements.	Based on our procedures performed, we deem the disclosures on the updated corporate structure to be reasonable and in compliance with EU-IFRS.

FLOW TRADERS | ANNUAL REPORT 2022 171


Risk	Our audit approach	Key observations
Fair value measurement of financial assets and liabilities held for trading
As disclosed in note 8 of the financial statements, Flow Traders’ fair value measurement of financial 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, 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 and directly impact the gross trading income. We considered the risk of fraudulent adjustments in fair valuation. Therefore, we identified the valuation of financial 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 financial 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 verifications done by the Risk and Operations 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 financial statements for compliance and consistency with IFRS 7 “Financial Instruments: Disclosure” and IFRS 13 on disclosure requirements for financial assets and liabilities held for trading, including the fair value hierarchy.	Based on our procedures performed, we consider the fair value of the financial 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.

FLOW TRADERS | ANNUAL REPORT 2022 172


Risk	Our audit approach	Key observations
Digital asset and liabilities balances and related income/expenses
Risk Flow Traders trades in cryptographically secured digital assets (‘cryptocurrencies’) as disclosed in note 18 to the financial statements. The digital assets positions are presented as other assets held for trading and results are presented as part of the gross trading income. Flow Traders also obtains loans in digital assets from digital asset exchanges and other loan providers as disclosed in note 27 to the financial statements, which are presented as other liabilities held for trading. Digital assets 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 digital asset exchanges. Reference is made to the information on digital assets in note 34 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 digital asset positions. In addition, we recognized a risk of incorrect valuation of digital assets, given the high volatility and large number of different exchanges. We, therefore, considered the existence and valuation of digital asset and liability positions and the related income or expenses as a key audit matter.	Our audit procedures included, amongst others, assessing the appropriateness of Flow Traders’ accounting policies related to the classification and measurement of the digital assets and liabilities under EU-IFRS. We evaluated the design and implementation of controls related to digital asset assets and liabilities by Flow Traders, including reviews performed by the Risk and Operations and the Compliance departments in onboarding exchanges as well as trading in certain digital assets, involving our own experts in the area of digital assets. Furthermore, we evaluated the design and implementation of the daily trades reconciliation controls and procedures for deposits and withdrawals with cryptocurrency 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 2022. In relation to the digital liabilities, we have obtained executed loan documentation and tested interest payments and redemption payments.	Based on the procedures performed, we did not identify any material audit findings in relation to the existence or carrying values of the digital assets and liabilities.

FLOW TRADERS | ANNUAL REPORT 2022 173

Report on other information included in the annual

report

The annual report contains other information in addition to the financial

statements and our auditor’s report thereon.

Based on the following procedures performed, we conclude that the other

information:

▪is consistent with the financial statements and does not contain material

misstatements

▪contains the information as required by Part 9 of Book 2 of the Dutch Civil

Code 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.

We have read the other information. Based on our knowledge and understanding

obtained through our audit of the financial 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 substantially less than

the scope of those performed in our audit of the financial statements.

The 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 Board is 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 the 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.

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 specific 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 specification 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 financial statements, as included in the

reporting package by the company, complies in all material respects with the RTS

on ESEF.

The Board is responsible for preparing the annual report, including the financial

statements, in accordance with the RTS on ESEF, whereby the 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.

We performed our examination in accordance with Dutch law, including Dutch

Standard 3950N ’Assurance-opdrachten inzake het voldoen aan de criteria voor

het opstellen van een digitaal verantwoordingsdocument’ (assurance

engagements relating to compliance with criteria for digital reporting). Our

examination included amongst others:

▪obtaining an understanding of the company’s financial reporting process,

including the preparation of the reporting package

▪identifying and assessing the risks that the annual report does not comply in

all material respects with the RTS on ESEF and designing and performing

further assurance procedures responsive to those risks to provide a basis for

our opinion, including obtaining the reporting package and performing

validations to determine whether the reporting package containing the Inline

XBRL instance document and the XBRL extension taxonomy files, has been

prepared in accordance with the technical specifications as included in the RTS

on ESEF examining the information related to the consolidated financial

FLOW TRADERS | ANNUAL REPORT 2022 174

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.

Description of responsibilities for the financial

statements

Responsibilities of the management board and the

supervisory board for the financial statements

The Board is responsible for the preparation and fair presentation of the financial

statements in accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil

Code. Furthermore, the Board is responsible for such internal control as the

Board determines is necessary to enable the preparation of the financial

statements that are free from material misstatement, whether due to fraud or

error.

As part of the preparation of the financial statements, the Board is responsible for

assessing the ability of (the successor) of the company to continue as a going

concern. Based on the financial reporting framework mentioned, the Board

should prepare the financial statements using the going concern basis of

accounting unless the Board either intends to liquidate the company or to cease

operations, or has no realistic alternative but to do so. The Board should disclose

events and circumstances that may cast significant doubt on the ability of (the

successor of) the company to continue as a going concern in the financial

statements.

The Audit Committee undertakes preparatory work for the Board’s decision-

making regarding the supervision of the integrity and quality of the company’s

financial reporting. Working within the Board, the Audit Committee is charged in

particular with the supervision with respect to the provision of financial

information by the company.

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 sufficient 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 influence

the economic decisions of users taken on the basis of these financial statements.

The materiality affects the nature, timing and extent of our audit procedures and

the evaluation of the effect of identified misstatements on our opinion.

We have exercised professional judgment and have maintained professional

scepticism 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 identified, and obtaining

audit evidence that is sufficient 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

Board

▪Evaluating the overall presentation, structure and content of the financial

statements, including the disclosures

▪Evaluating whether the financial statements represent the underlying

transactions and events in a manner that achieves fair presentation

Communication

We communicate with the Audit Committee regarding, among other matters, the

planned scope and timing of the audit and significant audit findings, including any

significant findings in internal control that we identify during our audit. In this

respect we also submit an additional report to the Audit Committee in accordance

with Article 11 of the EU Regulation on specific 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.

FLOW TRADERS | ANNUAL REPORT 2022 175

We provide the Audit Committee 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 Audit Committee, we determine the

key audit matters: those matters that were of most significance in the audit of

the financial 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.

Amsterdam, 23 February 2023

Ernst & Young Accountants LLP

R. Koekkoek

FLOW TRADERS | ANNUAL REPORT 2022 176

Glossary


AGM	Annual General Meeting of shareholders
AML	Anti-Money Laundering
AMX	Amsterdam Midcap Index
AP	Authorized Participant
APM	Alternative Performance Metrics
APT	Dutch Association of Proprietary Traders
AuM	Asset Under Management
AuM CAGR	Asset Under Management Compound Annual Growth Rate
CEO	Chief Executive Officer
CFO	Chief Finance Officer
CID procedure	Counterparty Identification 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 Officer
CTrO	Chief Trading Officer
DNB	Dutch Central Bank
EBITDA	Earnings before interest tax deprecation & amortization
EPS	Earnings per share
ERM	Enterprise Risk Management
ESG	Environmental, social and governance
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 firms
IFR	Regulation (EU) 2019/2033 on the prudential requirements of investment firms
IR	Investor Relations
KPI	Key Performance Index
MiFID II	Markets in Financial Instruments Directive (Directive 2014/65/ EU; as amended)
NDF	Non-Deliverable Forward
NFRD	Non-Financial Reporting Directive EU
NTI	Net Trading Income
NTI CAGR	Net Trading Income Compound Annual Growth Rate
OECD	Organization for Economic Cooperation and Development
OTC	Over the counter
QFII	Qualified Foreign Institutional Investor China
RMF	Risk Management Framework
ROE	Return on Equity, net normalized profit divided by average equity
RSA	Risk (self-) assessments
SDG	Sustainable Development Goals
UN	United Nations
VWAP	Volume weighted average price

FLOW TRADERS | ANNUAL REPORT 2022 177

EU Non-Financial Reporting Directive


Requirements EU Directive (NFRD)	Subtopic	Chapter/section reference
A brief description of the business model	Business model	Our profile: What we do
	Business environment	Value creation and strategy: Markets and trends
	Organization and structure	Governance
	Our market	Our profile: Products, Value creation and strategy, Markets and trends.
	Strategy and objectives	Value creation and strategy: Our ambition and strategy
	Long-term market drivers	Value creation and strategy: Markets and trends

Relevant social and personnel topics	A description of the policies pursued	Our performance: Sustainable employment
	The outcome of these policies	Our performance: Sustainable employment
	Principle risks in own operations and within the value chain	Our risk management: Operational risk
	How risks are managed	Our risk management: Enterprise risk management
	Non-financial key performance indicators	Our performance: Sustainable employment

Relevant environmental topics	A description of the policies pursued	Our performance: Carbon emissions, material and waste
	The outcome of these policies	Our performance: Carbon emissions, material and waste
	Principle risks in own operations and within the value chain	Our risk management: Environmental risk
	How risks are managed	Our risk management: Environmental risk
	Non-financial key performance indicators	Our performance: Carbon emissions, material and waste

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 the section 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-financial key performance indicators

FLOW TRADERS | ANNUAL REPORT 2022 178


2022 BY NUMBERS
Global ETP value traded (€bn) 51,811 2021: 36,835

Flow Traders ETP Value Traded (€bn) 1,775 2021: 1,541	Flow Traders Total Value Traded (€bn) 6,765 2021: 5,750	Normalized Total Income (€m) 460.6 2021: 387.1	Normalized EBITDA (€m) 208.2 2021: 178.5

Normalized Net Profit (€m) 150.2 2021: 130.9	Net Profit (€m) 126.8 2021: 114.9	Normalized basic EPS (€) 3.45 2021: 3.00	Basic EPS (€) 2.92 2021: 2.63


AMERICAS Number of ETP listings 6,141		ETP AuM (€bn) 5,957

FLOW ETP Value Traded (€bn) 892		NTI (€m): 89.5

		FTE: 119


EUROPE Number of ETP listings 5,316		ETP AuM (€bn) 1,278

FLOW ETP Value Traded (€bn) 787		NTI (€m): 315.5

		FTE: 456


ASIA Number of ETP listings 3,231		ETP AuM (€bn) 908

FLOW ETP Value Traded (€bn) 96		NTI (€m): 55.2

		FTE: 85




	HIGHLIGHTS

	▪Strong financial performance ▪Fourth consecutive year with more than €1 trillion ETP value traded ▪Further enlarged our global ETP footprint ▪Expanded fixed income and digital assets trading capabilities ▪Obtained QFII license in China and opened an office in Shanghai ▪Established Flow Traders Capital - a dedicated corporate venture capital unit