Brexit Is Such Good Business for the Dutch, Their Watchdog Needs to Get Bigger

(Bloomberg) -- Amsterdam is winning so much business as Europe’s post-Brexit trading hub that the Netherlands is boosting the financial regulator’s budget by 10 percent to keep up with it all.

“It could be even more in case of a no-deal Brexit,” Merel van Vroonhoven, head of regulator AFM, said in a Bloomberg TV interview. AFM needs the extra budget to “heavily invest in IT” and hire many more people,” she added.

The Netherlands is set to become the venue for a big chunk of Europe’s stock and bond trading as Brexit forces companies to do more business on the continent. Around 30 to 50 financial firms, most of them trading specialists, have applied for a license to operate in the country since the Brexit vote, Van Vroonhoven said.

The AFM chief echoed a warning by other European risk being unable to operate in continental Europe after the vote if they haven’t yet applied for a license. Companies that met the regulator’s July deadline to apply will receive their licenses on time if everything is in order, while there’s no guarantee for those who arrived late, she said.

Incoming financial firms from the U.K. will boost the Dutch share of European equity trading to around one-third of the total from five percent currently, and its share of European bond trading to nearly 90 percent, the AFM estimates.

Adding staff may be easier said than done in a Dutch financial industry with low unemployment and a sharp increase in demand from banks. The country’s three largest lenders plan to add hundreds of extra people in their compliance departments to meet stricter money-laundering codes in the wake of the Danske Bank A/S scandal.

“Brexit will be a game changer for the Netherlands and it will have a lot of impact” she said. “We will have to deal with many more transactions.”

©2019 Bloomberg L.P.