Industry Updates

Flow Traders rides new volatility wave

Scott Longley

The recent market volatility has been a boon to Amsterdam-based exchange traded product (ETP) liquidity provider Flow Traders which has seen its buoyant growth from the fourth quarter continue into the first couple of months of this year.

Flow Traders is a trading firm that uses its own platform to trade on its own account. As such, the hit taken by volatility-based exchange traded products as turbulence has made a return to the markets in the past two weeks provides a boost to the company's prospects.

In its recent results for the year to December, Flow Traders said that current trading was running at elevated levels, adding that the revenue run-rate for net trading income was above the €92.8m it earned during its previous record quarter in the third quarter of 2015.

Co-chief executive Sjoerd Rietberg said that 2018 had started well with the company benefitting from "some exceptional market circumstances." "We expect to report strong results in the first quarter based on those recent developments."

The relative calm in the markets for most of last year harmed Flow Traders with net trading income falling back 33% for the year. For its Americas division, the was evidenced by the velocity of trade slowing to its lowest level in over 10 quarters.

However, a rebound in trading in the last three months of the year on both sides of the Atlantic saw a quarter-on-quarter rise of 24% to €31.7m.

The company noted that the implementation of the new Mifid II rules had gone as planned and that the initial reaction to changes was positive.

"The preliminary MiFID II impact on the ETP market seems beneficial for us, as we see an increase in volumes traded on (the multilateral trading facilities) that we are connected to," said Dennis Dijkstra, the other co-CEO.

The company said it had enjoyed a strong revenue performance in Europe in the fourth quarter, driven by further market share gains, a rebound in trading margins and diversification in trading into currencies.

The return of market volatility has seen the analysts which cover Flow Traders reverse their own position son the stock. The team at UBS had upgraded the stock to a 'Buy' and said in a note this week that market volatility was "here to stay."


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