On 16 February 2018, the Dutch Minister of Finance sent a letter to the Dutch Parliament regarding developments around the prudential regime and remuneration rules applicable to investment firms that exclusively deal on own account (handelen voor eigen rekening) in the Netherlands, i.e. proprietary trading firms (the Letter).

Following the discussions around the Dutch prudential regime and remuneration rules for proprietary trading firms in November 2017 (view our earlier blog entry here), the Dutch Minister of Finance has announced a proposed change to the Act on the Financial Supervision (Wet op het financieel toezicht, AFS) which is line with current legislation as well as the European Commission’s proposal of 20 December 2017 regarding a new prudential framework for investment firms. As a result of the Dutch Central Bank’s (De Nederlandsche Bank, DNB) change of policy with regard to Dutch proprietary trading firms, such firms would no longer be exempt from the Dutch remuneration rules, including the 20% bonus cap, while these firms carry their own risk and are not subject to external stimuli. As this could result in a significant number of Dutch proprietary trading firms leaving the Netherlands, the Dutch Minister of Finance has announced that a legislative proposal will be prepared that will ensure that proprietary trading firms continue to be exempt.

The Dutch Minister states that this is line with existing practices in other EU member states, such as France and the United Kingdom, where proprietary trading firms are exempt from bonus caps on the basis of the principle of proportionality, and with the European Commission’s proposal of 20 December 2017 regarding a new prudential framework for investment firms.

View the Letter (Dutch only), 16 February 2018.