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Dutch central bank adopts European rules for proprietary traders
November 14, 2017 / 7:40 AM / a month ago

Dutch central bank adopts European rules for proprietary traders

AMSTERDAM, Nov 14 (Reuters) - The Dutch central bank (DNB) said on Tuesday it will adopt European rules governing capital requirements for proprietary trading firms, those that use their own money to trade for profit or loss.

Until the now, the DNB had been using its own system to assess capital requirements for such firms, which include several high-frequency trading houses such as Flow Traders , Optiver, and IMC Financial Markets.

The DNB said in a statement that while it believed its own rules for the firms were “sound and prudential”, its governance of them as “local firms” was untenable after a review in the face of a challenge by the European Banking Authority.

The DNB “has therefore decided to discontinue the current national prudential regime for local firms, taking immediate action to apply” Europe’s Capital Requirements Regulation, or CRR, instead.

“The relevant firms will have until 31 March 2018 to meet the applicable requirements under the CRR,” the DNB said.

“If a firm’s capital falls short, it must draw up a restoration plan to ensure that it meets the CRR capital requirements as soon as reasonably practicable but in any event by 31 December 2019 at the latest.”

The DNB said its regime applies to 13 firms, which it had already notified of its decision. It did not disclose their names.

Flow Traders said in a statement Tuesday it was assessing the impact of the change. (Reporting by Toby Sterling, editing by Larry King)

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