The Netherlands: legislation letters, maturities and acquisitions

Due to the low interest rate environment, investors are increasingly looking for higher returns while the internationalisation has caused financial markets to no longer restrict the borders and technological developments which has led to the emergence of new players, according to the Dutch Authority for the Financial Markets (AFM). The regulator has stressed the importance of cooperation between European regulators and shared a legislation letter with the Dutch Minister of Finance Jeroen Dijsselbloem (pictured) setting out requirements for legislation to make the financial markets fairer and more transparent and to enhance the effectiveness of supervision of the AFM.

In response to the letter, Dijsselbloem has informed the Dutch parliament about his main intentions regarding legislation and regulations in the financial markets, including a ban on the advertising of harmful financial products such as binary options, warrants, contracts for difference (CfDs) and turbos with a leverage of 10 or more, which he expects to come in force on July 1. Furthermore, a similar advertising ban - also expected by July 1 - in relation to consumers in the Netherlands targeted by online advertising from financial companies from another member state will be introduced by ministerial decree, according to Dijsselbloem.

Equities, and especially single indices, remain the dominant asset class in the Netherlands. Eighteen of the 23 structured products targeted at the Dutch retail investor this year to date are linked to either the local AEX index or the Eurostoxx 50, with the remaining five products linked to shares of local companies including Ahold Delhaize, Arcelor Mittal, KPN and Royal Dutch Shell. Commerzbank, with 19 products (bonus-, capped bonus-, and discount certificates), is the most active provider this year, followed by BNP Paribas (two), Kempen and Wilgenhaege (one each).

Commerzbank has introduced a number of listed investment products in the Netherlands in recent months, and the bank continues to be on the lookout to see if more product lines can be launched in the near future, according to Christophe Cox, derivatives public distribution Belgium and the Netherlands.

"Currently bonus certificates do very well, followed by rendement certificates," said Cox. However, when it comes to turnover and number of transactions, turbos remain number one for Commerzbank, according to Cox. "Compared to the sales and transactions of turbos, the proportion [of bonus and rendement certificates] is still relatively small," said Cox.

Van Lanschot announced a positive result of €4.3m generated by the bank's structured products desk and €0.3m generated by derivative financial instruments in 2016 while Rabobank reported a decrease in its gross structured notes and hedge accounting, from €276m in 2015 to €106m last year. Rabobank's net result on structured notes decreased by €125m to €150m (2015: €275m).

Several of the bank's maturing products produced positive results in recent months. The Rabo World Note February 2017, which was linked to a basket comprising three indices and two exchange-traded funds (ETFs) provided investors with the maximum return of 170%, or 7.85% per annum. However, the bank closed its equity derivatives desk in 2013 and is therefore no longer in a position to offer rollover opportunities to its clients, according to Ron Deckers, cross asset sales private investment products, Netherlands and Belgium, Rabo Global Markets. "Even if we could it would be near enough impossible to structure these products because interest rates are so low," he said.

Rabobank has taken a majority stake in Peaks, a micro-investment platform whose app allows consumers without investment experience to invest their spare change. The app rounds debit card payments to whole numbers and puts the extra money aside. Users can select one of four risk profiles and their contribution is then invested in a basket of index trackers from major providers such as BlackRock and Vanguard.

BinckBank has acquired Fintech firm Pritle for €12.5m (€7.5m cash and €5m in shares). The acquisition, which is the first acquisition of a robo-advisor in continental Europe, enhances BinckBank's online 'discretionary portfolio management' with robo-advisory alongside existing discretionary management services, according to Vincent Germyns, BinckBank chairman.

Pritle has 6,500 customers with approximately €60 million in assets and a team of 28 employees who come over as employees of BinckBank. After the integration of Pritle, the services will continue forward under the BinckBank label. Thomas Bunnik, CEO and founder of Pritle, will focus on the expansion of BinckBank's wealth management services across Europe.

ABN Amro, which stopped producing its own structured products in June 2014, has selected LexiFi Apropros, a software platform for the pricing and management of derivatives and structured products, to automate the structuring and sales processes for tailored derivatives.

"Our policy hasn't changed," said a spokesperson for ABN Amro. "We no longer offer our own derivatives and structured products. LexiFi [Apropos] is a software tool which is used within the private bank for the monitoring and settlement of structured products from third parties."

After a selection process ABN Amro has opted for LexiFi, as it "is already used by a large number of parties in the market", according to the ABN Amro official.

The last structured product from ABN Amro listed on the SRP Netherlands database is the Eurostoxx 50 Klik & Klaar Note which struck in May 2014 and knocked out one year later, paying investors a return of 110%.

Click the link to view the AFM legislation letter (Dutch) and the reaction (Dutch) of the Minister of Finance.