FLOW TRADERS LTD. Annual Report
Table of contents
2023 Financial overview | 67 | Conformity statement | |
3 | 2023 key figures | 68 | Board report |
4 | 2023 regional perspective | 69 | Message of the Chairman |
5 | 2023 highlights | 71 | The Board's focus in 2023 |
6 | Interview with CEO | 73 | Committees |
8 | Financial performance overview | 75 | Board composition |
9 | Our Company | 76 | Board rotation |
11 | Markets and trends | 77 | Meetings & attendance |
14 | Our business strategy | 78 | Remuneration report |
17 | Financial performance | 79 | Letter from the Chairwomen of the Remuneration & Appointment Committee |
18 | Financial overview | 81 | Flow Traders remuneration philosophy |
19 | Normalized IFRS reconciliation | 83 | 2023 remuneration for the Executive Directors of the Board |
22 | Case study: Flow Traders Strategic Capital | 86 | Performance assessment |
23 | Risk management | 95 | Case study: Flow Traders Academy |
38 | ESG at a glance | 96 | Consolidated financial statements |
38 | Our material ESG sustainability topics | 97 | Consolidated statement of financial position |
38 | Our ESG strategic themes | 98 | Consolidated statement of profit and loss and other comprehensive income |
40 | Our value chain | 99 | Consolidated statement of changes in equity |
51 | Case study: Flow Traders Foundation | 100 | Consolidated cash flow statement |
52 | Corporate governance | 102 | Notes to the consolidated financial statements |
53 | Our Board | 142 Parent Company financial statements | |
55 | Non-Executive profiles | 153 | Other information |
57 | Executive Committee profiles | 154 | Investor relations |
59 | Functioning of the Board | 155 | Share information |
61 | Board committees | 156 | Double materiality |
62 | General meeting, shares and shareholders | 162 | EU Taxonomy |
65 | Corporate governance statements | 166 | Independent auditors report |
The Flow Traders board report, as referred to in section 2:391 of the Dutch Civil Code can be found in the chapters on: 2023 Financial overview, Financial performance, Interview with
CEO, Risk management, ESG at a glance, Corporate Governance and Board report.
FLOW TRADERS | ANNUAL REPORT 2023 2
2023 key figures
- Further refined our strategy and strengthened our trading capabilities
- Fifth consecutive year with more than €1 trillion ETP value traded
- Expanded fixed income and digital asset trading capabilities
- Expanded Americas footprint with a new office in Chicago
- Continued build-up of on-site trading and operations in China after receipt of our QFII license
Global ETP value traded (€ bn)
43,081
2022: 51,811
Flow Traders Total | Flow Traders ETP |
Value Traded (€ bn) | Value Traded (€ bn) |
5,648 | 1,464 |
2022: 6,765 | 2022: 1,775 |
▪ Announced the launch of AllUnity | Net Profit (€ m) | EBITDA (€ m) | Total Income (€ m) | Basic EPS (€) |
partnership for a regulated EUR- | ||||
Digital | IFRS | 36.2 | 67.5 | 303.9 | 0.84 |
Stablecoin with DWS and Galaxy | |||||
2022: 126.8 | 2022: 179.3 | 2022: 458.7 | 2022: 2.92 |
Normalized Net | Normalized | Normalized Total | Normalized basic |
Profit (€ m) | EBITDA (€ m) | Income (€ m) | EPS (€) |
Normalized | 59.4 | 92.2 | 299.8 | 1.38 |
2022: 150.2 | 2022: 208.2 | 2022: 460.6 | 2022: 3.45 |
FLOW TRADERS | ANNUAL REPORT 2023 | 3 |
2023 regional perspective
EMEA
Americas
APAC
NTI (€ m) | Number FTE | ETP Value | NTI (€ m) | Number FTE | ETP Value | NTI (€m) | Number FTE | ETP Value |
at year-end | Traded (€ bn) | at year-end | Traded (€ bn) | at year-end | Traded (€ bn) | |||
83.2 | 111 | 753 | 162.2 | 450 | 617 | 54.9 | 85 | 93 |
FLOW TRADERS | ANNUAL REPORT 2023 | 4 |
2023 highlights
Employees climbed Mount
Kilimanjaro in aid of the Flow Traders Foundation
Partnership formed with | Chicago office | AllUnity announced, a |
FemaleXFinance to foster up and | opened | partnership with DWS |
coming female talent within | and Galaxy Digital | |
Finance | ||
JAN | FEB | MAR | APR | MAY | SEP | DEC |
Paul Hilgers, Delfin Rueda and Karen | |||||
Mike Kuehnel | Frank welcomed as Independent | Hermien Smeets-Flier | |||
became CEO | Non-Executive Directors to the Board | elected as CFO |
FLOW TRADERS | ANNUAL REPORT 2023 | 5 |
Interview with the CEO
How do you reflect on 2023?
Despite the subdued market environment, 2023 provided us with many proof points that confirmed the viability of our communicated strategy to achieve our growth and diversification objectives. Throughout the year, we further refined our strategy and strengthened our trading capabilities to deliver seamless execution to our growing network of trusted counterparties and to provide liquidity in all market environments. Focusing on Flow Traders' financial performance, despite a muted year in terms of trading volumes and volatility, we recorded a Net Trading Income of €300.3 million (Normalized Net Trading Income of €300.3 million) and a Net Profit of €36.2 milion (Normalized Net Profit of €59.4 million). Our capital position remained strong and enabled us to deploy trading capital effectively across all regions and asset classes to maximize trading opportunities that arose throughout the year. In 2023, we continued to expand geographically with a new location established in Chicago and we further bolstered our presence in China, where we grew our local partnerships.
Regarding our global leadership team, we welcomed Hermien Smeets-Flier to the team in July of last year and her appointment as Chief Financial Officer and an Executive Director of the Flow Traders Ltd. Board was confirmed by our shareholders in September. In August, following a 17-year tenure with the firm, Folkert Joling, Chief Trading Officer, decided to leave the organization. As part of the transition, our Global Executive Committee members representing Trading & Technology assumed Folkert's responsibilities. On behalf of our entire firm, I would like to extend our gratitude to Folkert for his
significant contributions to developing the firm and the trading function during his time with us.
What are your 2023 highlights?
I am incredibly proud of what our global team was able to deliver during a challenging year in terms of market circumstances. Our team remained fully committed and demonstrated extraordinary resilience throughout the year. Our global teams are the key ingredient for our firm and our growth in the coming years.
Diving into our business, in equities, we focused on harnessing our trading capabilities to explore adjacent products, successfully launching ADRs in the Americas. In Fixed Income we made structural progress and further capitalized on the electronification trend to scale our algo trading strategies. In digital assets we expanded our market making proposition and built connectivity to leverage the emerging opportunities within this asset class.
In 2023, we also strengthened our geographical footprint by expanding our operations in China, opening a new office in Chicago and successfully obtaining our Financial Conduct Authority (FCA) license in the UK. In December, we announced AllUnity, a partnership with industry leaders Galaxy Digital and DWS Asset Management. AllUnity will launch a Euro-denominated stablecoin and aims to accelerate the mass market adoption of digital assets. This partnership further cements our goal of increasing our proximity to emerging innovation within the digital assets space and leverages our strategic investments. Throughout the year, we also
increased our focus on enhancing our governance layer, control functions and risk framework to uphold the highest standards and principles across all our operating entities. Furthermore, we maintained ongoing dialogues with our stakeholders including shareholders and regulators to continue to build our business.
Mike Kuehnel | CEO Flow Traders
FLOW TRADERS | ANNUAL REPORT 2023 | 6 |
2023 was your first year as CEO, what are your observations?
Even though 2023 presented its challenges with below average market volatility and volumes, we took the opportunity to concentrate on our growth and diversification plans as well as further developing our trading capabilities as a global trading firm. Given our focus on scaling our business globally, we put a specific importance on our operating model to identify and drive operational efficiencies, alongside fostering our growth initiatives.
Given our role within the intricate global financial market ecosystem, we are also uniquely positioned to have a holistic view on the trends influencing market participants and how they transact today. Through our strategic partnerships, we can provide an invaluable perspective on how technology and innovation are driving tangible changes to fundamentally improve the efficiency of financial markets. Our technology strategy also plays a key role in this and continues to adapt to the evolving financial markets to serve retail and institutional investors in the future.
firm's rich history. We will continue to strive to bring greater transparency and efficiency to the markets and value to the financial ecosystem and our stakeholders for many years to come, which tremendously excites me and everyone else in our firm.
I remain excited about the unique prospects of our firm and the attractiveness of our medium- and long-term opportunities. There is a clear need in financial markets for liquidity provisioning, market making, and innovation, specifically at a time when we have seen and will further see impactful structural changes in global financial markets.
From a personal perspective, I feel privileged to be part of this team and to lead the firm alongside our global leadership team, knowing that the key to success is continued dedication to our business and challenging the status quo. Since joining the firm two years ago and being the CEO for the past year, this statement is truly something that resonates with me and continues to ignite my passion for this firm.
What are your key 2024 priorities?
The continuous inflow of funds into ETP assets around the world expands the opportunities to grow our core business, while the structural industry shifts towards electronification, digitization, and regulatory evolution plays to our strengths. We will concentrate on strengthening this core part of our business and further develop our relationships with leading issuers, exchanges, and counterparties.
The accelerating global adoption of digital assets by institutions and our position as a player in both the traditional centralized and newly emerging decentralized finance ecosystems present a multitude of growth prospects for Flow Traders. In 2023, the introduction of MiCAR, which provides a holistic regulatory framework for digital assets, positioned Europe at the forefront of the developing digital asset space and unlocked the potential of this emerging asset class. This regulation will also directly benefit AllUnity. Meanwhile, the approval and launch of spot Bitcoin ETFs in the U.S. also began a new phase in the maturity and adoption of digital assets in the world's largest economy.
We will also celebrate a significant milestone in 2024 as we mark our 20-year anniversary. Twenty years in the making, our culture is still unique, highly entrepreneurial, and energetic. This is an incredible achievement, and we look forward to continuing to grow the business, collaborate with our partners, and drive changes in global financial markets. As a firm, we believe we have the right components and strategy in place to deliver in 2024. We have established a strong leadership layer, created concrete plans to support the growth of our business across regions and asset classes, and are equipped to make 2024 one of the best years in our
"Throughout the year, we further refined our strategy and strengthened our trading capabilities, to deliver seamless execution to our growing network of trusted counterparties and to provide liquidity in all market environments."
FLOW TRADERS | ANNUAL REPORT 2023 | 7 |
Financial performance overview (in thousands of euro)
2023 | 2022 | |
IFRS Financial Overview | For the year ended 31 December | |
Net trading income | 300,311 | 460,191 |
Total income | 303,876 | 458,673 |
Operating expenses | 254,703 | 296,311 |
Operating result | 49,173 | 162,362 |
Profit before tax | 44,654 | 161,731 |
Tax expense | 8,503 | 34,904 |
Profit for the year attributable to the owners of the Company | 36,151 | 126,827 |
Normalized Financial Overview | 2023 | 2022 |
Normalized net trading income | 300,298 | 459,464 |
Normalized other income | (495) | 1,141 |
Normalized total income | 299,803 | 460,605 |
Normalized employee expenses | 109,521 | 163,987 |
Technology expenses | 64,416 | 61,171 |
Other expenses | 33,660 | 27,271 |
Normalized operating expenses | 207,597 | 252,429 |
Normalized EBITDA | 92,206 | 208,176 |
Depreciation / amortization | 18,295 | 16,815 |
Write off's, (in)tangible assets | 76 | 161 |
Normalized profit before tax | 73,835 | 191,200 |
Normalized tax expenses | 14,385 | 41,000 |
Normalized net profit | 59,450 | 150,200 |
KPIs | ||
Normalized EBITDA margin | 31% | 45% |
Normalized basic earnings per share | 1.38 | 3.45 |
Shareholders' equity | 585,838 | 606,315 |
Trading capital | 583,655 | 650,980 |
Please refer to page 19 for the Normalized to IFRS reconciliation. |
FLOW TRADERS | ANNUAL REPORT 2023 | 8 |
Our Company
Flow Traders is a leading trading firm operating in global financial markets. Its mission is to bring transparency and efficiency to the financial ecosystem and delivers this through investments, driving innovation and trading diversification. Founded in 2004, Flow Traders is a specialist in Exchange Traded Products (ETPs) and has leveraged its equity expertise to expand into fixed income, commodities, digital assets and foreign exchange. Flow Traders' role in financial markets is to maintain the availability of liquidity and enable investors to buy and sell financial instruments under all market circumstances, thereby ensuring markets remain resilient and continue to function in an orderly manner in all environments.
Flow Traders combines a unique set of capabilities across traditional and digital asset markets to serve the evolving needs of market participants. In addition to its trading activities, Flow Traders established an investment unit focused on fostering market innovation, which is fully aligned with our mission to bring greater transparency and efficiency to the global financial ecosystem.
With two decades of experience, we have built a team of over 600 talented professionals, located in ten locations across the globe, contributing to the firm's entrepreneurial culture and committed to delivering the Company's mission.
FLOW TRADERS | ANNUAL REPORT 2023 | 9 |
ETP ecosystem
FLOW TRADERS | ANNUAL REPORT 2023 | 10 |
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Flow Traders Ltd. published this content on 01 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 March 2024 11:12:43 UTC.
