flo-2023-12-31-en

Table of contents

FLOW TRADERS | ANNUAL REPORT 2023 2


	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 3

▪ 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

▪ Announced the launch of AllUnity

partnership for a regulated EUR-

Stablecoin with DWS and Galaxy

Digital

2023 key figures

Global ETP value

traded (€ bn)

43,081

2022: 51,811

EBITDA (€ m)

67.5

2022: 179.3

Flow Traders ETP

Value Traded (€ bn)

1,464

2022: 1,775

Normalized

EBITDA (€ m)

92.2

2022: 208.2

Total Income (€ m)

303.9

2022: 458.7

Normalized basic

EPS (€)

1.38

2022: 3.45

Flow Traders Total

Value Traded (€ bn)

5,648

2022: 6,765

Basic EPS (€)

0.84

2022: 2.92

Net Profit (€ m)

36.2

2022: 126.8

Normalized Net

Profit (€ m)

59.4

2022: 150.2

Normalized Total

Income (€ m)

299.8

2022: 460.6

IFRS

Normalized

2023 regional perspective

FLOW TRADERS | ANNUAL REPORT 2023 4

EMEA

APAC

NTI (€ m)

83.2

Number FTE

at year-end

111

ETP Value

Traded (€ bn)

753

NTI (€ m)

162.2

Number FTE

at year-end

450

ETP Value

Traded (€ bn)

617

NTI (€m)

54.9

Number FTE

at year-end

ETP Value

Traded (€ bn)

Americas

2023 highlights

FLOW TRADERS | ANNUAL REPORT 2023 5

Employees climbed Mount

Kilimanjaro in aid of the

Flow Traders Foundation

JAN

MAR

APR

SEP

DEC

AllUnity announced, a

partnership with DWS

and Galaxy Digital

Hermien Smeets-Flier

elected as CFO

Partnership formed with

FemaleXFinance to foster up and

coming female talent within

Finance

Mike Kuehnel

became CEO

FEB

MAY

Chicago office

opened

Paul Hilgers, Delfin Rueda and Karen

Frank welcomed as Independent

Non-Executive Directors to the Board

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.

FLOW TRADERS | ANNUAL REPORT 2023 6

Mike Kuehnel | CEO Flow Traders

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.

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.

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.

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

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.

FLOW TRADERS | ANNUAL REPORT 2023 7

“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."

Financial performance overview (in thousands of euro)


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
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

2023

2022

2023

2022

FLOW TRADERS | ANNUAL REPORT 2023 9

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 10

ETP ecosystem

Markets and trends

Our business

Flow Traders operates three main trading hubs in

Amsterdam, Hong Kong, and New York. In addition,

we operate branch and representative offices in

Chicago, Cluj, London, Milan, Paris, Shanghai, and

Singapore.

In 2023 we had access to more than 180 trading

venues in 40 countries around the world. We

provided liquidity in over 6,500 unique ETP ISIN’s

on- and off-exchange, which is more than 40

percent of all ETPs globally. Off-exchange, we

provide liquidity in ETPs on a request-for-quote

basis to more than 2,400 institutional counterparties

across the globe, including banks, asset managers,

pension funds, insurance companies, family offices,

hedge funds, and others and this number is

increasing on an almost daily basis. In addition to

ETPs we provide liquidity in similar instruments

whose value is correspondingly affected by a change

in the value of underlying or related assets, such as

futures or bonds. During 2023, we continued to

implement our diversification, strategy and related

initiatives across other asset classes and provided

liquidity as a market maker in FX, fixed income,

commodities and cryptocurrency.

Irrespective of what we trade, as a liquidity provider

we generally do not have a directional opinion on

the market. In other words, our results do not

depend on the direction of market prices. Our net

trading income is derived from the small price

differences that are realized between buying and

selling related or correlated assets. Whether that is

between the ETPs we buy or sell, the prices we pay

or receive for the underlying related financial

instruments to mitigate our risk, or trading FX pairs.

We are not a bank, broker or investment manager

and do not have client Assets under Management

(AuM), as we trade from our own capital. We also do

not develop or make products, do not provide any

services and do not have (consumer) clients. Our

value chain comprises, among others, of our

institutional counterparties, prime brokers and

regulators.

ETP market

In recent years, the ETP ecosystem has continued to

mature and experience significant growth in both

Assets under Management (AuM) and number of

products. According to ETFGI, global ETP AuM

increased from €8,143 billion at the end of 2022 to

€10,813 billion at the end of 2023. This is a reflection

mainly of the underlying market performance during

2023 coupled with continued inflows into ETPs. The

market expectation is that AuM will continue to

grow going forward and we believe there are a

number of reasons for this. One is that investors are

attracted to the transparent nature of ETPs, which

enables them to clearly follow how the underlying

securities are performing. Another reason is that

ETPs are liquid, available at lower costs and can be

bought and sold easily during market hours. A third

reason is that ETPs can be composed of financial

instruments from almost any asset class, sector or

location, providing investors access to markets that

would normally be difficult to reach.

Global ETP markets grew by 33% in 2023, as

measured by AuM, driven predominantly by the

outperformance of the underlying markets. Annual

global inflows of ETP AuM were €901 billion in 2023

(2022: €818 billion – source ETFGI). Overall trading

activity in 2023 declined compared to the prior year

given the heightened market activity in 2022 as a

result of the conflict in Eastern Europe, rising

inflation, interest rate increases by central banks,

and high levels of retail investor activity in the US.

Global coverage

In 2023, Flow Traders’ ETP value traded once again

was in excess of the €1 trillion mark. The EMEA ETP

market recorded total ETP value traded of €2.0

trillion in 2023. Flow Traders' total ETP value traded

in EMEA was €617 billion in 2023. We remained a

leading liquidity provider in ETPs in the region and

managed to grow our on- and off-exchange trading

capabilities further. The largest ETP market globally

remains in the Americas, where total ETP value

traded (on- and off-exchange) was €35.9 trillion in

2023. Flow Traders' ETP value traded in the Americas

was €753 billion in 2023, markedly lower than in

2022 given the subdued market environment.

Institutional trading continued to expand in 2023

and Flow Traders Americas continued to grow and

deepen its overall presence in this important market.

We also expanded our Lead Market Maker activities

during 2023 and supported numerous ETF listings in

the US for a variety of leading issuers. Our strategic

investment in Members Exchange (MEMX)

underlines our long-term commitment to the US

equities ecosystem as we seek to grow our business

and presence further.

In APAC, the ETP market remain fragmented, with

large differences in trading volumes, trading costs,

regulation and maturity across the financial markets.

The APAC ETP market recorded total ETP value

traded of €5.2 trillion in 2023, including China, while

Flow Traders' total ETP value traded was €93.0

billion. Flow Traders had a successful year in 2023 in

APAC following the receipt of our own QFII license in

FLOW TRADERS | ANNUAL REPORT 2023 11

China, confirming our strategy of recent investments

made in the region.

Equity

We still see significant opportunities for growth in

the equity ETP market, which is the main focus of

the Equity business at Flow Traders. Global equity

ETP value traded decreased to €23,372 billion in

2023 and further market growth is expected from

the increasing investor demand and awareness for

the product. Flow Traders' Equity value traded (ETPs,

Futures and Cash) amounted to €3,009 billion in

2023.

Flow Traders' strengths and future focus relating to

Equity include:

▪ Strong performance globally in International ETPs

and Index Futures.

▪ Leveraging our global pricing capabilities in APAC

as we penetrate and unlock new growth markets.

Fixed Income

Electronic trading in Fixed Income has increased

dramatically over the last few years. For example,

50% of Euro-denominated investment-grade (IG)

credit is now executed electronically, reaching 75%

on a ticket-count basis. This increase has

contributed to the approaching inflection point in

the electronification of credit markets. This is similar

to what we have witnessed in other asset classes,

such as foreign exchange (FX), US equity options and

exchange-traded funds (ETFs). This transition is

being driven by better pre- and post-trade

information, the rise of algorithmic trading and new

trading protocols being embraced by the buy- and

sell-side. Initially driven by regulation such as MiFID

II, it is likely that the regulatory landscape will

continue to accelerate this electronification trend.

Responding to these market dynamics, Flow Traders

has built a strong fixed income liquidity provision

capability set spanning ETPs, corporate credit

(investment-grade and high yield bonds) and

emerging market sovereigns.

There has been a consistent increase in fixed income

ETP value traded in recent years as well as AuM.

Global Fixed Income ETP value traded increased to

€3 trillion in 2023. Flow Traders Fixed Income value

traded (ETPs, Futures and Cash) amounted to €1,154

billion in 2023, a decline from 2022's €1,323 billion)

given the heightened volatility in the fixed income

market last year. Nevertheless, we continue to

deepen and broaden our market coverage and our

offerings continue to gain traction with our buy-side

counterparties.

From a strategic standpoint, Flow Traders' focus

areas include:

▪ ETP ecosystem - partner with issuers to develop

innovative fixed income products. We are also

seeking creation-redemption synergies with

corporate bond market making.

▪ Credit trading - will increase quote sizes to

undertake larger block transactions with

counterparties as well as distributing pre-trade

portfolio trading levels to expedite portfolio

construction.

▪ Model pricing - expand model trading capabilities

to new fixed income subsets and improve pricing

and coverage of investment-grade bonds.

Currency, Cryptocurrency and Commodity

(CCC)

In recent years, cryptocurrencies has emerged as an

important asset class with increased institutional

acceptance. The value of cryptocurrencies bounced

back in 2023 after a significant decline in 2022.

However, trading volumes and volatility declined

50-60% year-on-year in 2023 compared to 2022,

resulting in a subdued trading environment. The

development of institutional grade and regulated

digital asset market infrastructure continued to

progress in 2023. This comes on top of continued

growth in custody solutions, prime brokerage, data

and analytics, AML-KYC and other risk solutions,

digital property rights, digital identity solutions as

well as decentralized finance ecosystems.

Crypto ETPs are another clear example of regulatory

and investor acceptance of digital assets, with major

ETP issuers applying to regulators for permission to

create spot Bitcoin ETFs. They solve liquidity and

custody issues many investors, both retail and

institutional, face by having an exchange-listed

instrument with registered market makers providing

liquidity under all market circumstances.

Flow Traders’ Crypto liquidity provision commenced

more than seven years ago and spans OTC spot as

well as ETPs. We are connected to over 20 trading

venues globally and provide liquidity to over 200

cryptocurrencies. From an ETP perspective, Flow

Traders is the number 1 liquidity provider in Crypto

ETPs in Europe and a leader globally on-exchange.

The digital assets space is well-suited to Flow

Traders’ technology-enabled capabilities.

The future focus and opportunities for digital assets

include:

FLOW TRADERS | ANNUAL REPORT 2023 12

▪ ETPs - maintain our leading position in Crypto

ETP market making with the prospect of further

regional expansion while at the same time

working to increase efficiency of access across

the ecosystem.

▪ Spot and derivatives - continue to grow our

market making activities across these products

by expanding our platform and token coverage.

▪ Strategic partnerships - leverage new and

existing partnerships to further build out the

trading infrastructure around digital assets.

▪ Utilize Flow Traders Strategic Capital to further

integrate Flow Traders into the growing

ecosystem.

FLOW TRADERS | ANNUAL REPORT 2023 13

Our business strategy

We create value for our stakeholders in

various ways. Supported by our proprietary

technology platform, we provide liquidity in

financial products that helps contribute to

more efficient markets by lowering overall

trading costs, delivering greater execution

quality and market transparency. For our

employees, we provide a compelling and

constantly evolving work environment that

enables them to develop to their full

potential. We care for our investors by

focusing on growing profitably by

constantly ensuring the best usage of the

Company’s capital. Our value creation model

demonstrates the positive impact our

business has on all of our stakeholders.

Our purpose and ambition

We are the driving force for an investment

environment that is more transparent, efficient and

lower-cost for market participants, through the

power of trading acumen, innovation and talent.

Our market and environment

We operate in a highly dynamic world, where

globalization and technological development are

continuing to accelerate the pace of change. In

addition, we observe certain mega trends which are

more specifically shaping the future of the financial

markets:

▪ Rise of passive investing with significantly

growing assets under management (AuM) with

Blackrock estimating that ETP AuM will more

than double by 2030 from 2023.

▪ Increasing electronification of trading across

fixed income and other asset classes.

▪ Growth in digital assets and institutional adoption

as well as development of large new liquidity

pools.

▪ Emerging ecosystems adapting to shifting trends

and driving venture capital and private equity

investments.

▪ Ever evolving regulatory landscape which creates

greater transparency and a more level playing

field.

The markets’ core functions remain the same:

transferring risk between various market

participants. This is where we add value.

Accordingly, our focus will continue to be on

providing liquidity in more products in the financial

markets across multiple asset classes, building on

our status as an leading ETP trading firm. We are also

seeking to be a driver and accelerator of innovation

within financial markets through our dedicated

corporate venture capital unit, Flow Traders

Strategic Capital.

Our business principles

Our business principles are about being flexible,

agile and focused on continuous improvements. To

be successful, we recognize that we need to

perform well across all areas of the business.

Achieving this involves diligently studying the

markets and our responses to them, and using our

resources where they have the greatest impact. The

outcome of this process defines whether or not we

have a competitive edge.

Our business strategy

We will achieve our strategic ambition by continuing

to grow our business through our dedicated multi-

year diversification strategy. Here we have

expanded, and will continue to expand, on our

leading market position in ETPs with growth in fixed

income, digital assets, FX, and commodities. This

should result in structurally growing our Net Trading

Income (NTI), while increasing the resilience of the

business and also maintaining our desired risk

profile, controlling costs, and securing and attracting

the right talent.

FLOW TRADERS | ANNUAL REPORT 2023 14

Growing our NTI involves increasing the volumes we

trade and the net margins we capture per trade,

where volume is the value of products we trade, and

the net margin is the margin we capture per trade

after all associated hedging and trading costs. Our

risk profile is characterized by having no directional

opinion on the market. In other words, our results do

not depend on the direction of market prices. By

expanding our presence as a liquidity provider

across multiple asset classes, Flow Traders can

maximize the growth of its NTI.

By expanding our presence in the underlying asset

classes, we expect to improve our performance in

the future, including during those periods of

decreased trading activity. Our investments through

Flow Traders Strategic Capital are expected to not

only generate a financial return but also drive

strategic expansion as we foster innovation across

the global financial markets.

Be a leading global multi-asset liquidity

provider

We believe there are six elements of our strategic

ambition which will drive Flow Traders in its goal to

becoming a leading global multi-asset liquidity

provider:

▪ Global access - providing liquidity any time

anywhere across trading venues, exchanges and

to institutional counterparties.

▪ Asset universe - trading a variety of assets to

expand our presence in ETPs and grow in the

underlying asset classes.

▪ Pricing excellence - acting as a market neutral

provider 24/5 with strong hedging capabilities in

all asset classes.

▪ Proprietary cutting edge technology - benefiting

from automated, low-touch trading

infrastructure for seamless execution.

▪ Talented team - leveraging an experienced talent

pool that forms an open, diverse and

entrepreneurial team.

▪ Ecosystem innovation - shaping financial markets

through strategic investments and partnerships

with leading players.

FLOW TRADERS | ANNUAL REPORT 2023 15

Value creation model

We are committed to creating long-term value for our stakeholders and generating broader impact towards the global sustainable green transition. In our

value creation model, we have modelled the capital resources we use for our business activities in the execution of our strategy, to the financial,

environmental, social and governance related areas from our materiality assessment. For each, we have developed performance indicators to measure our

progress against our long-term objectives. We aim to use our capital resources in the most effective way by maximizing their potential value and minimizing

their negative impacts whenever we can. Continuously, our drive is to improve and to generate long-term value for all of our stakeholders.

FLOW TRADERS | ANNUAL REPORT 2023 16

Financial performance

171

FLOW TRADERS | ANNUAL REPORT 2023 17

Financial Performance

Financial overview

Normalized IFRS reconciliation

Dividend policy and dividend proposal

Flow Traders is focused on

strengthening its core, improving

efficiency and preparing the

business to capitalize on future

opportunities.

Hermien Smeets-Flier | CFO

Financial overview

Flow Traders delivered financial and trading

performance in 2023 reflecting a more

subdued market environment. We recorded

Total Income in 2023 of €303.9 million

(2022: €458.7 million). Operational

highlights included the broadening of our

ETP trading footprint and continued

development of our trading infrastructure,

connectivity and counterparty network.

Within digital assets, we saw an increased

appetite especially considering the much-

anticipated Bitcoin ETF approval by the SEC,

a milestone for the development of the

asset class. In terms of our capital position,

it remains strong despite of a challenging

2023 and looking ahead, we have cemented

our plans and governance to capitalize on

future opportunities.

Financial overview

Market environment

The market environment in 2023 was much more

subdued compared to 2022 given the heightened

market activity in the prior year as the increase in

inflation and central bank interest rates around the

world slowed throughout the year while the conflict

in Eastern Europe entered its second year. Volatility,

as measured by the VIX index, was on average much

lower in 2023 at 16.07 (2022: 25.98).

Given this market backdrop, Flow Traders' total

value traded declined to €5.6 trillion in 2023 (2022:

€6.8 trillion); of which €1.5 trillion was traded in on-

and off-exchange ETPs (2022: €1.8 trillion), with the

remainder in related financial products used to

facilitate trading in ETPs and other asset classes

such as fixed income, FX and cryptocurrency.

Likewise, on- and off-exchange ETP market value

traded also decreased during the same period to

€43.1 trillion (2022: €51.8 trillion).

Total income

Total income was €303.9 million in 2023, (2022:

€458.7 million), comprised of Net Trading Income

(NTI) of €300.3 million (2022: €460.2 million) and

€3.6 million of other income primarily from

unrealized gains in our strategic investments (2022:

€1.5 million). Europe, our home market, contributed

the most to our NTI which reflects that region’s high

level of flow visibility and counterparty and product

coverage. There was also significant contributions

from the US and APAC as we continue to leverage

our efforts to diversify our trading activities across

various asset classes and products. In the fourth

quarter of 2023, Flow Traders reported total income

of €74.3 million which reflected the generally

subdued levels of activity in the markets seen

throughout most of the year.

Operational expenses

On the cost side, fixed operating expenses increased

to €178.4 million in 2023 (2022: €175.7 million). The

main drivers of the increase in fixed expenses relate

to the targeted base compensation increases

implemented in Q2 of 2022, continued technology

investments in line with business needs, and general

price inflation. At year end FTEs decreased by 2% to

646. Variable employee expenses decreased to €57.9

million (2022:€103.7 million) which reflects the

decline in business performance during the year as a

result of the subdued market environment.

Given these income and cost dynamics, Flow Traders

was able to achieve operational leverage despite a

challenging market environment with EBITDA

margin of 22.0% in 2023 (2022: 39.0%) on EBITDA of

€67.5 million (2022: €179.3 million).

FLOW TRADERS | ANNUAL REPORT 2023 18

Normalized IFRS reconciliation

Flow Traders makes certain adjustments to various IFRS expense and profit

measures to derive Alternative Performance Measures (APM). The policy is to

exclude or adjust items that are considered to be significant in both nature or size

and where the treatment as an adjusted item provides stakeholders with useful

information to assess the year-on-year or quarter-on-quarter underlying

performance. On this basis, the following items were adjusted or excluded for the

2023 results reporting:

▪ Removal of IFRS 2 treatment of share-based payments which include the

deferral of a portion of the current year share plans as well as recognition of

prior years’ share plans. This adjustment provides insights into the relationship

between the current year variable employee expenses and current year

trading performance.

▪ Other income line includes all the realized and unrealized results on Flow

Traders’ long-term equity investments, by including results on investments

accounted for as Fair Value Other Comprehensive Income (FVOCI), and results

of equity-accounted Investments in addition to the result of investment

accounted for as Fair Value Profit and Loss (FVPL) included in IFRS total

income.

▪ Exclusion of strategic advisory costs as one-off expenses in 2023 in relation to

optimization of the Group legal entity and regulatory structure and further

balance sheet review efforts.

▪ Tax expenses are adjusted based upon the pre-tax adjustments and/or

excluded items above.

▪ Net trading income is normalized by reclassifying income related to long-term

investments to other income.


Normalized performance: IFRS reconciliation
For the year ended 31 December	2023	2022
Normalized total income	299,803	460,605
Fair value OCI investments adjustment from equity to profit or loss	(447)	(2,563)
Results of equity - accounted investments	4,520	631
Total income	303,876	458,673

Normalized EBITDA	92,206	208,176
Fair value OCI investments adjustment from equity to profit or loss	(447)	(2,563)
Results of equity accounted investments	4,520	631
One-off expenses	(4,306)	(14,055)
Prior year share plans	(17,292)	(25,359)
Current share plan deferral	(7,137)	12,510
Total EBITDA	67,543	179,339

Profit for the year attributable to the owners of the Company	36,151	126,827
Tax expense	8,503	34,904
Impairment for equity accounted investees	(4,445)	—
Share of profit of equity-accounted investees, net of tax	(74)	(631)
Operating Result	49,173	162,362
Depreciation of property and equipment	17,688	16,274
Amortization of intangible assets	606	542
Write off of (in) tangible assets	76	161
EBITDA	67,543	179,339

Normalized net profit	59,450	150,200
Profit before tax IFRS adjustments	(29,182)	(29,468)
Tax difference	5,885	6,096
Profit for the year attributable to the owners of the Company	36,153	126,828

Normalized net trading income	300,298	459,464
Reclassification of income related to long-terms investments	12	727
Net trading income	300,311	460,191

FLOW TRADERS | ANNUAL REPORT 2023 19

Prime broker capital requirements

The prime brokers require the Group to maintain

certain minimum capital levels. Prime brokers use

various internal systems to calculate required capital

amounts (e.g., the ‘internal haircut model’ and the

‘margin based approach model’, both intending to

ensure sufficient levels of risk allowances) and have

different limits structure, pre-funding possibilities

and cut-off times for wiring capital.

The aggregate capital that the prime brokers require

is significantly higher than their risk exposure. For

example, we may clear two legs of one transaction

through two different prime brokers. Even when the

transaction is fully hedged (the risk is fully offset),

each prime broker will still require capital for such

position as if the risk is not being offset. The prime

brokers cannot establish that the other prime broker

has an offsetting position so they will charge a full

capital requirement. This increases the capital they

require us to maintain beyond what would be

necessary. In addition, margin requirements of prime

brokers are conservatively determined by the

sophistication of their models and the regulatory

requirements, which might not necessarily be

efficient in respect of our business model and

trading portfolios.

The following table sets out the capital required to

be posted with our prime brokers and capital

available (Net Liquidation value).


Prime broker capital requirements
For the year ended 31 December
	2023	2022
Net liquidity at clearings/ prime brokers	577,947	642,368
Cash at bank	5,708	8,612
Net trading capital	583,655	650,980

Flow Traders will remain focused on all arising

opportunities to create shareholder value through

systematic capital management going forward.

Dividend policy and dividend proposal

Dividend policy

Flow Traders intends to pay dividends annually in

two installments, with a target aggregate dividend

pay-out ratio of at least 50 percent of the Company’s

IFRS net profits realized during the financial year.

The Board may decide that the profits realized

during a financial year will fully or partially be

appropriated to increase and/or form reserves. A

distribution of (interim) dividends is subject to

applicable rules and regulations, the Bye-laws of the

Company, and the Board Rules.

It is anticipated that our interim dividends will be

declared and paid following the publication of our

results for the first half of each year. However, there

can be no assurance that in any given year a

dividend will be proposed or declared.

The payment of dividends, if any, and the amounts

and timing thereof will depend on a number of

factors, including legal and regulatory requirements,

future profits, financial conditions, general economic

and business conditions, future prospects and such

other factors as the Board may deem relevant. Our

intentions in relation to dividends are subject to

numerous assumptions, risks and uncertainties,

many of which may be beyond our control.

The Board may declare dividend and decide to make

allocations to reserves and therefore decides how

much of the profit will be allocated to the reserves.

The dividend is subject to a non-binding advisory

vote of the shareholders.

Reserves and dividend proposal for the

financial year 2023

Pursuant to Bye-law 33.1, the Board has decided that

of the profit for 2023 (totaling €36.2 million), an

amount of €19.5 million shall be added to the

reserves.

The Board declared a total cash dividend of €0.45

per share and this will be paid out to shareholders

for the financial year 2023, subject to a 15 percent

dividend withholding tax (dividendbelasting). An

interim cash dividend of €0.30 per share was paid

out on 19 August 2023. This means that the final cash

dividend proposal for a non-binding advisory vote to

the General Meeting is €0.15 per share. Subject to

approval by the General Meeting on 13 June 2024.

Shares will trade ex-dividend on 17 June 2024.

Payment of the final dividend is anticipated to be

made on 21 June 2024.

FLOW TRADERS | ANNUAL REPORT 2023 20

Growth and talent

We continued to grow our global presence, trading

strategies and infrastructure in 2023. We increased

our institutional counterparty base globally to over

2,400 as well as being connected to over 180 trading

venues. To facilitate this growth, we continued to

recruit new talent throughout the year across all

segments of our business while keeping costs and

headcount under control, ending the year with 646

FTE (2022: 660).

Outlook

Looking ahead to 2024, normalized fixed operating

expenses are expected to be in the same range as

2023 as headcount is expected to be flat to down for

the year, offset by continued technology

investments and inflationary pressures.

FLOW TRADERS | ANNUAL REPORT 2023 21

Flow Traders

Strategic Capital

Flow Traders Strategic Capital was established in

2022. Our strategy focuses on increasing our

proximity to emerging technologies within the

capital markets ecosystem and is fully aligned with

Flow Traders’ strategic agenda.

A key focus of Flow Traders Strategic Capital is to go

beyond investing financial capital and instead create

long-term value by providing our broad 20-year

financial markets expertise. We support and invest in

companies that improve and bring greater

transparency to global financial markets,

concentrating on Tokens, Data, Connectivity and

Infrastructure.

The investment unit is supported by a dedicated

team of experts with a diverse background in

investing, trading, business and software

development. The team is supported by a seasoned

investment committee with a deep understanding

of global financial market structure and ecosystem

developments.

AllUnity was formed as part of a partnership

between DWS, Flow Traders and Galaxy Digital.

AllUnity’s mission is to revolutionize the on-chain

economy by issuing a fully collateralized EUR-

denominated stablecoin. AllUnity’s long-term focus

is to unlock the next wave of digital asset adoption

by launching a BaFin regulated stablecoin.

The partnership will combine DWS’ strong portfolio

management and product structuring capabilities,

Flow Traders’ leading liquidity provisioning expertise

and connectivity in both traditional and digital assets

globally, and Galaxy Digital’s technical infrastructure

and track record of delivering innovative digital asset

solutions to investors.

AllUnity will launch during a period of increased

regulatory clarity in the digital assets space within

the EU, following the newly adopted Markets in

Crypto Assets Regulation (MiCAR). Alexander

Höptner has been appointed as Chief Executive

Officer of AllUnity.

FLOW TRADERS | ANNUAL REPORT 2023 22

Case study

FLOW TRADERS | ANNUAL REPORT 2023 23

Risk management

Enterprise risk management

Risk management governance

Risk reporting

Operating a robust risk framework

is a key priority for Flow Traders.

Our approach is to identify,

assess, monitor, quantify and

document potential risks in the

rapidly evolving financial markets.

Furthermore, our control layer is

closely aligned with our Trading

desks and strives to uphold the

highest regulatory standards.

Tamara Maris-Mravunac | Global

Head of Risk

Our risk management

Flow Traders’ Enterprise Risk Management

Framework (ERMF) forms the foundation of

our approach to managing risks. The ERMF is

documented in Flow Traders’ Enterprise Risk

Management Policy and is reviewed

annually by our Board.

Where possible, we identify, assess, monitor,

quantify and document potential risks which are

inherent to trading in an automated market-making

firm. In the fast and dynamic environment of

automated trading we designed our ERMF in such a

way that it is robust, efficient and transparent. In the

figure below, we present the stakeholders that have

an interest and place value in how our framework

operates.

Our ERMF helps us to ensure that we have adequate

systems and controls including the management of

our liquidity and capital. This is delivered through a

consistent, continuous and careful method for

addressing, managing and prioritizing our key risks

in the context of our Company’s strategic objectives.

FLOW TRADERS | ANNUAL REPORT 2023 24

Enterprise Risk Management

The objective of Flow Traders’ ERMF is to

institutionalize a formal Risk Management

Framework in the Company. The Board considers

Risk Management as a central and integral part of

the organization’s strategic management.

Flow Traders aims for a good balance between its

business activities, return on capital and related

risks. Flow Traders’ Risk Management adopts a

Enterprise Risk Management (ERM) approach to

ensure that the Company’s Risk Appetite and profile

are integrated in the day-to-day operations as well

as the strategic, tactical and operational objective

setting and decision making. Every year, Flow

Traders Group Executive Committee derives its

business targets after determining its strategic

goals. Based on these targets and objectives, the

Company formulates its risk appetite. The targets,

objectives and risk appetite give direction to the

various departments within the Company and are

used to derive our strategic risks.

We deliver on the risk activities set out in our annual

Risk Management Cycle to ensure that the residual

risk profile is (and remains) in line with our set risk

appetite. In order to achieve this, we perform risk

control self-assessments (RCSAs) to assess current

risks and identify risks that have newly arisen.

Following the RCSAs, the Board decides on the

appropriate risk response.

Risk categories

Our risk taxonomy is split into five broad risk

categories - Financial, Business & Strategic,

Compliance & Ethical, Operational, and Technology

risk - each with their own specific sub-risks-

FLOW TRADERS | ANNUAL REPORT 2023 25


Risk Taxonomy Domain	Level 1 Risk Category	Description of the Risk
Financial risk	Capital risk	Capital risk (cost of doing business) refers to the situation where potential loss of investment value happens due to factors such as market volatility, regulatory and PB requirements, economic downturns, or poor financial performance of a company. It is the risk of failing to meet compulsory capital requirements invested in an asset or investment which are needed to maintain a firm’s trading licenses and normal business activities and relationships with prime brokers.
	Liquidity risk	Liquidity risk refer to the inability to replenish capital to the required level. This can happen when: 1) not being able to timely obtain additional funding at a reasonable cost and 2) an inefficient internal management on liquidity. This is the risk of not being able to quickly convert an investment into cash without experiencing a significant loss in value, due to a lack of buyers or sellers in the market, restrictions on trading, or the illiquid nature of the asset itself that lead to an inability to easily buy or sell an asset without incurring significant costs. It can also happen because of a lack of access to alternative sources of funding such as short-term loans, trading credit from certain platforms, etc. in a timely manner. This is the risk of internal management deficiency which can lead to liquidity constraints.
	Market risk	Market risk is the risk to an institution resulting from movements in market prices; in particular, changes in interest rates, foreign exchange rates, and equity- and commodity prices.
	Credit risk	Credit risk is the risk of a counterparty and/or issuing institution involved in trading in or issuing a financial instrument defaulting on an obligation.

FLOW TRADERS | ANNUAL REPORT 2023 26


Risk Taxonomy Domain	Level 1 Risk Category	Description of the Risk
Business and Strategic risk	Strategy risk	Risk that may arise from the pursuit of the Company’s business plan, from strategic changes in the business environment, and/ or from adverse strategic business decisions. Market activity risk is part of this risk as our NTI and profitability are primarily a function of the level of trading activity, or trading volumes, in the financial instruments in which we trade.
	Concentration risk	Probability of loss arising from heavily lopsided exposure to a particular group of counterparties or products. Concentration risk also includes supplier dependency risks.
	Project Delivery & Management risk	The risk of inaccurate project management leading to inadequate realization of project objectives.
	Sustainability & Environment risk	The risk that an environment, social or governance (related) issue or event will impact the entity financial, non-financial and/or in the realization of strategic objectives of the entity.
Compliance & Ethical risk	Financial crime risk	The risk of money laundering, sanctions violations, bribery and corruption, and Know Your Customer (KYC) failure.
	Regulatory compliance risk	Failure to comply with any legal or regulatory obligations that are not captured through other risks.
	Reputation risk	The reputation risk is the risk of loss resulting from negative exposure to stakeholders.
	Fraud risk	Acts intended to defraud, misappropriate assets, deceive or circumvent regulations or the law, attempted or perpetrated against the entity.
	Conduct risk	Failure to act in accordance with internal and external stakeholders’ and society's best interests, fair market practices, and codes of conduct.
Operational risk	Business continuity risk	The risk of failure to provide and maintain appropriate business continuity management (BCM), including inadequate business continuity plans.
	Trading execution risk	The risk of losses due to errors in the execution.
	Legal risk	Legal risk refers to the potential exposure and negative consequences that an individual or organization may face as a result of non-compliance with applicable laws, regulations, and legal obligations.
	People risk	The risk that the entity is not able to develop, retain and attract the necessary skills and diverse capabilities in our workforce to realize strategic objectives.
	Model risk	Model risk for a trading firm refers to the potential for adverse consequences resulting from errors or limitations in the financial models and algorithms used for trading and risk management. This risk arises from the reliance on mathematical models and computer algorithms to make trading decisions, value financial instruments, and manage risk. Model risk can stem from inaccuracies in the models, inappropriate assumptions, data errors, or the failure to account for all relevant market factors.
	Reporting risk	The risk of not being able to report adequately to stakeholders (e.g., annual financial report, regulatory reporting).
	Taxation risk	The risk of unexpected tax charges, including interest and penalties including tax related events resulting in for example a damaged reputation with the tax authorities, investors, employees and the public at large.

FLOW TRADERS | ANNUAL REPORT 2023 27


Risk Taxonomy Domain	Level 1 Risk Category	Description of the Risk
Operational risk	Third-party risk	The risk of failing to manage third-party relationships and related risks appropriately.
	Trade settlement risk	The risk of ineffective trading leading to financial performance variability and non-compliance with internal and external regulation.
	Physical security risk	The risk of damage to the organization's physical assets or harming of employees at the workplace.
	Financial reporting risk	The risk of incorrectly reporting financial information (balance sheet, income statement, cash flow statement, statement of changes inequity) to various stakeholders, such as shareholders, investors, creditors, and government regulatory bodies.
Technology risk	Technology systems risk	Risks in technology surrounding malfunctions, algorithmic risk, natural disasters, software bugs, and hardware failures resulting in service interruptions, availability of data, financial losses and reputational damage.
	Data Management risk	The risk of failing to appropriately manage and maintain data, including all types of data, for example, counterparty data, employee data, and the organization’s proprietary data.
	Technology Strategy risk	The risk that the IT strategy is not described, unclear or incomplete and thereby not sufficient to contribute to IT and business objectives. This includes the risk of the strategy not being properly executed.

Risk Management Governance

The effectiveness of risk management is unavoidably

linked to commitment and integrity. It is therefore

crucial that the Board, the Executive Committee,

global and local department heads, and all Flow

Traders employees are aware of the Company's risk

policies, Risk Appetite and their own responsibilities,

as well as the responsibilities of Flow Traders as a

whole. Flow Traders Risk Management is embedded

across the organization in line with the three lines of

defense model.

The first line of defense is formed by Trading,

Technology and Operations. These departments are

crucial for the core processes within Flow Traders

and are responsible for incorporating controls in the

day to day trading and IT processes and for the

continuous monitoring of Flow Traders’ systems and

trading controls including onboarding of new

counterparties.

The second line of defense is responsible for

oversight and monitoring regarding regarding risk

(market and credit risk, treasury, and operational

management) compliance (including trading,

regulatory, surveillance and AML KYC), legal and

finance; together are responsible for the continuous

risk management at Flow Traders.

The third line of defense is formed by Flow Traders’

Internal Audit Function (IAF). They provide

independent and objective assurance and advice on

the adequacy and effectiveness of governance, risk

management and control systems. It reports its

findings to the Audit Committee and to the CEO to

promote and facilitate continuous improvement.

The IAF carries out its audit work in accordance with

the approved and implemented Group Internal Audit

Charter.

FLOW TRADERS | ANNUAL REPORT 2023 28

Annual Report_risk management governance2.jpg

Enterprise Risk Management roles and

responsibilities

The role of the Risk & Sustainability Committee of

the Board is to:

Supervise the Executive Directors with respect to:

▪ Identifying and analyzing the risks associated

with the strategy and activities of the Company

and its affiliated enterprise;

▪ Establishing the risk appetite, and putting

in place the measures in order to counter the

risks being taken;

▪ Designing, implementing and maintaining

adequate internal risk management and control

systems;

▪ Monitoring the operation of the internal risk

management and control systems and carrying

out a systematic assessment of their design and

effectiveness at least once a year. Where

necessary, improvements should be made to

internal risk management and control systems;

▪ Accounting for the effectiveness of the design

and the operation of the internal risk

management and control systems together with

the Audit Committee.

Advise, and where applicable supervise, the

Executive Directors with respect to:

▪ the Company’s overall risk appetite, tolerance

and strategy;

▪ the current risk exposures and future risk

strategy;

▪ the intended appointment and/or removal of the

Global Head of Risk.

▪ Review, in relation to the Company’s internal risk

management and control systems;

▪ the Company’s overall risk assessment processes

that inform the Executive Directors’ decision

making, ensuring both qualitative and

quantitative metrics are used;

▪ on an annual basis, the parameters used for these

processes and the methodology adopted;

▪ the accurate and timely monitoring of certain risk

types of high importance;

▪ the Company’s capability to identify and manage

new risk types;

▪ reports on any material breaches of risk limits and

the adequacy of proposed action.

Monitor the manner in which the Company’s risk

management function is provided with adequate

resources and appropriate access to information to

enable it to perform its function effectively and in

accordance with the relevant professional standards.

The Risk & Sustainability Committee shall also keep

under review that the function has the adequate

independence and is free from management and

other restrictions;

Prepare reports, recommendations and

deliberations on its findings regarding the

Company’s internal risk management for purposes

of the meetings of the Board;

Review, and where applicable monitor the Executive

Directors’ responsiveness to the reports, findings

and recommendations of the Global Head of Risk.

The role of the Audit Committee of the Board is to:

▪ Supervise the Executive Directors with respect to

discussing the effectiveness of the design and

operation of the internal risk management and

control systems.

The Executive Directors, with the support of the

Executive Committee, are responsible for:

▪ Setting Company-wide and local department

targets and objectives;

▪ Setting boundaries for risk-taking taking by

communicating our risk appetite;

▪ Successfully promoting, sponsoring and

coordinating the development of a risk

management culture throughout the Company;

▪ Guiding the inclusion of risk management

practices in all strategic and operational decision

making;

▪ Maintaining and monitoring the effectiveness of

the framework to manage, monitor and report

risk;

▪ Identifying and evaluating the significant risks

related to Flow Traders’ strategy;

▪ Providing advice and follow-up on risk mitigating

measures;

▪ Inviting stakeholders within the firm to report on

new and existing risk exposures;

▪ Reporting on the outcomes of the risk

management activities to the Risk &

Sustainability Committee of the Board.

▪ Managing the risk self-assessment cycle:

FLOW TRADERS | ANNUAL REPORT 2023 29

Flow Traders’ Global/Local Heads are responsible for:

▪ Setting global/local department targets and

objectives in line with Company-wide objectives;

▪ Performing annual risk self-assessments to

identify assess and document existing and new

risks and their impact on proposed plans;

▪ The adoption of risk management practices;

▪ Awareness and training on risk management;

▪ The results of risk management activities,

relevant to their area of responsibility;

▪ Reporting on risks and risk management towards

the Risk Department, the Local and/or Global

Heads.

Flow Traders’ Risk Department is responsible for:

▪ Monitoring, improving and developing the ERMF;

▪ Triggering risk self-assessments for all

departments;

▪ Gathering the necessary information and creating

risk reports for internal stakeholders and the

Board, the Risk & Sustainability Committee, the

Executives Directors and the Executive

Committee.

Flow Traders’ Internal Audit Function is responsible for:

▪ Evaluating risk exposure relating to achievement

of the organization’s strategic objectives;

▪ Monitoring and evaluating the effectiveness of

Flow Traders Group’s risk management

processes.

Flow Traders’ employees are responsible for:

▪ Giving input to annual risk self-assessments to

identify, asses and document existing and new

risks and their impact on proposed plans;

▪ Identifying areas where risk management

practices should be adopted and advising their

supervisors accordingly.

The below figure shows the ERM cycle of

Flow Traders:

FLOW TRADERS | ANNUAL REPORT 2023 30

The annual Risk Management Cycle follows

the below Risk Management Framework:

Every year the Executive Directors, with the support

of the Executive Committee, set their business

targets following the strategic goals. The strategic

goals are generally formulated in November/

December. The Board approves the strategic goals

and business targets.

Additionally, the Board is involved in the strategy

setting exercise. Based on these long-term goals,

short-term targets are determined. These targets are

then translated into annual Company-wide,

departmental and individual goals and discussed in

an annual meeting with the Executive Committee

and all relevant regional Operational Committees

and the Board.

Based on the targets, objectives and current

business operations, the Executive Directors

formulate the risk appetite of the Company. The

targets, objectives and risk appetite give direction to

the various departments within Flow Traders and are

used to derive the Company’s strategic risks.

Flow Traders’ Risk Management Cycle is

implemented to manage our residual risk profile to

remain in line with our risk appetite. To help achieve

this, we perform Risk Self Assessments to identify

and assess current or emerging risks. Following the

Risk Self Assessments, department heads in

cooperation with the Executive Directors will decide

on the appropriate risk response. The effects of the

chosen risk responses will be monitored and the

actual residual risk profile will be mapped versus the

appetite annually.

FLOW TRADERS | ANNUAL REPORT 2023 31

Risk reporting

Flow Traders has a standing Risk Committee that

continuously assesses the risks we face in our

business, and is comprised of our Global Head of

Risk, the Executive Directors and certain members

of the Executive Committee.

Aside from regular ongoing communication, there is

a formal monthly meeting in which we discuss all

risk assessments and risk proposals related to

position limits, strategies, procedures, liquidity and

capital requirements and other requests. Any

material change to our risk profile, systems,

strategies and limits must subsequently be

approved by the Executive Committee.

In addition to this standing Risk Committee, we have

a Risk & Sustainability Committee of the Board. All

Non-Executive Directors of the Board are members

of this Risk & Sustainability Committee. The Global

Heads of the Control Functions inform the Risk &

Sustainability Committee of the Board about the

effectiveness of the internal risk management and

control systems. This includes the reasonable

assurance that the aforementioned systems do not

contain any material inaccuracies.

The tasks of the Risk & Sustainability Committee of

the Board include supervision and monitoring, as

well as advising the Executive Directors on the

operation of the Company’s internal risk

management and control systems. The Risk &

Sustainability Committee is also responsible for

providing advice to the Executive Directors on the

Company’s development, performance, and

sustainability of its trading strategies, as well as

reviewing the risk of the Company.

It also maintains regular contact with the Company’s

Trading and Risk and Operations departments.

For more information on the responsibilities of our

Risk & Sustainability Committee, please see the

chapter "Corporate Governance".

The monitoring of the Company’s internal risk

management and control systems was previously

identified as a priority. This is a major responsibility

of the Board and its Risk & Sustainability Committee.

Good progress has been made and the Board

continues to oversee progress on this matter.

All risks relevant to each of the committees of the

Board are monitored in the Risk & Sustainability

Committee of the Board. This means that the

relevant items set out in best practice provision 1.4.1

of the Corporate Governance Code have been

discussed by the Board in 2023, all Non Executive

Directors of the Board are members of the Risk &

Sustainability Committee.

For more information, please refer to the chapter

Board Report.

Financial risks

Market risk

Market risk is the risk of loss resulting from

unfavorable market movements in various drivers of

a security’s price that may result in a financial loss

for its holder.

For illustration, the value of a financial instrument

may fluctuate because of changes in factors such as

equity prices, currency rates, future dividend

expectations, interest rates and volatilities.

Our hedging strategies (typically implemented by a

combination of underlying securities and vanilla

derivatives) along with our continuous monitoring of

our positions aim to minimize this risk.

Our trading philosophy is that we hedge our

positions as perfectly as possible to minimize our

market risk exposures.

Business strategy and market activity risk

The Board and the Executive Committee establish

effective policies and procedures that enable the

Company to identify strategic risks and regularly

reassess that its strategic objectives and business

plans are being executed as intended in the

competitive environment. Such assessments include

Sustainability & Environmental risk considerations as

well as Concentration Risk with respect to supplier

concentrations and geographical footprint.

Our NTI and profitability are primarily a function of

the level of trading activity, or trading volumes in the

financial instruments in which we trade, and the bid-

ask spreads (which largely determine the profit on

the trade, or margins, we capture).

Trading volumes in securities, derivatives,

currencies, commodities, digital assets and other

financial instruments on exchanges and on other

trading venues worldwide are directly affected by

factors beyond our control, including economic and

political conditions, broad trends in business and

finance, regulatory requirements, actions by central

banks, and changes in the markets in which such

transactions occur.

To cope with periods of low market activity, we have

diversified our trading into different products and

across multiple markets. This is to safeguard that we

FLOW TRADERS | ANNUAL REPORT 2023 32

are not overly dependent on market activity in one

particular asset class or product type.

Over the past year, our organization has consistently

extended its presence in the Digital Asset markets.

We established a dedicated risk management team

working closely with the trading desks. Our primary

risk management objective is to diligently evaluate

and mitigate credit, market, and operational risks in

line with the firms risk appetite. This tactical step has

enabled us to cultivate a comprehensive risk

framework, integrating advanced automations for

real-time monitoring and alerting. Throughout the

year, our framework underwent rigorous testing on

multiple occasions and proofed its effectiveness in

safeguarding against major losses associated with

Digital Asset trading activities.

Non-financial risks

Operational risk

Operational risk is defined as the risk of loss arising

from inadequate or failed internal processes, people,

systems or external events. Operational risk

management is an integral part of Flow Traders’ risk

and control systems. The aim is to promote a

proactive approach to risk management, incident

identification, reporting, and resolution to minimize

operational disruptions, financial losses, and

reputational damage. Our operational risk is

dominated by technology-related events at our

exchanges and clearing members. Therefore, the

level of our investment in technology is important to

mitigate those associated risks as well as having

resilient and robust internal systems and controls.

We operate an integrated, in-house developed,

high-performance and customized technology

platform with frequent and controlled deployments

of new hardware and software.

Our infrastructure has a modular design which

allows us to rapidly test and implement

improvements in both hardware and software on an

ongoing basis. Controlled releases of hardware and

software enhancements provide for minimal

disruption to our business.

The environment in which our trading software (or

updates of our trading software) is being developed

is strictly separated from the environment in which

such trading software operates in production.

Access to the source code is strictly controlled and

limited.

We have a monitoring system in place to control

undisrupted trading activities in real time. Multilayer

monitoring is employed to avoid errors. When an

error does occur, the relevant teams are

immediately notified via multiple different channels.

We rely on multiple third-party service providers for

business and market data, which is a key part of

what is monitored.

Our risk management system is fully integrated with

our proprietary technology platform, analyzing real-

time pricing data, and is designed to ensure that our

order activity is conducted within strict

predetermined trading and position limits.

For example, our pre-trade risk controls are

designed to prevent the trading engines from

sending quotes that deviate from our predefined risk

parameters. These include price and volume limits,

which are set by our Risk Management department.

This keeps our ordering, trading and positions well

within our preset tolerance levels. Our post-trade

monitoring tools include trade-level reconciliation of

prices and positions against those of our exchanges

and prime brokers.

Our IT systems are regularly subjected to

penetration tests by external experts. We have a

comprehensive IT security system that is designed

to protect us from attacks both from internally and

externally.

Where we have a technical interface with

institutions such as our prime brokers and

exchanges, the integrity of the connection between

the systems and the data that is being exchanged is

subject to prior conformance testing and continuous

monitoring.

Unexpected deviations are flagged and investigated.

We also have a disaster recovery plan in place which,

we continuously review to ensure it adequately

captures relevant scenarios. For the lessons that we

have learned from the COVID-19 global pandemic,

we have already made substantial changes to our

global approach to our site management.

We use risk-based onboarding procedures before

we start trading on any new platforms, including

platforms designated for trading digital assets. While

many of these platforms remain unregulated, many

have improved their own onboarding procedures

and counterparty identification procedures. While

we believe our own procedures are strong, the

unregulated status of these platforms makes them

inherently less institutionalized and supervised than

regulated platforms.

Regulatory risk

We serve institutional counterparties and do not

provide investment services or ancillary services to

third parties, most of the markets we operate in and

nearly all aspects of our business are highly

regulated. Where applicable, entities forming part of

the Group have obtained the regulatory licenses and

approvals needed to operate these entities.

FLOW TRADERS | ANNUAL REPORT 2023 33

Flow Traders operates in three key trading hubs in

Amsterdam, Hong Kong and New York, and has

established offices in London, Milan, Shanghai,

Singapore, Chicago and Paris. The Group currently

trades on more than 180 venues worldwide as well

as operating on numerous other venues through our

brokers. Our regulatory landscape is broad as we

have to comply not only with our local regulations,

but also with the trading rules of all venues on which

we trade.

Legislators and regulators worldwide continue to

closely supervise the world financial markets in

which we operate. This places significant demand on

Flow Traders to maintain a professional, well-

structured and compliant organization.

We received authorization from the Financial

Conduct Authority and completed the migration of

activities of our branch office in London to a

regulated subsidiary. The authorization enables us to

increase our exposure to the UK financial ecosystem

and maintain our physical footprint in the UK and

how we interact with UK-based financial institutions.

Our Compliance department supports management

and operations at Group and local level by

identifying, advising on, reviewing and reporting on

regulations. It also seeks to maintain a compliant

business environment through staff training and

monitoring in order to manage the Group’s

conformance with its regulatory obligations.

Compliance together with Public Affairs monitors

and assesses any forthcoming regulations that may

impact the firm. During 2023 this included amongst

others matters:

The European Commission review of the European

Central Securities Depositories Regulation that was

adopted on 16 March 2022. Amendments on the

mandatory buy-in regime in the Settled Discipline

Regime (SDR) by proposing a "two-step approach".

We will continue to monitor the future impact of

mandatory buy-ins and to manage the two-way flow

of cash penalties for failed transactions.

Compliance together with Public Affairs monitors

and assesses any forthcoming regulations that may

impact us. During 2023 this included amongst others

matters:

▪ The EC review of the European Central Securities

Depositories Regulation that was adopted on 16

March 2022. Amendments on the mandatory

buy-in regime in the Settled Discipline Regime

(SDR) by proposing a "two-step approach". We

will continue to monitor the future impact of

mandatory buy-ins and to manage the two-way

flow of cash penalties for failed transactions.

▪ The legislative procedure on the MiFID/MiFIR

review almost came to a close with the vote in

the European Parliament in January 2024. This

review aims to further improve the framework

introduced by MiFID II. One of the key

components is the post-trade consolidated tape

that should be real-time and not include any

deferrals. We are and have engaged with

regulators and various stakeholders to continue

our efforts to increase transparency in all markets

we are active in.

▪ We completed the implementation of IFR/IFD.

We have received minor pointers from the DNB

and AFM around a few observations they would

like to have clearly articulated in our next ICLAAP.

We will continue to implement best practice as

much as possible. Such conversations with our

regulators as well as our peers are ongoing, and

this will continue as this regulation matures along

with any further interpretation by the EBA and

DNB.

▪ Digital Assets and related forthcoming

regulations such as the prudential BIS paper,

MiCAR and DORA remain a topic that garners

significant attention. There is still variety of

approaches taken by various governments and

regulators from around the globe for this

developing asset class. As a leading liquidity

provider, we continue to follow these

developments closely and remain an active

contributor to key regulatory consultations. We

anticipate the regulatory uncertainty will

continue in 2024 and beyond. We are engaging

with regulators on a global and local level to

lobby for a clear and fair regulatory framework, as

we believe that will lead to a mature ecosystem

and sustainable growth for this asset class.

The Compliance, Risk and Operations departments

have promulgated and implemented controls,

internal rules and processes that have been

pragmatically developed following applicable

regulatory requirements, guidelines from market

authorities, and industry best practices.

Nevertheless, it is worth remembering that laws and

regulations are subject to change and will be

interpreted differently in practice over time.

Actual or alleged non-compliance with applicable

laws or regulatory requirements could adversely

affect our reputation and in turn our long-term

profitability and future business prospects. This may

FLOW TRADERS | ANNUAL REPORT 2023 34

also be the case to a lesser degree for differences in

interpretation or lack of timely or complete

implementation of regulatory requirements.

Sanctions could include fines, penalties,

disgorgement and censures, suspension or expulsion

from trading venues or the revocation or limitation

of licenses.

We aim to minimize such risks by focusing

considerable management attention to choose the

most appropriate strategic approach, employing

highly qualified compliance and risk professionals to

allow the deployment of staff training; to efficiently

update our monitoring and reporting systems; and

to be able to continuously evaluate the impact of

current and upcoming regulations on our operations

to find the optimal path to evolve our processes.

Notwithstanding such efforts and given the highly

regulated nature of our business, we remain subject

to routine (and more targeted) inquiries and audits

from our global regulators and our trading venues.

The outcome of such inquiries are difficult to predict

and manage, however we aim to be as transparent

as possible in the spirit of cooperation to facilitate a

better understanding of how we manage risk.

In the course of 2023, Flow Traders B.V. received an

information request by the AFM to investigate

compliance with the Dutch Financial Supervision Act

(Wft). Flow Traders duly provided all required

documentation and complied in full with the

request. In early 2024, the AFM notified Flow Traders

that no formal proceedings would take place

pursuant to this request. In parallel, the AFM and

DNB requested further information at the end of

2023 in order to investigate compliance with the

Dutch Money Laundering and Terrorist Financing

(Prevention) Act (“Wwft”). This information was

delivered in full in January 2024.

Environmental risk

While Flow Traders considers its overall impact on

the environment to be low due to the office-

oriented nature of our business, we have

nonetheless identified certain environmental risks:

▪ Physical environmental risks such as earthquakes,

forest fires and floods could negatively impact

our physical infrastructure. This is particularly

relevant to our server locations, which are

distributed globally. Climate change will likely

lead an increase in extreme weather events in the

future. We have and will mitigate this risk by

having a widely distributed server infrastructure

with a high degree of system redundancy. In 2023

forest fires in South East Asia have led to the

closure of our Singapore office. This was

mitigated by activities transferring to other office

locations.

▪ Future regulation may also affect Flow Traders

financially by putting a price on CO2 and other

greenhouse gas emissions. In addition, CO2

pricing may have an impact on how we seek to

offset our carbon footprint in the coming years.

External risk

Given the highly interconnected nature of the

financial markets ecosystem we are a part of, we

recognize that should any of the risks referenced

within this section materialize, there could be a

negative impact on various external third parties.

Specifically, market and operational risk events

could negatively impact key parties within our value

chain; namely our counterparties and our prime

brokers. This could limit our counterparties’ ability to

trade with us or settle trades effectively on a timely

basis. Moreover, the various prime brokers we work

closely with could also be exposed to similar risks. In

order to monitor and mitigate such risks, we have

built internal systems to monitor the credit risk

exposures, and maintain an active Global Business

Continuity Management Policy and Recovery Plan.

Compliance and transparency

Focus on anti-bribery, anti-corruption and

anti-money laundering

Flow Traders continues to be a strong proponent of

effective, efficient and equal regulation and we

contribute to the regulatory dialogue in our key

jurisdictions to campaign for markets to be fair,

transparent and functioning in an orderly fashion.

We are committed to complying with all relevant

laws and regulations that apply to us, wherever we

operate. Especially important are the rules around

anti-corruption, anti-bribery and anti-money

laundering.

Flow Traders applies its counterparty due diligence

(KYC) program to all existing and prospective

counterparties. Unregulated digital asset

counterparties are subject to enhanced due

diligence measures, in line with our risk based

approach. Our KYC program ensures that all

counterparties are reviewed and monitored for

money laundering, terrorist financing and sanction-

related risks on an ongoing basis as well as at

onboarding.

Integrity and transparency are central to the way we

run our business regardless of their seniority or role.

The Company encourages everyone, from our Board

to all our staff, to speak up and participate in our

firm's open culture. This inclusive culture supports

FLOW TRADERS | ANNUAL REPORT 2023 35

our employees in complying with the applicable

laws, regulations and our internal policies.

We believe that each employee of Flow Traders has

an individual as well as collective responsibility for

ensuring an honest and ethical conduct of business

within the Company. Our Code of Conduct, which

forms part of our employment documentation, is the

formalization of our behavioral values.

We believe that each employee of Flow Traders has

an individual as well as collective responsibility for

ensuring an honest and ethical conduct of business

within the Company. Our Code of Conduct, which

forms part of our employment documentation, is the

formalization of our behavioral values.

We believe that each employee of Flow Traders has

an individual as well as collective responsibility for

ensuring an honest and ethical conduct of business

within the Company. Our Code of Conduct, which

forms part of our employment documentation, is the

formalization of our behavioral values.

Ensuring adherence with our Code of Conduct is the

responsibility of the Executive Committee. Any

reported potential breaches are investigated fully by

the Executive Committee and other members of our

senior management team in accordance with

existing clearly laid out procedures and policies.

Our Code of Conduct can be found on our website

www.flowtraders.com.

We also have anti-bribery, anti-corruption and anti-

money laundering (AML) policies in place that apply

to all our staff. We expect our counterparties,

business partners, intermediaries, contractors and

subcontractors to adhere to the same standards. We

believe that the risk of bribery or corruption is very

limited as we do not hold or manage client money or

assets. We trade financial instruments for our own

account and own risk only. We do not maintain

production facilities or source raw materials.

Nevertheless, our staff receives training in anti-

bribery, anti-corruption and AML practices, as the

Board would like to reinforce the importance of

these policies.

Key to our anti-bribery and anti-corruption policy is

that officials or counterparties that we work with

may never be placed in an uncomfortable position.

Therefore, no gifts nor favors that may lead (or have

the appearance to lead) to obligations or embarrass

any recipient, and no gifts nor favors of any

substantial value may be given to any authorities or

counterparties that we interact with. Any form of

facilitation payments is strictly not permitted under

any circumstances. We provide clear and recurring

guidance on a regular basis in that respect.

Nevertheless, our staff receives training in anti-

bribery, anti-corruption and AML practices, as the

Board would like to reinforce the importance of

these policies.

Key to our anti-bribery and anti-corruption policy is

that officials or counterparties that we work with

may never be placed in an uncomfortable position.

Therefore, no gifts nor favors that may lead (or have

the appearance to lead) to obligations or embarrass

any recipient, and no gifts nor favors of any

substantial value may be given to any authorities or

counterparties that we interact with. Any form of

facilitation payments are strictly not permitted

under any circumstances. We provide clear and

recurring guidance on a regular basis in that respect.

As part of our constant monitoring, all expenses and

gifts relating to external parties are checked by

senior managers and employees must state the

purpose and recipient of an expense.

We have zero tolerance approach towards bribery

and corruption and we actively ensure that no such

behavior occurs. No cases of bribery or corruption

were reported in 2023.

Whistleblowers

In addition to our culture of openness, transparency

and participation, we also have a detailed

Whistleblower Policy in place for all staff and

relevant contractors, approved by the Board.

The Whistleblower Policy has wide applications,

including in respect of topics such as fraud, market

abuse, corruption, anti-money laundering, theft,

bribery, dishonoring the organization, global tax

policy and any other structural misconduct that

threatens the integrity and proper business conduct.

All employees are required to participate in an online

course on the Whistleblower Policy, as part of the

Flow Academy, to create awareness and guidance

on how to deal with misconducts and incidents

described in Flow Traders Whistleblower Policy.

Employees are free to raise issues and have the

responsibility to report misconduct and incidents, or

any reasonable suspicions.

The Whistleblower Policy also provides any

whistleblower with anonymity, confidentiality, and

the Company will not impose sanctions on

disclosure (or affect an employee’s legal position)

when the employee reports a suspected misconduct

in good faith, unless the employee is involved in the

FLOW TRADERS | ANNUAL REPORT 2023 36

issue that is being reported. We respect a non-

retaliation policy when a suspected misconduct is

reported. Our Whistleblower Policy can be found on

our website www.flowtraders.com.

Internal audit

The Internal Audit (IA) Function seeks to enhance

and protect organizational value by providing risk-

based and objective assurance, advice, and insight.

An efficient and effective IA contributes to strong

internal controls and to a robust governance

structure, which can address significant risks.

The scope of IA's work includes the examination and

evaluation of the adequacy and effectiveness of our

governance, risk management and control

processes. It also includes quality assurance work

reviewing our performance in carrying out assigned

responsibilities to achieve our stated goals and

objectives.

Our Group Internal Audit Charter defines the IA’s

purpose, authority, responsibility and position within

the organization. This charter is aligned with the

Corporate Governance Code and with guidance

provided by the Institute of Internal Auditors.

Our Group Internal Audit Charter defines the IA’s

purpose, authority, responsibility and position within

the organization. This charter is aligned with the

Corporate Governance Code and with guidance

provided by the Institute of Internal Auditors.

The IA function is an integral part of our reporting

cycle. The Internal Audit Function reports to the

Audit Committee and to the CEO. It aligns its efforts

with our external auditor and reports its audit results

to the Board, the Audit Committee and informs the

external auditor. The Board assesses the way in

which the IA function fulfills its responsibility

annually and takes the opinion of the Audit

Committee into account.

Flow Traders Internal Audit Function conforms to

the International Professional Practice Framework

(IPPF) of the Institute of Internal Auditors (IIA).

FLOW TRADERS | ANNUAL REPORT 2023 37

ESG at a glance

ESG sustainability strategy

The world is facing significant challenges in ensuring

a sustainable future for our people and our planet.

Many national and international initiatives are

addressing these challenges. Every organization will

have to play its own role in the transition to a

sustainable society, depending on its impact and its

opportunities.

Flow Traders’ ESG ambition is to contribute to

markets functioning in a smooth manner which we

believe will assist in financing the transition towards

a sustainable society. Key to achieving our ESG

ambition, is our collaboration with key stakeholders

to deliver on our identified strategic themes.

Through our ESG sustainability strategy that

comprises five strategic areas – Environmental

footprint, Sustainable employment, Responsible

supply chain, Good governance and Sustainable

green transition – we continue to advance our

corporate responsibility to create long-term value

for our stakeholders as well as contribute to the

United Nations’ Sustainable Development Goals

(SDGs). We endorse sustainable impact while

providing the best value for our stakeholders.

Staying focused on what matters for our business

and stakeholders, is the cornerstone of our strategy.

Our material ESG sustainability topics

Flow Traders aims to focus our ESG (environment,

social and governance) sustainability strategy on the

matters and topics that are most important from a

sustainability impact as well as a sustainability risk or

opportunity perspective.

In 2023, we completed an enhanced materiality re-

assessment which we initially conducted in late

2020. This double materiality assessment (DMA) was

undertaken as critical input to identify Flow Traders’

ESG strategic priorities, which will be implemented

in the course of 2024.

Based on the guidance from the European

Sustainability Reporting Standards (ESRS), the DMA

concludes the following. (1) Flow Traders’ most

significant impact is in relation to our people and our

environment. (2) The most significant sustainability-

related risks and opportunities relate to our

operations and from across relevant value chain

actors. We derived this by looking at our impact at

various levels, from society at large to our own

business operations.

As a result of this extensive re-assessment, we have

consolidated the material issues and our impact

areas to five sustainability themes categorized by

the environmental, social and governance (ESG)

aspects of our Company, business and operations.

This forms the basis for our sustainability reporting

going forward.

The DMA guidance from the ESRS, was formalized in

late 2023, therefore in the 2023 Annual Report we

report on the results of the DMA and the identified

strategic priorities. In 2024, we will work on further

developing our approach and deployment plans for

each of these five strategic priorities.

From the 2024 Annual Report (published early 2025)

and subsequent reporting cycle, the ESRS standards

and those topical standards resulting from our

material topics will be the basis for CSRD-compliant

disclosure in the Annual Report.

Read more about the DMA process in section “Other

information - Double materiality".

Our ESG strategic themes

Environment

We want to continue to expand our trading footprint

and capabilities to ensure that sustainable

investment products can be traded easily and

efficiently, with minimal energy use and emissions.

That is why we focus on energy efficiency and

climate action to reduce our environmental footprint

from our business operations.

Social

Our proprietary cutting-edge technology for

seamless execution of trading, would not operate

without our talented team of over 600 employees.

We prioritize sustainable employment, by creating

an attractive workplace for all, leveraging an

experienced talent pool that forms an open, diverse,

and entrepreneurial team.

We want to promote the drive for fair and

transparent markets and fuel innovation in our

ecosystem, in continuous collaboration with the

financial and investment community. We view a

responsible supply chain with robust human rights

practices and positive environmental contribution

FLOW TRADERS | ANNUAL REPORT 2023 38

will benefit all our stakeholders and result in Flow

Traders being a valued partner in our communities.

Governance

Being a player in the global financial ecosystem,

good governance means that we must ensure that

we always operate with high ethical standards in

compliance with laws and regulations. We will act on

our responsibilities and fully anchor them in the way

we do business through our focus on integrated

governance, engaged stakeholders and transparent

reporting.

We believe that Flow Traders has an important role

to play in the global financial ecosystem. We serve

the real economy by allowing investors, including

pension funds and retail investors, to manage their

risks by being able to always trade. Moreover,

market makers like Flow Traders, have contributed

to making it cheaper and more efficient to trade

than in previous decades, which benefits everyone.

In this key role Flow Traders has a responsibility to

contribute to the financial stability and the

sustainable agenda in the countries in which we

operate (see Flow Traders’ value creation model). As

a key market participant, at the core of the financial

ecosystem, Flow Traders supports the acceleration

of the sustainable green transition towards

sustainable climate neutral economy to sustain

growth and finance, notably by providing liquidity in

the ever-growing suite of ESG ETFs.

Going forward

While we have re-assessed the material topics and

strategic themes, the process of defining the metrics

to measure our performance and success is

underway and implementation will start in 2024.

In addition, to ensure that we achieve our ambitions,

we will focus on strengthening our organization’s

governance structure to ensure that each project on

our ESG sustainability roadmap is embedded in our

operational business plans and the firm is well-

equipped to meet its targets.

We will report on our updated ESG ambitions using

this set of metrics per our 2024 Annual Report.

The table below provides an overview of our

material topics, resulting from the DMA, and how

those are bundled into strategic themes.

Read more about the DMA and material topics in

section “Other information - Double materiality".

FLOW TRADERS | ANNUAL REPORT 2023 39


Environment
Environmental footprint	▪ GHG emissions – scope 2 (electricity)
	▪ GHG emissions – reduction mechanism
Social
Sustainable employment	▪ Diversity and inclusion
	▪ Employee engagement
	▪ Human capital development
	▪ Human rights (incl. equal treatment)
	▪ Labor practices
	▪ Health and safety
	▪ Privacy and data protection
Responsible supply chain	▪ (ESG) Due diligence
	▪ Procurement practice
Governance
Good governance	▪ Business conduct
	▪ Public affairs
	▪ Tax
	▪ Cyber security
Sustainable green transition	▪ Innovation management
	▪ Social impact

ESG Strategic

Theme

ESG material topic

SDGs

Our value chain

Central to our approach in assessing the material ESG topics, is engagement with our value chain partners. We assess the current and potential future impacts, risks and

opportunities from two perspectives: a) impacts resulting from our business activities on our stakeholders (Inside-Out view), and b) impacts resulting from the business

activities from our upstream and downstream value chain on Flow Traders (Outside-In view). When identifying the material topics, we assess each ESG topic on the

most granular level (so-called, sub-sub-topics) to allow focus on areas where impacts, risks and opportunities are likely to arise.

FLOW TRADERS | ANNUAL REPORT 2023 40

Environmental footprint

Flow Traders considers its overall direct

environmental footprint to be low. The nature of our

business characteristics is a relatively light carbon

footprint in relation to its direct business activities.

Our scope 1 and 2 GHG emissions amounts to 1,197

tCO2e, which is less than 30% of the total scope 1, 2

and 3 footprints in 2023. In 2023, Flow Traders’

carbon footprint was equivalent to 4,157 tCO2e

(2022: 2,993 tCO2e).

Nevertheless, Flow Traders is conscious of the

challenges linked to climate change, the need to

reduce greenhouse gas emissions and to manage

natural resources prudently. Since our first carbon

footprint analysis, conducted four years ago, we

have commenced the application of improved

measurement models as well as expanded the scope

of our reporting by gradually onboarding more

scope 3 categories into our dataset. This is part of

our approach for continuous improvement and our

decision-making process.

Examples of data maturity and improvement

actions, among others, are:

▪ Reduced the amount of non-renewable energy

sources at the data centers by more than 40%,

from nearly 500 tCO2e to 275 tCO2e.

▪ Included purchased IT related hardware in our

scope 3 calculation, which is around 860 tCO2e.

▪ Our London office moved to 100% renewable

energy.

Although we made good progress, we still see

challenges in obtaining primary data from our

suppliers. This was particularly relevant for the

electricity consumption in our office buildings using

primary data (scope 2). Flow Traders will focus in the

coming years on deploying carbon reduction actions

whenever possible. Flow Traders has a direct grasp

only on Scope 1 and 2 CO2 emissions. For scope 3, we

will need to initiate a dialogue with our entire value

chain (upstream and downstream) to act on the bulk

of these emissions.

Flow Traders reports its scope 1 and 2 emissions via

the operational control approach. Scope 2

represents locations-based emissions from

electricity consumption in our office buildings.

Read more about the GHG Protocol categories

included in our calculation in section “Other

information - About the non-financial indicators".

FLOW TRADERS | ANNUAL REPORT 2023 41


ESG strategic theme	ESG material topics
Environment
Environmental footprint	▪ GHG emissions – scope 2 (electricity)
Environmental footprint	▪ GHG emissions – reduction


GHG protocol scope		2023 (tCO2e)	2022 (tCO2e)	2021 (tCO2e)
Scope 1	Natural gas for heating of buildings and company car	233	241	122
Scope 2	Electricity consumption from buildings	966	1,207 1)	511
Scope 3	Business travel, employee commute, the use of servers at data centers and purchased IT related hardware	2,958	1,545	655
Grand total	All three scopes	4,157	2,993	1,287
Average FTEs		634	629	584
Intensity ratio (1 & 2)	per EUR million revenue	4
Intensity ratio (1, 2 & 3)	per EUR million revenue	14
Note 1 The total scope 2 emissions reported in 2022 was 2,956 tCO2e. We noted an inconsistency in the primary data method applied for the calculation of the scope 2 emissions of our Amsterdam office. As a result the reported data for scope 2 emissions 2022 should be 1,750 tCO2e lower. The data table above reflects the adjustment.

Sustainable employment

Culture and values

We constantly evolve and enhance our culture to

make Flow Traders the best place to work for our

workforce. We have distilled our approach to culture

into the following culture statement:

We are passionate about creating an international,

diverse and empowering culture, which is focused

on teamwork, collaboration and fostering talent. We

are proud of our roots and 20 years' heritage,

starting in Amsterdam, and how we have evolved

into a global trading firm on a mission to bring

greater transparency to markets, where we act as a

responsible market participant. Through this

entrepreneurial spirit the firm has grown and so have

the people that work here. This results in a truly

unique culture, where colleagues make connections

and work together across functions and

geographies. We engage together on not only work

but also on a passion for sports, get-togethers and

events. We are also incredibly proud of the diversity

we foster with 50+ nationalities and we make sure

colleagues can be themselves. Colleagues join the

Company at different stages in their career, from

graduates to professionals, making Flow Traders a

place for colleagues to develop personally,

professionally and grow their career. Our culture is

underpinned with a strong set of values that we

thrive across our Company.

Our values

Maintaining and nurturing our culture

Our culture is a key success factor for Flow Traders

and is extremely important to everyone across the

organization:

▪ Flow Traders Leadership - through the

organization of firm-wide events and regular all-

staff updates. In addition, feedback received

from our annual engagement survey is reviewed

in detail by relevant leaders and action plans are

derived.

▪ Business Departments - through providing

specific trainings or learning sessions to actively

stimulate our workforce in their personal and

career development.

▪ Colleagues - through reinforcing our culture

bottom up, colleagues organize their own events,

competitions, and charitable endeavors.

▪ Societal commitments and charities - through

supporting multiple charities through our

dedicated Flow Traders Foundation, not only

financially but also by offering access to our

knowledge and experience.

Flow Traders leverages numerous robust enablers to

make all employees feel included and safe as well as

reinforcing a positive work culture:

▪ Group of internal and external ‘trusted persons’ to

discuss challenges and difficulties in private, in

case desirable.

▪ Zero-tolerance policy in case of unacceptable

behavior in any form whatsoever and clear follow

up procedures towards all stakeholders.

▪ Recently refreshed DE&I policy including targets.

FLOW TRADERS | ANNUAL REPORT 2023 42


ESG strategic theme	ESG material topics
Social
Sustainable employment	▪ Diversity and inclusion
	▪ Employee engagement
	▪ Human capital development
	▪ Human rights (incl. equal treatment)
	▪ Labor practices
	▪ Privacy and data protection
Responsible supply chain	▪ (ESG) Due diligence
Responsible supply chain	▪ Procurement practice

We are driven

We are

entrepreneurial

We are

responsible

We are one

team

▪ Annual global employee engagement survey of

which the results are shared transparently with all

employees including next steps.

▪ Ability to always work in the office and from

home.

▪ Ability to rotate between different offices to

grow and develop.

▪ Wide range of tailored training opportunities.

▪ Focus on healthy lifestyle (gym with personal

programs, hairdresser, massages, healthy kitchen

meals and nutrition advice).

Diversity and inclusion

Flow Traders is a multinational company with offices

worldwide. This naturally creates an environment

where people of diverse cultures and backgrounds

collaborate to achieve our mission, excel in their

roles, and perform at their highest potential.

We have a long-standing policy of recruiting and

retaining the best talent available and aim to provide

an inclusive working environment regardless of the

gender, ethnicity, faith or sexual orientation of our

employees. We are committed to providing equal

employment opportunities to all qualified job

applicants.

We believe, companies that are diverse in e.g., age,

gender, race, sexual orientation, physical or mental

ability, ethnicity, and perspective are proven to be

more successful in attracting talent and accomplish

better performance and growth.

Flow Traders embraces this philosophy and sees the

added value diversity brings to our business. Our

current Company demographics are also something

to be proud of:

▪ Over 25% of the world’s nationalities (of all

inhabited continents) are represented in our

600+employee workforce over 10 offices globally.

▪ Our people bring in experience of 50+ academic

study backgrounds, providing multiple angles,

broad perspectives, and insights to solve

challenges together and develop personally by

learning from others.

▪ We are a relatively young Company with an

overall average age of 33.7 years. However, we

see a healthy mix of ages through all ranks with

~44.8% of our workforce in the age category of

30-40 years old. Average age between our three

Company divisions (Trading, Technology, and

Business Support) is also balanced with a

difference in average age of less than five years.

▪ Our Business Support division, comprising of 167

employees, shows a balanced ratio of 49.1%

female employees in line with the sector

benchmark of 44%. The Technology and Trading

divisions female representation is growing.

▪ We employ people from 57 nationalities across

our offices.

We strongly encourage women to apply for any

function within the firm, particularly when they have

a background in fields that traditionally have a

higher proportion of male employees.

To keep evolving, enforcing, and nurturing our

Company culture we want to increase our D&I

efforts. Therefore, we have indicated several targets

across the three key themes, some of these targets

are mandatory and need to be made public (in e.g.,

the Annual Report) or reported to external

organizations (e.g., the “Sociaal Economische Raad”).

Other targets are voluntary targets that we feel

strongly about.

Below is Flow Traders’ D&I approach for the coming

years up to 2025. Mandatory KPIs/targets have been

marked to clarify the difference between chosen

metrics/targets and metrics/targets that are non-

negotiable. In general, we aim to incorporate

diversity aspects such as nationality, age, gender,

educational background or professional background

into decision making concerning the composition of

our workforce. To the extent possible, this also

applies to the composition of our Board, and

Executive Committee, as well as the corporate

bodies of Flow Traders B.V.

Regardless of rules and regulations, we see diversity

as a means to guarantee a safe and inclusive

environment for our employees. Nonetheless, since

the introduction of “de wet ingroeiquotum en

streefcijfers” as per 1 January 2022 it has become

increasingly important to track explicit metrics and

have clear targets. This piece of legislation obliges

corporates to disclose several diversity metrics. We

therefore aim for the following goals and targets:

▪ Strive to have more than 20% of world’s

nationalities working at Flow Traders (currently

25%).

▪ Strive to have women in Technology at par with

the market (benchmark 17%).

▪ Strive to have at least 1/3 female and 1/3 male

Non-Executive Directors.

▪ Strive to have at least one female and one male

Executive Director.

▪ Flow Traders Top-50 (which includes the

members of the Executive Committee) reflects

the total workforce gender distribution.

FLOW TRADERS | ANNUAL REPORT 2023 43

We will also implement initiatives to keep D&I top of

mind. Below a subset of what is on the roadmap:

▪ Increase our range of (online) trainings on

communication and unconscious bias.

▪ Include a D&I module in our Leadership training

to train our managers on inclusive leadership.

▪ Start with “high performing team training” and

offer team activities around D&I to ensure more

inclusive collaboration and train employees in

understanding how inclusion will improve

performance / high performing teams.

▪ Keep reviewing policies and procedures on a

yearly basis and update/create were applicable

or required by law.

We also believe in open communication and

encourage collaboration across the firm. Everyone

within the firm has unrestricted, direct access to

senior management and are regularly informed and

consulted about key developments. People are

encouraged to speak their minds to help make Flow

Traders a better place to work. Information travels

freely and is not restricted unless we need to protect

overriding interests, such as those concerning

regulations, commercial sensitivities or to protect

our intellectual property. We believe that a diverse

workforce, which has open communication

channels, helps create a richer variety of ideas and

solutions.

Employee engagement

Flow Traders undertakes an annual global employee

engagement survey to gather feedback on how to

improve our culture and ensure a positive employee

experience for all colleagues. Engagement is a

measure of how committed and enthusiastic

employees are about their work and the

organization. When people are engaged, they feel

more comfortable being themselves at work.

Different factors contribute to employee

engagement, including organizational culture, work

environment, work relationships, and development

opportunities.

Giving honest responses combined with anonymity

are essential and therefore in 2023, we have once

again collaborated with Peakon, a specialized third-

party survey provider. The collaboration with Peakon

began in 2021. This ensures all responses remain

confidential and no individual results are identifiable.

In 2023, on the engagement score, a 7.0 was scored,

below the target of 7.7. This target was kept the

same for 2023 as in 2022. This is the average score

given by our employees in response to the main

engagement question in the annual global employee

engagement survey as described above. This

compares to an engagement score of 7.4 recorded in

2022 (slightly below the target of 7.6). In addition,

Flow Traders is benchmarked against the broader

financial industry who also undertake Peakon

surveys.

Human capital development

Talent

Since the day we were founded, our goal has been

to foster a culture that encourages innovation, and

risk-awareness, while focusing on drive, teamwork

and ownership. By developing talent in-house and

maintaining a committed and substantial employee

shareholder base, we have strengthened internal

bonds and helped create a loyal, forward-looking

team. We are proud that we create and maintain

high-quality jobs, which result in a stable and

trusting working environment that benefits our

people, our business, and society.

As an evolving Company and having successfully

created high quality jobs across a variety of

departments. In 2023, we welcomed 124 new hires

(2022: 206).

To make sure they feel at home quickly, we offer full

relocation support for everyone moving to our

offices from abroad. We help with finding a home,

applying for a visa and getting to know the local

culture. We also offer our international employees

based in Amsterdam the opportunity to attend

Dutch language classes. In 2023, 59 employees took

advantage of this offer and attended a Dutch

language class (2022: 62).

Recruitment

We seek to attract the best talent around the globe.

Operating in a financial market environment, with

stringent legislation and complex technology, our

selection standards remain high – our candidates

need to go through several tests and interviews.

Although our traders have a varied educational

background, they share a strong numerical aptitude,

which is why a numerical test is an important part of

the selection procedure. To find people with the

unique skill sets needed for a global liquidity

provider our recruitment approach for our trading

and technology positions, focuses on graduates. Our

labor market program aims to reach young talent

(early career talents), among others, through:

▪ Campus visits

▪ University career fairs and workshops

▪ In-House Business Courses for students to

experience trading practice

▪ Dedicated events with partners such as Female x

Finance

FLOW TRADERS | ANNUAL REPORT 2023 44

To make sure that our new colleagues feel welcome

and continue their leap learning curve, we invest in

the Graduate Software Development Program and

an extensive Graduate Trading Program, which will

enhance the experience of new graduates joining

the firm. Throughout the program, graduates receive

continuous support from dedicated mentors, not

only in the field of expertise, but also around

personal development.

Work environment

The health and well-being of our employees is a key

priority. All our offices are designed to provide a

pleasant and ergonomically sound place to work, we

offer healthy breakfast and lunch options, and

organize great Company trips and parties. We

believe these benefits are important to maintain a

healthy and happy workforce, and to stimulate

bonding and connections beyond employees’ direct

circle of colleagues. We have formally instituted a

hybrid working policy whereby certain functions

have the option of working from home for two days

a week. To facilitate this, we have continued to

invest in people’s home office environments by

granting a budget for buying equipment.

Dedicated Flow Academy

Continuous investment in our people is a key priority

for the firm. By using a variety of learning solutions

and knowledge management to unlock people’s

potential and foster a culture of learning.

We understand that employee development is never

a straight line as employees are at different stages in

their employee journey and have different needs.

We offer various career paths and have various tools

in place to support our employees’ career

navigation. Through Flow Academy we offer

everyone varied training opportunities, aimed at

improving function-specific skills or their personal

development.

In total, employees undertook 35,238 training hours

during 2023 (2022: 10,733) which comprised of

onboarding, leadership training, mandatory training,

e-learnings and coaching programs.

Many of our managers are ‘home-grown’, having

developed into their positions after several years of

working with the Company. They set an example

and act as an inspiration for new hires, illustrating

the career paths open to them. Additionally, to

complement self-growth, we also like to give our

employees the chance to transfer between our

offices and experience life and work elsewhere.

Labor practices, including human rights

We believe in sharing our profits with all relevant

stakeholders, including our employees. Given good

performance, employees from any role and office

are entitled to receive variable compensation

relative to their contribution to the firm. We are

transparent about how we pay our people and how

much we pay them, including management. We

have a Remuneration Policy that permits variable

pay only when a profit is made. We are constantly

looking for ways to improve our remuneration

principles. And because variable remuneration is, to

a large extent, deferred, it remains at risk of

forfeiture if we sustain a loss. We believe this is the

strongest incentive for sustainable, risk-aware

behavior for all our staff.

We have a long-standing philosophy of encouraging

management and employee share ownership, thus

aligning the Company’s long-term success to their

personal financial circumstances. Since IPO, we have

utilized several share schemes. In 2020, a new share

plan was introduced which provides the award up to

50% of variable remuneration in shares (or share-like

instruments). This seeks to further embed share

ownership across our employee base.

On 31 December 2023, 445 employees out of 646 (31

December 2022, 457 out of 660) employees are

active participants of various employee share plans.

At Flow Traders, we also have a great respect for

human rights in every jurisdiction where we operate.

Moreover, Flow Traders operates in an industry

where the risk of modern slavery and human

trafficking is inherently low and in jurisdictions

where labor standards are high.

Nonetheless, since 2022 we have been a signatory to

the United Nations Global Compact. Flow Traders

complies with these fundamental rights,

conventions and recommendations, notably social

rights, freedom of association and equality,

abolishment of forced and child labor.

Privacy and data protection

We are committed to respecting and protecting the

privacy rights of employees, counterparties, issuers,

exchanges, suppliers and everyone we do business

with. Personal data is managed in a professional,

lawful and ethical way, in line with our Staff Manual

and Code of Conduct and in compliance with

applicable laws and regulations.

We have technical and organizational measures in

place intended to prevent accidental or unlawful

destruction, loss, alteration, unauthorized disclosure

of, or access to, personal data. Our Privacy Policy

sets the minimum requirements from the

perspective of Flow Traders as a global organization.

The policy is binding for all Flow Traders employees

and applies to the processing of personal data of our

FLOW TRADERS | ANNUAL REPORT 2023 45

staff, job applicants and business partners such as

customers, suppliers, visitors and other individuals.

A dedicated privacy and personal data protection

program ensures we adhere to high standards of

personal data protection. Among other elements,

the program covers:

▪ Governance: At the senior management level, the

Risk Committee is responsible for oversight of

the topic of privacy, while the Data Privacy

Officer manages the privacy framework and aids

with guidance. Each employee is responsible for

reading and understanding the content and

implications of the Privacy Policy.

▪ Systems and procedures: The Privacy Controls

Framework includes privacy impact assessments

and data protection impact assessments. The

privacy controls framework is included in our

ERM process.

▪ Disciplinary actions: We investigate all incidents,

concerns and reports of potential breaches, as

outlined in our data breach procedure. We take

appropriate control measures and disciplinary

actions to prevent reoccurrence.

▪ Audit: Privacy is included in our Internal Audit

Program.

Our privacy notices for both business partners and

recruitment are derived from our Privacy Policy.

They explain why personal data is collected and how

Flow Traders uses it.

In late 2020, we updated our Privacy Notice on our

website. The new Privacy Notice reflects the latest

processing of personal data within Flow Traders and

meet the requirements of the applicable privacy

laws and regulations, for example GDPR (EU) and

CCPA (US).

Responsible supply chain

Operating in a financial market characterized by

stringent regulations, fast global trade, complexity

and sensitivity of information requires several key

business conduct requirements from the supply

base.

In this interconnected financial market ecosystem,

we and our partners outsource services and business

processes. This encounters corporate social

responsibility and reputational risks. Our supply

chain is an important extension of our business

activities and therefore we must ensure that they

act responsibly and foster a similar ESG focus.

Incidents, controversies or disruptions in the

upstream value chain have a direct impact on the

service reliability and reputation of Flow Traders at

downstream value chain partners.

Due diligence and procurement practices

To drive a sustainable and resilient supply chain, we

place high importance on supplier performance

management and supply chain risk management.

Our supply chain strategy is centered on long-term

relationships and close collaboration with our

suppliers and partners. Our goal is to ensure that our

proprietary technology infrastructure can

continuously and seamlessly provide liquidity for

financial products.

With over 100 suppliers in our total global supplier

base, we distinguish between technology related

and other services related suppliers. Technology

related suppliers provide excellence for our

technology infrastructure, such as technology

platforms, cloud service providers, data centers and

other software and hardware suppliers. This

category represents most of our total procurement

spend. Other services related suppliers are those

providing products and services supporting our

operations, varying from office space to food, travel

and general office suppliers.

Our supply chain is the main contributor to our GHG

footprint, representing roughly 95% of our total

carbon footprint (scope 1, 2 and 3). As we seek to

ensure a responsible supply chain, to deploy a

Supplier Code of Conduct and ESG due diligence

program is part of our sustainability ESG focus

derived from our 2023 double materiality

assessment.

Our Supplier Code of Conduct is an important tool to

attest our commitment to sustainability and to

communicate what we expect from our suppliers to

respect and contribute to our sustainability goals. As

such, we encourage our suppliers to adopt

sustainability practices to ensure that their business

operations are environmental and socially

responsible and conducted ethically.

In 2024 we will further enhance our ESG due

diligence program and supplier sustainability

program.

FLOW TRADERS | ANNUAL REPORT 2023 46


ESG strategic theme	ESG material topics
Governance
Good governance	▪ Business conduct
	▪ Public affairs
	▪ Tax
	▪ Cyber security
Sustainable green transition	▪ Innovation management
Sustainable green transition	▪ Social impact

Good governance

Business conduct

As of 13 January 2023, Flow Traders operates a one-

tier Board governance structure, comprising

Executive and Non-Executive Directors. The

Executive Directors along with the Executive

Committee are responsible for the day-to-day

management of the Company and setting and

achieving our objectives. The Non-Executive

Directors on the Board supervise and advise the

senior management team. The Board is accountable

to the Annual General Meeting for the Company's

and its performance.

Our governance is reflected in our internal rules and

regulations, including our Articles of Association, By-

laws, the Terms of Reference of our Board

committees, and our Code of Conduct. These,

together with our policies, can be found on our

website.

Flow Traders remains focused on long-term value

creation, culture and risk management while

balancing the interests of our many stakeholders,

such as shareholders, senior management

executives, counterparties, suppliers, investors,

employees, regulators, and the community. When

making decisions, the Board carefully weigh the

interest of all these stakeholders in relation to our

Company objectives and ESG strategic priorities.

Flow Traders ESG strategic priorities are determined

and set by the Executive Directors and Executive

Committee with regular monitoring by the Board.

Please refer to the chapter ‘Governance’ for further

information.

At Flow Traders, business integrity means

conducting business within a framework of laws and

regulations, to high ethical standards, and in

accordance with our own policies and procedures.

Being a responsible market participant is embedded

across our approach to governance and part of our

core value set. We operate a rigorous first and

second line defense as part of our risk management

approach including continuous monitoring,

comprehensive trading controls and processes such

as AML and KYC across our entire footprint.

An example of our high levels of business integrity

can be seen in the fact we have zero tolerance

towards bribery and corruption, and we actively

ensure that no such behavior occurs. No cases of

bribery or corruption were reported in 2023 (and in

2022 as well). Continuous training of staff as well as

robust risk and compliance controls contribute to

the business integrity of Flow Traders.

Public affairs

Flow Traders operates in one of the most regulated

and competitive markets. We actively seek to

connect with numerous stakeholders and peers to

collaboratively discuss and align on regulatory

matters impacting the industry we operate in.

In 2023, we contributed and facilitated dialogues on

these key regulatory developments:

▪ IFR/IFD

▪ EU Markets in Crypto Assets (MiCAR)

▪ T+1 Settlement in the US

▪ MiFIR Review

As part of our regulatory agenda, we collaborate

with other market participants, governments,

regulators, interest groups and trade associations to

align on key issues impacting the industry we

operate in. One of the key pillars of this strategy is to

establish open dialogues with our stakeholders,

responding to their views and concerns in order to

be able to balance competing expectations. We are

always keen to address pressing issues, demonstrate

our positive impact to society and ultimately

improve our business. As part of our collaborative

strategy, we contribute to representative bodies like

the EU Consolidated Tape Expert Group and various

advisory committees of exchanges. We are an active

member of several trade associations and are

participating specifically in the Board of the Dutch

Association of Proprietary Traders (APT) and the

Executive Committee of the European Proprietary

Traders Association (FIA-EPTA). In these trade

associations we have representation on several

committees regarding market structure, prudential

regulation, digital assets and Dora, sustainable

finance and ESG, diversity and well-being. Flow

Traders is also a member of Holland Fintech, the

International Capital Markets Association (ICMA) and

participates in several other professional networks.

FLOW TRADERS | ANNUAL REPORT 2023 47

Tax

We are committed to being good corporate citizens,

bringing positive value to the communities we

operate in. A key part of this commitment involves

paying taxes where they are due and subscribing to

fair taxation. In 2023 we incurred total corporate

income taxes of €8.5 million (2022: €34.9 million)

which resulted in an effective tax rate of 19.0% (2022:

21.6%).

We believe it is vital to operate a fair, transparent

and straightforward Tax Policy, which is required

when running a sustainable business and delivering

long-term value to all our stakeholders. This is also

reflected in the tax principles included in our

Principles of Responsible Tax Behavior Policy, as

published on our website. The tax principles also

serve as KPIs throughout our performance

measurement. The Flow Traders Tax Function will

therefore provide applicable input as part of the

approval process for business proposals to ensure a

clear understanding of the tax consequences.

Flow Traders also established a Tax Control

Framework, members include the Board, Audit

Committee, Finance department, Tax department

and external auditors. They are responsible for

assessing and weighing the risks associated with the

tax decision process for our business and

stakeholders. Under this Tax Control Framework,

significant tax positions, including the tax strategy,

are always shared with and subject to the approval

of the Board.

Flow Traders is prudent and transparent in respect

of its financial reporting and its relations with tax

authorities globally. Regarding financial reporting,

conservative accounting principles are being applied

and one-offs must occur infrequently and be clearly

documented.

We support transparency initiatives, such as Pillar II

legislation and country-by-country, and frequently

assess the impact of such initiatives. We also closely

monitor impact for Flow Traders, to ensure that we

comply with local and international legislation and

meet our reporting obligations. Where necessary or

relevant, we take the appropriate actions to adopt

these initiatives in our Tax Control Framework. We

have good standing relationships with the tax

authorities in each region in which we operate. We

proactively manage our relationship with the tax

authorities with the aim of minimizing the risk of

challenge, dispute or damage that could have an

impact on our credibility.

Flow Traders pays taxes where profits are earned in

accordance with local and international tax

legislation. We do not use tax haven jurisdictions for

tax avoidance purposes and carry out our business

through entities resident in jurisdictions where we

factually operate our business. With this simple tax

philosophy in place, the Company can operate its

business in line with its belief that it is part of the

corporate social responsibility duty to pay taxes

where it operates. In addition to corporate income

taxes, Flow Traders pays many other taxes, including

but not limited to, payroll taxes and social security

contributions on the wages of its employees, value

added taxes and property taxes. All these taxes are a

significant basis of funding governmental public

services. It is our social responsibility to contribute

through taxes in the regions we operate in.

For more information on our tax position, please

refer to note 14 of the financial statements.

FLOW TRADERS | ANNUAL REPORT 2023 48


Taxes paid per country (In thousands of euro)
Netherlands	71,766
Singapore	179
Hong Kong	513
United States of America	3,253
Other	804

2023

Cyber security

As a global liquidity provider, Flow Traders is

exposed to cyber risk. Increasing in sophistication,

frequency and persistence, cyber risks are growing

more dangerous and diverse. An essential part of

'Good Governance' is ensuring that these risks are

managed appropriately and are focused on by the

Board and relevant members of management.

Significant cyber events continue to be observed in

the financial sector and in the broader economy that

demonstrate the sophistication of cyber adversaries

and the impact they can have on the victim

organization. Cyber risk is driven by the increasing

use of data, technology and digital services by Flow

Traders and by our supply chain. In addition to the

direct impact on ourselves and our customers, our

role as a key part of the financial market

infrastructure ecosystem means that a significant

cyber event could create a knock-on impact to the

global markets that we are active in. We must

acknowledge, to remain competitive in this era of

data and digitalization, that cyber risk cannot be

eliminated. However, it can be managed to a level of

risk that we are prepared to take as a cost of doing

business.

We continue to make significant investments in

cyber security and have a dedicated Security

function led by our Head of Security which is

focused on protecting and defending Flow Traders

against cyber attacks. Due to the increasing

sophistication of cyber adversaries and the

techniques that they use, we proactively collect and

evaluate threat intelligence. We recognize that the

prevention of cyber attacks may not always be

possible, and our focus and priority is on remaining

resilient to withstand cyber attacks with minimal

disruption to our business. Our approach to cyber

security aligns to industry best practice and we will

continue to invest and advance our cyber defense,

detection, response and recovery capabilities. As

outlined in "Our Risk Management", Flow Traders

operates a three lines of defense framework and the

Risk function provides independent oversight and

challenge.

2023 saw some notable achievements from a cyber

security perspective:

▪ Advanced security infrastructure: In 2023, we

enhanced our cybersecurity infrastructure with

state-of-the-art technologies. This includes the

expansion of capabilities in the areas of advanced

threat detection systems, threat intelligence and

the integration of AI-driven security models,

significantly improving our ability to detect, pre-

empt and respond to cyber threats.

▪ Employee training and awareness: Recognizing

that human factors play a crucial role in

cybersecurity, we conducted comprehensive

training programs for our employees. These

initiatives aimed to foster a culture of security

awareness and vigilance across all levels of our

organization.

▪ Security governance and compliance: Our efforts

in 2023 led to enhanced compliance with

international ISO/IEC 27001 standard. This not

only demonstrated our commitment to best

practices in information security but also

provided a framework for continuous

improvement.

▪ Stakeholder transparency: We increased

transparency and risk awareness with our

stakeholders regarding our ISMS practices,

reinforcing trust and showcasing our

commitment to protecting their data.

▪ Sustainability through cyber resilience: Our

efforts in cyber resilience contributed to the

sustainability of our operations, minimizing

disruptions and ensuring business continuity

even in the face of increasing cyber threats.

FLOW TRADERS | ANNUAL REPORT 2023 49

Our tax principles

▪ Business rationale; We pay taxes where

profits are earned.

▪ Transparency; We engage pro-actively

with tax authorities. We meet on a regular

basis with tax authorities to discuss our

business and exchange views and insights

on various tax matters.

▪ No use of tax havens; We do not use tax

haven jurisdictions for tax avoidance

purposes and carries out its business

through entities that are resident in the

jurisdiction where we operate our

business.

▪ Transfer pricing; We comply with the

OECD definition of the ‘arm’s length’

principle for determining our transfer

pricing and have proper documentation

in place to support this.

▪ Compliance; We pay taxes promptly and

in accordance with all applicable laws and

regulations.

▪ Accountability and governance; We have

mechanisms in place to adhere to the

above tax principles and tax related

matters are on a regular basis reported to

and discussed with the Board and the

Audit Committee.

Sustainable green transition

Global transition towards sustainability and net zero

has become imperative due to pressing

environmental challenges, such as climate change

and biodiversity loss. The entire financial sector must

play its part in accelerating the transition towards

green and sustainable capital markets that deliver on

the common goals of a green economy and climate

neutrality.

Flow Traders as an independent market maker and

liquidity provider is committed to supporting the

transition towards a sustainable financial sector.

We believe that a mature and healthy secondary

markets ecosystem of ‘green’ Exchange-Traded

Derivatives (ETDs, i.e., listed futures and options) and

Exchange-Traded Funds (ETFs), needs to be

developed alongside the primary and secondary

markets for sustainable shares and bonds. This will

help foster a liquid market for sustainable

investment and risk management which is needed

to ensure that Sustainable Finance is fully embedded

into mainstream financial markets.

The key for a successful green transition is the

secondary markets because they enable asset

holders to buy or sell ESG products on behalf of end-

investors (both retail and institutional), insurance

holders, or pension participants. Market makers

provide liquidity and choice to investors to adjust

their portfolios, pursue their trading and investment

strategies and manage their risk, at low cost and

with ease globally.

Flow Traders offers end investors the opportunity to

buy or sell on a continuous basis while at the same

time maintaining tight bid and ask spreads,

contributing to price discovery across products and

asset classes. Long-term investors are also able

through the provision of liquidity in ESG products to

always buy or sell financial instruments, without

having to wait for another long-term investor

looking to do the opposite. Through this, liquidity

provision by Flow Traders results in lower

transactional costs and reduces risk for end

investors. As a consequence, via increasing price

transparency and reducing search costs, asset

managers are able to more efficiently navigate the

sustainable investment market and lowering the

costs for all end-investors.

Flow Traders supports investors with the migration

toward a green portfolio by supplying liquidity in

sustainable products and making sure there remains

a counterparty to buy their ‘brown’ products/assets.

Converting out of brown assets needs to be done

over time as there are not yet enough alternatives to

support a faster transition.

Innovation management

Innovation has been at heart of Flow Traders ever

since our inception in 2004. As a technology enabled

liquidity provider, we are constantly innovating

across our business.

From a technology standpoint, this involves creating

new trading algorithms as well as enhancing and

refining existing ones. In terms of our technology

infrastructure, we have focused on reducing latency,

improving connectivity with trading platforms and

implementing cloud-based solutions.

As a key market participant, Flow Traders will

support new sustainability-focused products such as

the growing suite of ESG ETFs. We have also been at

the forefront of the movement to institutionalize the

adoption of digital assets.

In 2022, Flow Traders Strategic Capital, a dedicated

venture capital unit, was established to actively

invest in the development of financial markets

infrastructure and the digital asset space. The

primary focus of Flow Traders Strategic Capital is to

invest in innovative ventures that accelerate growth,

create greater transparency within the digital asset

space and enable financial ecosystem scalability.

Social impact

Functioning financial markets are a cornerstone of

modern society and allow businesses and individuals

to manage investments and associated risks. The

provision of liquidity is the lifeblood of financial

markets thus reflected in society more broadly and

specifically in areas such as lowering the cost of

investing.

As described earlier, Flow Traders’ approach to

innovation will contribute to the transition to green

and sustainable capital markets which all of society

can benefit from.

FLOW TRADERS | ANNUAL REPORT 2023 50

Flow Traders

Foundation

The Flow Traders Foundation is focused on fighting

poverty. It aims to aid those living in poverty with

support to improve their well-being. The Foundation

will achieve this by, but not limited to, providing

direct and indirect aid (goods), granting

microcredits, providing information, volunteering for

events, support initiatives donated by Flow Traders’

employees, and or/financial means.

In the past decade, employees and Flow Traders

have supported several initiatives. In 2020, the Flow

Traders Foundation was formalized to continue our

efforts on a broader scale. Our belief has always

been that while providing support is crucial,

whoever initiates a project is in the lead. This has

always been done based on the believe that those

involved should be supported, this approach has

enabled a network of ambassadors within the

organization to work together.

The Foundation supports several long-term

initiatives and in 2023 we supported charities across

our regions and brought to life projects in our

communities.

The Foundation started supporting SINA in 2020 and

provides both financial support as well as providing

volunteers and expertise to help the charity grow.

SINA supports families who live below the poverty

line and conducts Home Visits during which they aid

families with purchasing furniture such as

mattresses, cupboards and provide tutoring for

children. Our support goes towards helping with the

Home Visits.

The Foundation started collaborating with Project

Backboard in 2022 in New York, they aim to renovate

basketball courts to strengthen communities. Our

colleagues in New York worked in close

collaboration with Project Blackboard to complete a

full basketball court renovation close to the office,

with a local artist committed to help decorate the

court.

FLOW TRADERS | ANNUAL REPORT 2023 51

Case study

FLOW TRADERS | ANNUAL REPORT 2023 52

Governance

Corporate Governance

Executive Directors

Non-Executive Directors

Executive Committee

Functioning of the Board

Board Committees

General meeting, shares and shareholders

Corporate Governance statements

Flow Traders operates a

comprehensive governance

framework, which is upheld

by the Board to the highest

standards. The Board is

focused on continuing to

pursue sustainable long-term

value creation, executing the

firm’s growth strategy and

engaging with stakeholders.

Rudolf Ferscha | Independent

Non-Executive Director and

Chairman of the Board

Corporate Governance structure

Our corporate governance is reflected in our internal rules and regulations,

including our Bye-laws, Board Rules and Committee Charters. These, together

with our policies, can be found on our website.

Flow Traders remains focused on sustainable long-term value creation, culture

and risk management while balancing the interests of our many stakeholders,

such as shareholders, senior management executives, counterparties, suppliers,

investors, employees, regulators and the community, as defined in the Bye-laws.

Our Board

Flow Traders operates a one-tier board governance structure, consisting of two

Executive Directors and six Non-Executive Directors. As at the date of this report,

the Board comprises of the following Directors:

Executive Directors

▪ Mike Kuehnel (Chief Executive Officer)

▪ Hermien Smeets-Flier (Chief Financial Officer)

Non-Executive Directors

▪ Rudolf Ferscha (Chairman of the Board)

▪ Jan van Kuijk (Vice-Chairman of the Board)

▪ Linda Hovius

▪ Delfin Rueda

▪ Paul Hilgers

▪ Karen Frank

The Board manages the Company and the associated business and may exercise

all powers of the Company, except those powers that are required by the

Companies Act or the Bye-Laws to be exercised by the shareholders. The

Executive Directors are responsible for the day-to-day management of the

Company and developing, proposing to the Board and implementing the

Company's strategy and operational objectives. The Non-Executive Directors

supervise and advise the Executive Directors. Together they are accountable to

the General Meeting of Shareholders for the performance of their duties.

Executive Committee

Flow Traders' Executive Committee (“ExCo”) supports the implementation and

alignment of the Company's strategic priorities. The ExCo was formed to bring

operational decision-making and execution closer to the various business areas,

increasing collaboration and operational efficiencies across the organization. The

ExCo comprises of the Executive Directors and other senior leaders representing

key competencies, business focus areas and regions within the Company. As at

the date of this report, the members of the ExCo are Mike Kuehnel and Hermien

Smeets-Flier as Executive Directors who form part of the Executive Committee

by default, as well as Aaron Dimitri, Alex Kieft, Bill Stush, Cam Colella, Coen van

Sevenhoven, Fabian Rijlaarsdam, Marc Jansen, Matt O'Neill, Philip Kaufmann,

Quinten Koekenbier and Tamara Maris-Mravunac.

FLOW TRADERS | ANNUAL REPORT 2023 53

Executive Directors



Mike Kuehnel		Hermien Smeets-Flier
Chief Executive Officer (CEO)		Chief Financial Officer (CFO)
Gender: male		Gender: female
Year of birth: 1977		Year of birth: 1971
Nationality: German		Nationality: Dutch

Mike Kuehnel was appointed Chief Executive Officer (CEO) in February 2023, he serves as Executive Director on the Flow Traders Board as well as member of the Executive Committee. As CEO, Mike is responsible for driving the overall strategic and growth agenda of Flow Traders. Mike joined Flow Traders in August 2021 and was appointed as member of the Management Board and Chief Financial Officer in September 2021. Mike has over 20 years of investment banking and strategy consulting experience in the global financial market infrastructure space. Immediately prior to joining Flow Traders, Mike served as a partner at Bain & Company leading the Investment Banking and Financial Markets Infrastructure practice for EMEA. Before that, he worked at Goldman Sachs, where he was responsible for advising on large-scale equity and M&A transactions in the European banking, insurance, asset management, private wealth and exchanges sectors. Mike holds an MBA in Accounting and Finance from the University of Chicago. Prior to that, he obtained his Bachelor in Business Administration (BBA), majoring in Banking & Finance, from the Frankfurt School of Finance & Management.		Hermien Smeets-Flier was elected as Chief Financial Officer (CFO) and Executive Director on the Flow Traders Ltd. Board in September 2023. She serves as Executive Director on the Flow Traders Board as well as member of the Executive Committee. As CFO, Hermien is responsible for the firm’s finance and control functions and focuses on supporting the execution of Flow Traders’ strategic growth agenda. Hermien joined Flow Traders in July 2023 as Global Finance Director. Hermien has over 20 years of experience leading and scaling finance, risk, control and operational functions across insurance and asset management firms. Prior to joining Flow Traders, Hermien served as Chief Financial and Risk Officer and member of the Management Board at Achmea Investment Management. Before that, she served as Chief Financial Officer and Board member at AEGIS London. Prior to joining AEGIS London, Hermien served as Chief Financial Officer and Board member at Amlin Underwriting Ltd. She started her career at KPMG, where she provided audit, financial, and M&A advisory services to listed companies. Hermien is a chartered accountant registered in the Netherlands.

FLOW TRADERS | ANNUAL REPORT 2023 54

Non-Executive Directors



Rudolf Ferscha	Jan van Kuijk	Linda Hovius
Chairman	Vice-Chairman
Gender: male	Gender: male	Gender: female
Year of Birth: 1961	Year of Birth: 1966	Year of Birth: 1961
Nationality: Austrian	Nationality: Dutch	Nationality: Dutch
Fourth term (2023 - 2027)	Third term (2022 - 2024)	First term (2021 - 2025)

Rudolf serves as an independent Non-Executive Director and Chairman of the Flow Traders Ltd. Board. He is a member of the Remuneration & Appointment Committee, the Trading & Technology Committee, the Audit Committee and the Risk & Sustainability Committee. Rudolf was first appointed as a member of the Supervisory Board of Flow Traders in July 2015, re-appointed for a second term in 2018 and a third term in 2021. Rudolf was appointed Chairman of the Supervisory Board in March 2021 and in 2023 he was re-elected for a fourth term to the Board as Chairman. Originally a corporate finance and capital markets lawyer, he has over 25 years’ board-level experience at international financial institutions, including executive roles on the management boards of Goldman Sachs Bank in Frankfurt and of Deutsche Börse AG. For more than a decade, he held direct oversight responsibility for FSA and BaFin regulated derivatives and securities trading businesses. Between 2000 and 2005, Rudolf served as CEO of Eurex and from 2003 to 2005 Rudolf was Chairman of the Management Board of the Frankfurt Stock Exchange. Rudolf is currently a partner at Gledhow Capital Partners and Chairman of the Advisory Board at Mainberg Asset Management GmbH.	Jan serves as Non-Executive Director on the Flow Traders Ltd. Board and is Chair of the Trading & Technology Committee. He is also member of the Audit Committee, the Risk & Sustainability Committee, and the Remuneration & Appointment Committee. Jan is one of the co-founders of Flow Traders and served as its Co-CEO from its inception in 2004 until 2014. He was appointed Vice- Chairman of the Supervisory Board of Flow Traders in July 2015. Until 1996, Jan served as a partner at Optiver, a proprietary trading firm and was involved in setting up their first electronic trading activities at Deutsche Börse in 1993. He co-founded Newtrade Financial Group in 1997, which was an options market-making firm before being discontinued after he co-founded Flow Traders.	Linda serves as an independent Non-Executive Director on the Flow Traders Ltd. Board and is Chairwomen of the Remuneration & Appointment Committee. She is also member of the Risk & Sustainability Committee and the Trading & Technology Committee. Linda was appointed member of the Supervisory Board of Flow Traders in April 2021. Linda has more than 30 years of experience in managing professional organizations, setting strategic direction and implementing change. In 2012, Linda founded Aberkyn – Change Leadership Partners, with its head office in the Netherlands, to serve top teams of multinationals in the transformation of their leadership and organizations. Linda is currently a Supervisory Board member of Royal Flora Holland, KPMG Netherlands, and of Triple Jump Impact Investment, and serves as an Advisory Board member of Vereniging Rembrandt and Karmijn Capital. She is Vice-Chair of the Board of the Koninklijke Hollandsche Maatschappij der Wetenschappen. Linda is currently the owner of Hovius Consultancy, specializing in boardroom consultancy.

FLOW TRADERS | ANNUAL REPORT 2023 55

Non-Executive Directors (continued)



Delfin Rueda	Paul Hilgers	Karen Frank

Gender: male	Gender: male	Gender: female
Year of Birth: 1964	Year of Birth: 1968	Year of Birth: 1968
Nationality: Spanish	Nationality: German	Nationality: American
First term (2023 - 2026)	First term (2023 - 2026)	First term (2023 - 2027)

Delfin serves as Independent Non-Executive Director on the Flow Traders Ltd. Board and Chair of the Audit Committee. He is also a member of the Remuneration & Appointment Committee, the Risk & Sustainability Committee and the Trading & Technology Committee. Delfin was elected as Non-Executive Director in April 2023. Delfin brings a wealth of experience in finance, strategy and financial markets. He previously served as the CFO and CRO and member of the Management Board at Atradius and held leadership positions at J.P. Morgan, UBS and Andersen Consulting. Delfin was also the CFO and Vice-Chair of the Executive Board and Management Board at NN Group as well as Chairman of the European Insurance CFO Forum. Currently, Delfin is a member of the Supervisory Board of Adyen and Chair of its Audit & Risk Committee, as well as Non-Executive Director of Allfunds. He is also Managing Director at Squircle Capital and Venture Partner at Mundi Ventures.	Paul serves as Independent Non-Executive Director on the Flow Traders Ltd. Board and Chair of the Risk & Sustainability Committee. He is also a member of the Trading & Technology Committee. Paul was elected as Non-Executive Director in April 2023. Paul has an extensive and proven track record within global financial markets, particularly within trading, clearing and market infrastructure. Paul previously served as CEO APAC and as Director Market Structure for Optiver and then became global CEO of Optiver from 2014 until 2017. Paul was a member of the Supervisory Board at EuroCCP, and Managing Director at Hilgers Consulting. Most recently Paul worked at Deutsche Börse AG as Managing Director, heading the firm’s cash market business.	Karen serves as Independent Non-Executive Director on the Flow Traders Ltd. Board. She is also a member of the Audit Committee, the Risk & Sustainability Committee and the Trading & Technology. Karen was elected as Non-Executive Director in April 2023. Karen is an experienced investor, and executive and business leader in the financial services industry. Most recently, Karen was the Executive Managing Director and Global Head of Equities at Ontario Teachers Pension Plan where she Chaired the Investment Committee. She previously held leadership positions at Barclays plc, where Karen was appointed as CEO of Barclays Global Private Bank and member of the International Executive Committee, among others, and co-Head of Financial Sponsors, EMEA. Earlier in her career, Karen worked in the Private Equity industry, including for Goldman Sachs in their Merchant Bank and Financial Sponsors businesses. Karen is a Trustee of the British Heart Foundation, and Chair of the Dean's Council for Harvard Kennedy School of Government.

FLOW TRADERS | ANNUAL REPORT 2023 56

Executive Committee



Aaron Dimitri	Alex Kieft	Bill Stush	Cam Colella	Coen van Sevenhoven	Fabian Rijlaarsdam
Global Head of Compliance	Global Head of Trading	CEO Americas	Head of Technology	Global Head of Trading	CEO APAC

Aaron joined Flow Traders as a Compliance Officer in May 2017, later becoming the Head of Compliance for the Americas. He was also appointed as General Counsel Americas in March 2022 and oversees the firm’s compliance in accordance with U.S. securities laws. In May 2022, Aaron was promoted to Global Head of Compliance. Aaron is a Certified Regulatory and Compliance Professional (CRCP) from the FINRA Institute at Wharton. Before joining Flow Traders, he held management roles at the Financial Industry Regulatory Authority (FINRA) from 2010 to 2017, focusing on market manipulation surveillance and regulatory control investigations. Aaron holds a bachelor’s degree and MBA in International Business from St. Bonaventure University, a Juris Doctor from Albany Law School, and has been a licensed attorney in New York since 2011.	Alex joined Flow Traders as a Trader in 2014, with a focus on trading delta one Equity Index products (ETFs, futures & derivatives), before being promoted to Head of Trading for EMEA in 2019 and then to Global Head of Trading in 2022. Alex is responsible for the development and execution of the equities trading strategy globally and oversees the daily trading operations and processes in Europe. Alex holds a master's degree in Theoretical Physics from the University of Amsterdam.	Bill joined Flow Traders in 2016 as Head of Sales to open Flow Traders' Institutional Trading broker dealer. In this role he focused on building the U.S. Institutional Trading Business, managing all the counterparty facing relationships. In July 2023, Bill was promoted to CEO Americas where he is responsible for the external relationship management, development of growth initiatives alongside the leadership team in the U.S. and for the day-to-day operations of the U.S. offices. Bill also represents the Americas region in Flow Traders’ global Executive Committee. Prior to joining Flow Traders, Bill was a Managing Director at Bank of America Merrill Lynch from 2005 to 2015, where he held several roles including Head of ETF Distribution and Head of Portfolio Trading for the Americas. Before joining Bank of America Merrill Lynch, Bill was a Director at Deutsche Bank where he was Head of Transition Management for the Americas.	Cam Colella joined Flow Traders in 2015 initially as a Trader, spending a year in Amsterdam before moving to the New York office in 2016. Cam became Head of Trading Performance in 2019 and Head of Technology AMER in 2020 overseeing the technology function in the US and is responsible for driving technology strategy, innovation, and architecture globally. Cam holds a bachelor’s degree in Economics and Pure Mathematics from the University of Michigan.	Coen joined Flow Traders as a Trader in 2010, and relocated to Singapore. Whilst in Singapore, Coen supported the development of strategies covering equity ETFs, commodity ETPs and structured products in the APAC region. In 2017, Coen relocated to the U.S. and was promoted to Head of Trading and Managing Director AMER. He was appointed Head of Trading Strategy in 2019 and works closely with the Management Board and is responsible for strengthening the trading business as well as new strategic initiatives to expand Flow Traders’ footprint.	Fabian joined Flow Traders in 2018 as Team Lead for the EMEA Exchanges team and subsequently became the Head of Business Development for the EMEA region. In 2020, he relocated to Hong Kong and was appointed Managing Director APAC. He is responsible for expanding APAC operations, developing the regional strategy and partnerships. Prior to joining Flow Traders, Fabian spent five years at Deutsche Boerse’s Eurex group, where he focused on market microstructure research, academic engagement, and trading system design. Fabian holds a master’s degree in Finance from the University of Groningen.

FLOW TRADERS | ANNUAL REPORT 2023 57

Executive Committee (continued)



Marc Jansen	Matt O'Neill	Philip Kaufmann	Quinten Koekenbier	Tamara Maris- Mravunac
Global Head of Trading	Global Head of Business Development	Global Head of HRM and Recruitment	Head of Trading performance	Global Head of Risk

Marc joined Flow Traders as a Trader in 2013. He initially focused on commodity products and in 2016 expanded his scope to include FX. Marc was promoted to Head of Trading for EMEA in 2018. Marc also spent 1.5 years in New York to strengthen Equity Index trading, during which time he was also co-head of the AMER region. In 2021, Marc relocated to Amsterdam and became Head of Trading with a focus on Digital Assets. Marc holds a double master’s degree in Econometrics and Management Science specialized in Quantitative Finance and a master’s degree in Economics and Business specialized in Entrepreneurship & Strategy Economics both from the Erasmus University Rotterdam.	Matt joined Flow Traders in December 2022 as Global Head of Corporate Strategy and is responsible for the firm’s strategic growth, partnerships, prime brokerage and bank strategy, M&A activities, investor relations, public affairs and our venture capital unit, Flow Traders Capital. In January 2024, Matt was promoted to Global Head of Business Development. In this expanded role, Matt is additionally responsible for Flow Traders' commercial agenda through the firm's institutional sales teams globally. Prior to joining Flow Traders, Matt was a Managing Director at Goldman Sachs with a focus on Global Markets strategic partnerships and investments. He also worked for Morgan Stanley within the prime brokerage business in Asia. Matt holds a bachelor’s degree from the University of Nottingham.	Philip joined Flow Traders in 2022 as the Global Head of HRM & Recruitment. He is responsible for the global HRM & Recruitment strategy and associated implementations. Prior to joining Flow Traders, Philip worked as a strategy consultant at McKinsey & Company and in various roles at bol.com, a Dutch e-commerce platform. Philip holds a master’s degree in Hydraulic Engineering from the TU Delft and an MBA from INSEAD.	Quinten joined Flow Traders in November 2009. After three years Quinten was promoted to technical lead of the R&D desk and subsequently became product owner for proprietary algorithmic trading applications. In 2016 he also became responsible for the speed, networking & infrastructure and the FPGA teams before being promoted to Head of Trading Performance and is responsible for performance, monitoring, R&D and analysis of trading performance in 2018. Quinten holds a master's degree in Finance and Business Administration from VU University Amsterdam.	Tamara joined Flow Traders in 2023 as Global Head of Risk. In this role she is responsible for Flow Traders’ global risk control function as well as the Risk, Legal and Compliance functions in EMEA. In her previous role, as Head of Financial Markets & Business Services Netherlands at ING, she was responsible for the non-financial risk controls, governance and conduct, and regulatory control across the Netherlands. She helped with the regulatory implementation of MiFID II as the head of Business Services and has an extensive trading background. Tamara holds a master’s degree in Dutch law from the University of Amsterdam.

FLOW TRADERS | ANNUAL REPORT 2023 58

Tamara Maris-Mravunac-modified-small.png

Functioning of the

Board

The Board is responsible for the continuity of the

Company and is guided by the interests of the

Company and its associated business, taking into

consideration the Company’s sustainable long-term

value creation and the interests of the Company’s

stakeholders, including our employees and our

shareholders, as defined in the Bye-laws as

stakeholder interests. This ensures decisions are

made in a balanced manner.

The Executive Directors are primarily charged with

the Company's day-to-day operations, subject to the

limitations set out in the Companies Act and the

Bye-laws. Two Executive Directors can jointly

represent the Company, reflecting the four-eyes

principle we operate across the Company: at least

two persons must sign off on business decisions. The

Board may further allocate the duties of the

Executive Directors among individual Executive

Directors. The Executive Directors may submit

resolutions that can be adopted on behalf of the

Board by one or more Executive Directors or be

delegated by the Board in accordance with the Bye-

Laws to the Executive Committee.

The Non-Executive Directors are primarily charged

with the supervision of the performance of the

duties of the Directors and assist the Executive

Directors by providing advice and direction. The

Non-Executive Directors' duties specifically include

the supervision of the Executive Directors'

implementation of the Company's strategy. The

Board Rules include further detail on the

implementation of responsibilities and tasks of the

Non-Executive Directors, amongst others with

respect to decision-making of the Board on several

matters, inter alia, nomination of Directors,

remuneration of Directors and selection and

nomination of the external auditor.

Chairman & Vice-Chairman

The Board appointed Rudolf Ferscha as Chairman

and Jan van Kuijk as Vice-Chairman. The Chairman

shall act as main contact for the Directors regarding

the functioning of the Board. The Chairman is

primarily responsible for the functioning of the

Board and its committees and is responsible for

ensuring the proper conduct of business at meetings

of the Board in order to promote a meaningful

discussing at meetings. As a general rule, the

Chairman presides over the General Meeting. The

Vice-Chairman deputizes for the Chairman and is the

main contact on behalf of the Board regarding the

Chairman's performance.

Conflicts of interest

In case of a conflict of interest, the Board will

determine, on a simple majority vote, if a Director's

interest indeed conflicts with the interests of the

Company or its business in such a way as described

in section 24.6 of the Bye-Laws. In 2023, there have

been no cases of conflicts of interest, transactions

between the Company and members of the Board,

or transactions with shareholders holding at least

10% of the shares of the Company.

Evaluation of the Board

At least annually, the Board shall evaluate – without

the presence of the Executive Directors – the

functioning of the Board, the committees and the

functioning of the individual Directors, shall discuss

the conclusions of such evaluations, and shall

identify aspects where the Directors require further

training or education.

At least annually, the Executive Directors shall

evaluate their own functioning. The Executive

Directors may invite one or more Non-Executive

Directors to participate in the evaluation or part

thereof.

Nomination, Election, Suspension and

Removal of Directors

Executive Directors

As set out in more detail in our Bye-Laws and Board

Rules, nominations can be made at any meeting of

the Shareholders either (i) by the Board or (ii) by

shareholders, providing these shareholders 3% of the

Company's outstanding share capital or such lower

number as is prescribed by the Companies Act.

Following a nomination by the Board, a Director shall

be elected by a simple majority of votes cast

representing more than one-third (1/3) of the then

outstanding shares that are entitled to vote on the

matter. If two or more nominees receive the same

number of votes in favor, the nominee receiving the

highest percentage of votes in favor shall be elected.

If equal percentages are cast, no nominee shall be

elected. Following a nomination by shareholders, a

Director shall be elected by a simple majority of the

votes cast, representing at least half (1/2) of the then

outstanding shares that are entitled to vote on the

matter. The term of a proposed election shall not

exceed four years. However, a proposal may provide

that the term shall expire at the close of the first

annual meeting of shareholders held after the

expiration of the four-year term. There is no

limitation in the duration of an Executive Director's

entire service.

In connection with a proposed (re-)election of an

Executive Director, he or she will need to be

assessed by the Dutch Central Bank on integrity and

reputation in view of the qualified interest that Flow

Traders Ltd. holds in Flow Traders B.V.

FLOW TRADERS | ANNUAL REPORT 2023 59

The shareholders, on proposal of the Board may

remove or suspend a Director from office. An

Executive Director may also be suspended by the

Board, which suspension shall end if three months in

aggregate have lapsed without a decision taken on

the termination of the suspension or removal. In

case the removal or suspension is resolved on by

shareholders but not on a proposal of the Board,

such removal or suspension will require a simple

majority of the votes cast, representing at least half

(1/2) of the then outstanding shares that are entitled

to vote on the matter, unless a Reflection Period is

invoked. In case the removal or suspension is

proposed by shareholders or is included on the

agenda of a general meeting by a competent court,

the Board may invoke a reflection period as further

described in the Bye-Laws.

Non-Executive Directors

The nomination, election, suspension and removal

from office of Non-Executive Directors follow the

same rules as noted above for Executive Directors,

with the exception of the following.

The consecutive term of a Non-Executive Director

shall expire at the closing of the annual general

meeting held in the twelfth calendar year after the

initial election. Following such expiration, a Non-

Executive Director shall not be eligible for re-

election. Such consecutive term shall not apply to

Non-Executive Directors elected in accordance with

the nomination right provided for in the Relationship

Agreement.

Non-Executive Directors may not be suspended by

the Board without involvement of the shareholders.

Independence of Non-Executive Directors

Best practice in terms of corporate governance

prescribes that at most one of the Non-Executive

Directors on the Board qualifies as a non-

independent and that the total number of non-

independent Non-Executive Directors should

account for less than half of the total number of

Non-Executive Directors. Jan van Kuijk and Roger

Hodenius, as founders of the Company, were

attracted to their role as Non-Executive Directors

(former Supervisory Board members) because of

their specific business-related expertise. They did

not qualify as independent under the provisions of

the Corporate Governance Code as they are former

members of the Management Board of the

Company, and because they represent shareholders

of the Company owning an interest of over ten

percent. As at the date of this report, only Jan van

Kuijk is still acting as Non-Executive Director on the

Board. Roger Hodenius decided not to stand for re-

election at the 2023 AGM. As such, the number of

non-independent Non-Executive Directors on the

Board amounts to one.

Independence of Committee members

As Jan van Kuijk and Roger Hodenius did not qualify

as independent Non-Executive Director as set out

above, this also affected two committees of which

they were members during (part of) the financial

year 2023. Best practice in terms of corporate

governance prescribes that more than half of the

members of the Audit Committee and the

Remuneration & Appointment Committee should be

independent. Until the end of Roger Hodenius' term

of office, both Jan van Kuijk and Roger Hodenius

were members of the Remuneration & Appointment

Committee, implying that half (and not more than

half) of its members were independent.

FLOW TRADERS | ANNUAL REPORT 2023 60

Board committees

The Board may from time to time establish

permanent or ad hoc committees. As at the date of

this report, the Board has established four

committees: the Audit Committee, the

Remuneration & Appointment Committee, the Risk

& Sustainability Committee and the Trading &

Technology Committee. The way that each of the

four committees operate is governed by their

respective Committee Charters, which are publicly

accessible on our website. Each of the committees

has a preparatory and/or advisory role to the Board.

The Committee Charters provide for the possibility

of the Board to delegate decision-making in writing

to the Committees on matters that fall within their

respective tasks and responsibilities.

Audit Committee

The Audit Committee undertakes preparatory work

for the Board’s decision-making regarding the

supervision of the integrity and quality of the

Company’s financial reporting and the effectiveness

of the Company’s internal risk management and

control systems, where applicable together with the

Risk & Sustainability Committee and/or the Trading

& Technology Committee.

The Audit Committee shall consist of at least two

members. All members of the Audit Committee

must be Non-Executive Directors. More than half of

the members of the Audit Committee should be

Independent Directors.

The Audit Committee shall be chaired by an

Independent Director. The Audit Committee shall

not be chaired by the Chairman or by a former

Executive Director of the Company or former

member of the management board of Flow Traders

N.V.

Remuneration & Appointment Committee

The Remuneration & Appointment Committee

undertakes preparatory work for the Board’s

decision-making concerning amongst others the

following subject matters: the Remuneration Policy

for the members of the Board, the Remuneration of

the individual Directors, selection criteria and

appointment procedures, succession planning and

Diversity, Equity & Inclusion.

The Remuneration & Appointment Committee shall

consist of at least two members. All members of the

Remuneration & Appointment Committee must be

Non-Executive Directors. More than half of the

members of the Remuneration & Appointment

Committee should be Independent Directors.

The Remuneration & Appointment Committee shall

be chaired by an Independent Director. The

Remuneration & Appointment Committee shall not

be chaired by the Chairman or by a former Executive

Director of the Company or former member of the

management Board of Flow Traders N.V

Risk & Sustainability Committee

As per 1 January 2024, the former Risk Committee

was renamed Risk & Sustainability Committee as

part of a broader exercise to embed the increasing

importance of ESG related matters into our

corporate governance processes. The Company

should have adequate internal risk management and

control systems in place. The Board is responsible for

identifying and managing the risks associated with

the Company’s strategy and activities. The Risk &

Sustainability Committee's duties include amongst

others the supervision of the Executive Directors

with respect to identifying and analyzing the risks

associated with the strategy and activities of the

Company and its affiliated enterprise, establishing

the risk appetite, and putting in place the measures

in order to counter the risks being taken, designing,

implementing and maintaining adequate internal

risk management and control systems, monitoring

the operation of the internal risk management and

control systems and carrying out a systematic

assessment of their design and effectiveness at least

once a year. As per 1 January 2024, the Risk &

Sustainability Committee's duties amongst others

include developing and integrating various

sustainability topics into the Company’s strategy and

long-term value creation, including priority-setting

and sustainability-related KPIs and connected target

setting. The Risk & Sustainability Committee shall

consist of at least two members. All members of the

Risk & Sustainability Committee must be Non-

Executive Directors. More than half of the members

of the Risk & Sustainability Committee should be

Independent Directors.

The Board shall appoint one of the members of the

Risk & Sustainability Committee as chairman of the

Risk & Sustainability Committee.

Trading & Technology Committee

The Trading & Technology Committee's duties

include amongst others the review of annual

investments and expenses on technology, the

preparation of advice to the Board regarding the

technology budget, assessing the current state of

technology in terms of competitiveness and

functionality, the supervision of the Board on the

operation of the Company's security systems and

related risks and reviewing the Company's trading

activities.

FLOW TRADERS | ANNUAL REPORT 2023 61

General meeting,

shares and

shareholders

Flow Traders highly encourages shareholder

participation in the decision-making of the General

Meeting. It is of great importance to the Company

that its shareholders have an actual say in the Annual

General Meeting (AGM), and the Company therefore

encourages an open dialogue. Flow Traders ensures

that the General Meeting is adequately provided

with information.

In accordance with the Bye-laws and subject to the

provisions of the Companies Act, the Company's

Board shall convene and the Company shall hold

General Meetings as Annual General Meetings not

later than six months after the end of the financial

year. The Board may, whenever it thinks fit, and

shall, when requisitioned by shareholders pursuant

to the provisions of the Companies Act, convene

General Meetings other than Annual General

Meetings which shall be called Special General

Meetings, at such time and place as the Board may

appoint.

Subject to the Companies Act, a resolution may only

be moved and put to a vote at a General Meeting if

(i) it is proposed by or at the direction of the Board,

(ii) it is proposed at the direction of a competent

court, (iii) it is proposed on the requisition in writing

by eligible shareholders, and (iv) the chairman of the

meeting in their absolute discretion decides that the

resolution may properly be regarded as within scope

of the meeting.

Save as otherwise provided in the Bye-laws, at least

two shareholders present in person or by proxy and

entitled to vote on the matter representing the

holders of at least twenty per cent, or the highest

amount required from time to time by any stock-

exchange on which any of the shares are listed, of

the issued share entitled to vote on the matter at

such meeting shall be a quorum. Increased quorum

requirements apply for the passing of certain

resolutions requisitioned by shareholders or the

resolution to elect, suspend or remove a Director.

Each shareholder present in person at a General

Meeting shall be entitled to vote on any question to

be decided on a show of hands or by a count of

votes received in the form of electronic record

(including by proxy), and each shareholder present in

person or by proxy shall be entitled on a poll to vote

for each share held by them. Each share carries one

vote at a General Meeting. The AGM is the ideal

opportunity for shareholders and the Board to

interact. At an AGM, shareholders can ask questions

directly to the Board. Our Board strongly encourages

shareholders to interact.

The 2023 AGM was held on 26 April 2023 at the

Company's registered address. During this AGM, all

proposals on the agenda were adopted. The

proposals adopted by the General Meeting related

to: the alteration of the bye-laws, the declaration of

the final dividend, the remuneration report, the

remuneration policy, the re-election of Rudolf

Ferscha, the election of Karen Frank, Paul Hilgers

and Delfin Rueda, the authority to issue shares, the

authority to exclude or limit preemptive rights,the

authority to purchase own shares and the re-

appointment of the external auditor.

The Company held an Extraordinary General Meeting

on 14 September 2023. The sole proposal on the

agenda was the election of Hermien Smeets-Flier as

Chief Financial Officer and Executive Director to the

Board. 99.8% of the votes cast were in favor of such

proposal.

The Company's next AGM is scheduled to be held on

13 June 2024. More information will become

available on our website in due course.

Alteration of the Bye-laws

The Bye-Laws may be revoked or amended only by

the Board, which may from time to time revoke or

amend them in any way by a resolution of the Board

passed by a majority of the Directors then in office

and eligible to vote on that resolution, but no such

revocation or amendment shall be operative unless

and until it is approved at a subsequent general

meeting of the Company by the Shareholders by

Resolution passed by a majority of votes cast.

Issue of shares

Subject to the provisions of the Bye-Laws, the

Company may only allot or issue shares, or grant

rights to subscribe for shares (other than treasury

shares) as authorized by a shareholders’ resolution

and within the limits of such authorization, which

authorization cannot be withdrawn, unless

determined otherwise at the time of the adoption of

the resolution.

During the 2023 AGM, our shareholders renewed the

authority of the Board to issue common shares or to

grant rights to subscribe for common shares up to

and including 26 October 2024 for up to ten percent

(10%) of the total number of shares issued at the

time of the General Meeting for any purposes. Any

issuance exceeding this limit needs separate

approval by the General Meeting.

FLOW TRADERS | ANNUAL REPORT 2023 62

In addition, the General Meeting renewed the

authority of the Board to exclude or limit applicable

preemptive rights when issuing common shares or

granting rights to subscribe for common shares up

to and including 26 October 2024.

At our 2024 AGM, the Board intends to request that

the General Meeting renews its authorization to

issue common shares or to grant rights to subscribe

for common shares for up to ten percent (10%) of the

total number of shares issued at the time of the 2024

AGM for any purposes.

Purchase and cancellation of shares

The Board may, after prior authorization by

shareholders’ resolution and within the limits of such

authorization, authorize the purchase by the

Company of its own shares upon such terms as the

Board may in its discretion determine, provided

always that such purchase is effected in accordance

with the provisions of the Companies Acts. Subject

to the provisions of the Bye-Laws, any shares of the

Company held by the Company as treasury shares

shall be at the disposal of the Board, which may hold

all or any of the shares, dispose of or transfer all or

any of the shares for cash or other consideration, or

cancel all or any of the shares

During the 2023 AGM, our shareholders renewed the

authority of the Board to purchase shares in the

capital of the Company, either through purchase on

a stock exchange or otherwise, up to and including

26 October 2024, under the following conditions: (i)

the repurchase may constitute up to ten percent

(10%) of the total number of shares issued at the

time of the General Meeting, (ii) provided that the

Company will not hold more shares in treasury than

ten percent (10%) of the issued share capital and (iii)

at a price (excluding expenses) not less than the

nominal value of the shares and not higher than the

opening price on Euronext Amsterdam on the day of

repurchase plus ten percent (10%).

On 22 July 2022, Flow Traders announced a €25

million share repurchase plan, which was

subsequently increased with €15 million as

announced on 27 October 2022, thereby resulting in

an aggregate €40 million share repurchase plan. On

28 July 2023 it was further announced that the

period of execution for the €15 million share

repurchase increase would be extended by 12

months to 26 October 2024. Share repurchases for a

total consideration of €3.2 million have been made

as at 31 December 2023.

At the 2024 AGM, the Board intends to propose to

the General Meeting to renew its authorization to

repurchase shares in the Company.

Major shareholders

The following shareholders filed their interests in the

capital of the Company exceeding 3% to be included

in the AFM’s register of substantial holdings and

gross short positions as published on the website

www.afm.nl (data as published on 31 December

2023). A shareholder must file or update its holdings

if its interest exceeds, or drops below, 3%, 5%, 10%,

15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95%.

Based on the publications in the AFM’s public

positions, the table below shows such information

as per 31 December 2023. For more recent detail on

individual shareholdings please refer to the AFM’s

registers. For Javak Investments B.V. and Avalon

Holding B.V., the information as included in the table

below is based on historic filings in the AFM’s

of the Supervisory Board of Flow Traders N.V. In their

capacity as directors of Flow Traders Ltd., members

of the Board (including Jan van Kuijk) do not notify

changes in share ownership to the AFM to be

registered in the register on notifications by

directors and members of the Supervisory Board, as

is the case for directors or members of the

Supervisory Board of a public limited Company

incorporated under Dutch law and whose

(depository receipts for) shares are admitted to

trading on a regulated market in the Netherlands or

in another EU Member State.

Information which is relevant to our shareholders

and which is required to be published or submitted

pursuant to the provisions of Company law and

securities law, is posted in a separate section of our

website www.flowtraders.com. Our Bilateral

Contacts Policy can also be found on our website.


Shareholdings on 31 December 2023
	Filing/notification date
J.T.A.G. van Kuijk (Javak Investments B.V.)	12.22%	2/5/2018
R. Hodenius (Avalon Holding B.V.)	10.07%	7/12/2018
Jupiter Asset Management Ltd.	3.04%	30/10/2023

Jan van Kuijk’s (Javak Investments B.V.) shareholding

is considered a long-term investment within the

meaning of section 3.3.3 of the Dutch Corporate

Governance Code.

Relationship agreement

Avalon Holding B.V. and Javak Investments B.V.

entered into a relationship agreement with the

Company.

The relationship agreement currently grants each of

Avalon Holding B.V. and Javak Investments B.V.

amongst others a specific right to nominate one

FLOW TRADERS | ANNUAL REPORT 2023 63

Non-Executive Director for election (and

replacement). This right expires, in respect of each

relevant party, if such party ceases to, directly or

indirectly, hold more than five percent of the shares

in the Company provided that and for as long as, in

aggregate, Avalon Holding B.V. and Javak

Investments B.V. together continue to, directly or

indirectly, hold more than five percent of the

Company’s shares, Avalon Holding B.V. and Javak

Investments B.V. shall be entitled to jointly nominate

one Non-Executive Director for election.

The relationship agreement also stipulates that the

Board shall procure that for as long as Avalon

Holding B.V. and Javak Investments B.V.

(independently or together) have the right to

nominate a Non-Executive Director, each of the

Remuneration & Appointment committee as well as

the Audit Committee, will include at least the Non-

Executive Director nominated by Avalon Holding

B.V. and/or Javak Investments B.V. (as the case may

be).

The relationship agreement shall cease to bind

Avalon Holding B.V. or Javak Investments B.V. if and

when Avalon Holding B.V. or Javak Investments B.V.,

respectively, no longer has the right to nominate (or

co-nominate) a Non-Executive Director. The

relationship agreement shall furthermore terminate

on the first day any of the following conditions shall

be met: (i) the Company having become subject to

insolvency proceedings, (ii) a resolution of the

shareholders of the Company to liquidate the

Company having become unconditional (iii) the

Company having ceased to exist as a legal entity as a

result of a legal merger or spin-off where the

Company is the disappearing entity; or (iv) a

termination of the listing of the Company's shares on

Euronext Amsterdam takes effect, provided that the

shares are not listed on any other stock exchange

No dedicated take-over protection

structures

Flow Traders does not employ any of the following

dedicated take-over protection structures:

preference shares, depository receipts or call

options issued to vehicles conducive to protecting

the Company’s interest or independence.

Compliance with the Dutch Corporate

Governance Code

The Board values and considers the interests of the

various stakeholders involved. Good corporate

governance results in effective decision-making in a

manner which enhances shareholder value and

enables a Company to maintain a culture of

integrity, transparency, and trust. The Company has

a long standing focus on a sustainable long-term

value creation strategy, culture and risk. As a

Company governed by Bermudan laws, the Dutch

Corporate Governance Code is not directly

applicable to Flow Traders Ltd., however, the Dutch

Corporate Governance Code continues to be one of

the guiding resources for Flow Traders Ltd.'s

corporate governance related practices. As the

Dutch Corporate Governance Code is not directly

applicable to Flow Traders Ltd., it is not intended

that Flow Traders Ltd. will report on any possible

deviations from the Dutch Corporate Governance

Code.

FLOW TRADERS | ANNUAL REPORT 2023 64

Corporate governance

statements

Dutch decree on the content of the Board

report (besluit inhoud bestuursverslag)

The information required by section 2a of the Decree

is included in the chapters Governance and the

Board Report;

▪ the main features of our internal risk

management and control systems relating to the

financial reporting process can be found in the

chapter Risk Management;

▪ the functioning of our General Meeting and the

authority and rights of our shareholders can be

found in the chapter Governance;

▪ the composition and functioning of our Board

and its Committees can be found in the chapters

Governance and in the Board Report;

▪ the diversity policy regarding the composition of

the Board including its aims, how it is being

effected and the results can be found in the

chapters ESG at a glance and in the Board Report

(section 3a sub d of the Decree); and

▪ the disclosure of the information required by the

Decree on Section 10 EU Takeover Directive can

be found in the chapter Governance (section 3b

of the Decree).

Board in control statement

The Executive Directors of Flow Traders are

responsible for the design, implementation and

functioning of Flow Traders’ internal risk

management and control systems. Flow Traders’

internal risk management and control is a process,

effectuated by the Executive Directors, senior

management and other personnel. It is designed to

mitigate risks and provide reasonable assurance

regarding the achievement of objectives in the

following categories:

▪ Effectiveness and efficiency of operations;

▪ Reliability of financial and non-financial

information;

▪ Compliance with laws, regulations and internal

policies;

▪ Safeguarding of assets, identification and

management of liabilities; and

▪ Strategic goals of the Flow Traders Group.

The chapter Risk Management elaborates on Flow

Traders’ identified financial and non-financial risks

and how these risks are managed. This chapter

provides insight into the impact of these risks on

Flow Traders’ results. The design and functioning of

the internal risk management and control systems is

based on the Enterprise Risk Management

Framework (ERMF). The framework explained in

detail in the chapter Risk Management, combines

various financial and non-financial risk disciplines

into a single converged approach and provides the

businesses with an overview on their risks and how

these are managed. The Risk department assessed

the controls in this process and the findings have

been presented to the Executive Directors and Non-

Executive Directors. This allows the Executive

Directors and senior management to form a view on

the internal risk management and control systems

regarding the risks they face while pursuing the

Board’s strategy.

On the basis of the above and with due observance

of the limitations stated below, we confirm that to

the best of our knowledge:

▪ The annual report provides sufficient insights into

any failings in the effectiveness of the internal

risk management and control systems (see e.g.

chapter Risk Management);

▪ The aforementioned systems provide reasonable

assurance that the financial and tax reporting

does not contain any material inaccuracies (see

e.g. chapter Financial Statements and Other

Information);

▪ Based on the current state of affairs and initial

prognoses, it is justified that the financial

reporting is prepared on a going concern basis

(see e.g. chapters Financial Statements and Other

Information); and

▪ The report states material risks (if any) and

uncertainties that are relevant to the expectation

of the Company’s continuity for the period of

twelve months after the preparation of the report

(see e.g. chapters Our Business Strategy and Our

Risk Management).

FLOW TRADERS | ANNUAL REPORT 2023 65

It should be noted that the above does not imply

that these systems and procedures provide absolute

assurance to Flow Traders as to the realization of

financial and strategic business objectives, or that

internal risk management and control systems can

prevent or detect all misstatements, inaccuracies,

errors, fraud and noncompliance with legislation,

rules and regulations.

Amsterdam , 29 February 2024

The Executive Directors

▪ Mike Kuehnel (Chief Executive Officer)

▪ Hermien Smeets-Flier (Chief Financial Officer)

FLOW TRADERS | ANNUAL REPORT 2023 66

Conformity

Statement

The Executive Directors of Flow Traders are required

to prepare the Annual Accounts and the Annual

Report of the Company in accordance with Title 9 of

Book 2 of the Dutch Civil Code (due to its status as a

formeel buitenlandse vennootschap) and those

International Financial Reporting Standards (IFRS)

that were endorsed by the European Union.

Conformity statement pursuant to section

5:25c paragraph 2(c) of the Dutch Financial

Supervision Act (Wet op het financieel

toezicht).

The Executive Directors of Flow Traders are

responsible for maintaining proper accounting

records, for safeguarding assets and for taking

reasonable steps to prevent and detect fraud and

other irregularities. They are responsible for

selecting suitable accounting policies and applying

them on a consistent basis, making judgements and

estimates that are prudent and reasonable. They are

also responsible for establishing and maintaining

internal procedures which ensure that all major

financial information is known to the Board, so that

the timeliness, completeness and correctness of the

external financial reporting are assured.

As required by section 5:25c paragraph 2(c) of the

Dutch Financial Supervision Act, each of the

signatories hereby confirms that to the best of his

knowledge:

▪ The Flow Traders 2023 Annual Accounts give a

true and fair view of the assets, liabilities,

financial position and profit or loss of Flow

Traders Ltd. and the enterprises included in the

consolidation taken as a whole; and

▪ the Flow Traders 2023 Annual Report gives a true

and fair view of the position at the balance sheet

date, the development and performance of the

business during the financial year 2023 of Flow

Traders Ltd. and the enterprises included in the

consolidation taken as a whole, together with a

description of the principal risks Flow Traders is

being confronted with.

Amsterdam, 29 February 2024

The Executive Directors

▪ Mike Kuehnel (Chief Executive Officer)

▪ Hermien Smeets-Flier (Chief Financial Officer)

FLOW TRADERS | ANNUAL REPORT 2023 67

FLOW TRADERS | ANNUAL REPORT 2023 68

Board report

Message of the Chairman

The Board’s focus in 2023

Committees

Board Composition

Board Rotation

Meetings and attendance

Message from the Chairman

Dear Stakeholder,

The year 2023 witnessed several transitions within

our firm from a governance perspective. It was also a

year with challenging macro-economic

circumstances for Flow Traders as well as the

broader industry. Despite these market

circumstances, we remained focused on driving our

growth and diversification strategy, as well as on

expanding our regional presence and product

coverage to structurally increase the opportunity set

for our business. On behalf of the entire Board, I

would like to express our appreciation to all of the

firm’s employees who have shown excellence, vigor

and great resilience in successfully navigating

through a challenging yet defining year for financial

markets.

Governance

There were several key changes in the firm’s top

leadership layers.

On behalf of the Board I would like to express our

heartfelt gratitude to Dennis Dijkstra, who had

served the firm for more than 14 years (of which the

last nine years as Chief Executive Officer),

particularly for the energy and determination he

brought to building and shaping a fast growing

organization. In February 2023, Mike Kuehnel

succeeded Dennis as Chief Executive Officer, after

having served as Chief Financial Officer since 2021.

Our new Executive Director, Hermien Smeets-Flier,

succeeded Mike as Chief Financial Officer as per

September 2023. We would also like to extend our

gratitude to Folkert Joling, who was instrumental in

building the firm’s trading capabilities, having

worked in several trading roles in the firm since

2006, until he was appointed Chief Trading Officer in

2018, a position he held until September 2023.

Also, our non-executive bench witnessed transition

and renewal, with us being grateful for the

significant contributions Ilonka Jankovich, Olivier

Bisserier and Roger Hodenius made to the firm’s

continued success. Roger, as one of Flow Traders’

co-founders, had shaped the firm’s entrepreneurial

spirit and culture and laid the foundations for

continuous improvement with unwavering drive and

ambition. He remains connected to the business in

an advisory role. Olivier had served the firm for

almost a decade as Chairman of the Audit

Committee, and we all thank him for his tireless and

insightful leadership in that role. We are also most

grateful for Ilonka’s highly valuable contributions to

the Supervisory Board, which benefited from her

extensive experience in venture capital and in

developing portfolio companies from a boardroom

perspective.

During 2023 we also welcomed the successors to

our departing non-executive colleagues. In Karen

Frank, Paul Hilgers and Delfin Rueda we have found

highly experienced and uniquely capable directors

with highly complementary competencies. We are

delighted to have attracted such high caliber

personalities to help build solid foundations for the

firm’s next phase of growth.

A key change in the governance framework

applicable to our firm has come with the completion

of the update to our corporate holding structure,

because of which Flow Traders’ top holding

Company is now a Bermuda based limited Company,

and the firm’s two tier board structure transitioned

successfully into a unitary board. It was an

impressive result to receive such overwhelming

support from our shareholders for this, with 96% of

votes cast in favor of the related resolution at the

Extraordinary General Meeting of December 2022.

Although, as one consequence, Flow Traders Ltd.

will not be required to apply the Dutch Corporate

Governance Code going forward, the Code will

nevertheless continue to be an important point of

reference for the firm. Furthermore, these changes

to the corporate holding structure are highly

relevant to our firm from a strategic standpoint, as

they enable us to become more competitive as a

global liquidity provider, particularly in relation to

regulatory capital management. It has also created a

more level playing field with our global peers with

respect to the regulatory capital framework overall

and is expected to expand and accelerate our firm’s

growth options.

Another key highlight in terms of our Company’s

governance was the approval of our updated

remuneration policy for the Executive Directors. The

remuneration policy was approved by a

supermajority of the Company’s shareholders at our

2023 Annual General Meeting. This was an important

governance topic for the firm as it underpins our

vision with respect to sharing economic success and

aligning pay structures, including Executive

Directors’ pay, with the interests of shareholders and

the Company’s financial performance.

2023 Business Performance

Within the global trading industry, the year 2023 was

characterized by significantly subdued volumes and

FLOW TRADERS | ANNUAL REPORT 2023 69

lower volatility across all asset classes and regions. It

goes without saying that this overall subdued

environment impacted our firm’s performance

throughout the year. The firm endured significant

headwinds during the year from a macro-economic

perspective. As a result of the overall decline in

market activity over the year, we recorded Net

Trading Income of €300.3 million and Net Profit of

€36.2 million for the financial year 2023, which was

well below our financial performance in the prior

year and well below our aspirations. This challenging

year has however also provided us with the

opportunity to further strengthen our business and

focus on operational excellence and efficiencies as

well as on additional strategic initiatives.

Strategic Priorities & Initiatives

In addition to strengthening and growing our

business and retaining our strong market presence

in ETP trading, our diversification efforts remain a

top priority to the Board. By way of highlighting just

a few of these, in February 2023, we opened our

Chicago office, focusing predominantly on ADR

trading. The Chicago office will furthermore allow us

to benefit from the city’s unique talent pool and

academic diversity. In March 2023, Flow Traders

London Ltd., a UK based subsidiary, received

authorization from the Financial Conduct Authority

which enables us to safeguard our positioning within

the UK financial system, as well as deepening our

relationships with UK-based financial institutions.

Moreover, we have continued to build out our

trading activities in China in 2023 as a key market

participant, following the successful receipt of our

QFII license and the opening of our Shanghai office.

Furthermore, Flow Traders Strategic Capital

continued to build strong relationships, with a

particularly exciting highlight being AllUnity, our

recently announced partnership with DWS and

Galaxy Digital. AllUnity will be an emerging

infrastructure provider, with the mission to launch

the leading regulated EUR-denominated stablecoin

to unlock greater institutional adoption of tokenized

assets.

Future Outlook

This year we are celebrating the firm’s 20-year

anniversary, which is a fantastic milestone paying

testament to the firm’s ongoing success. We will

continue to be focused on strengthening our trading

capabilities as well as on further diversifying our

business. From an asset class point of view, the firm

is, for instance, very well positioned to capitalize on

arising opportunities within the digital asset space

after years of dedicated focus and investments,

which will further mature in 2024. Examples of this

include the introduction of MiCAR, the accelerating

adoption of digital assets by institutions, and the

acknowledgement of digital assets as a validated

asset class by regulators including the SEC.

Furthermore, we will keep focusing on

systematically strengthening the control layers

within our firm, which safeguards our credibility

within global financial markets. Lastly, operational

and cost efficiencies remain important areas of

attention as the firm continues to grow and captures

more opportunities, creating additional strategic and

operational synergies.

Finally, on behalf of the Board I would like to thank

all of our employees for their significant

contributions in 2023 and am confident that

together we will make 2024 another successful and

memorable year for our business.

Rudolf Ferscha

Chairman of the Board

FLOW TRADERS | ANNUAL REPORT 2023 70

The Board's focus in 2023

During 2023, the Board held fifteen formal Board

meetings and met several times without holding a

formal meeting. Examples of meetings without

holding a formal meeting include a preparation

session for the AGM, education and strategy days

and the self-assessment day. During these meetings

a variety of topics were discussed, including but not

limited to the following:

Strategy

The Board remained focused on (sustainable) long-

term value creation, taking into account the

strategy’s implementation and feasibility, the

business model applied by the Company and the

market in which the Business operates,

opportunities and risks for the Company, the

Company’s operational and financial goals and their

impact on its future position in relevant markets,

stakeholder interests, and any other aspects relevant

to the Company and its business, such as the

environment, social and employee-related matters,

the chain within which the business operates,

respect for human rights, and fighting corruption

and bribery.

Strategy-associated risks

Reviewing the Company’s risk assessment processes

and the monitoring of the Company’s internal risk

management and control systems continued to be a

priority and joint responsibility of the Board and all

committees throughout the year 2023. The review

amongst others entailed an overview of all relevant

risks the Company is exposed to, the internal

controls in place to address these risks, and the

Board’s views on such risks.

Financial results

The Board was updated on the Company’s financial,

legal and compliance risks through the Audit

Committee and the Risk Committee. Other topics

discussed were the annual, half-yearly and quarterly

results.

Off-site

The Board met for a two-day off-site meeting in

London, United Kingdom. During this off-site, the

Board extensively discussed the Company’s growth

strategy and participated in a deep-dive session

with respect to liquidity and risk management in

view of the Company’s trading activities.

Remuneration and variable compensation of

Executive Directors and employees

The Remuneration & Appointment Committee

updated the Board on remuneration and variable

compensation plans for both employees and the

Executive Directors. The Executive Directors did not

participate in the deliberations and decision-making

concerning their own remuneration.

The Internal Audit Function

The recommendations of the Internal Audit

Function, the functioning of the Internal Audit

Function and the progress of the 2023 Internal Audit

Plan have been discussed and followed up during

2023.

Board evaluation

In December 2023, both the Non-Executive

Directors as well as the Executive Directors self-

evaluated their performance over the year 2023.

The Non-Executive Directors evaluated their own

functioning and performance as a group as well as

for the Board’s Committees and for the individual

Non-Executive Directors. Given that 2023 was the

first year of the Company operating in a one-tier

board structure, the board decided for this

evaluation to be supported by external consultants

who are subject matter experts in respect of

Corporate Governance and leadership effectiveness.

As a result of the conclusions of the 2023 Non-

Executive Director self-assessment, it was agreed to

increase the interactions between the Non-

Executive Directors and a wider range of people in

the organization beyond the board’s formal

meetings. It is intended to proactively create

additional opportunities for mutual exchange of

views and for further informal communication,

particularly taking advantage of in-person presence

of Non-Executive Directors in different offices

around official board meetings. The 2023 Non-

Executive Director self-assessment also included an

independence-assessment which was led by Rudolf

Ferscha as Chairman of the Board and Linda Hovius

as Chairwoman of the Remuneration & Appointment

Committee. As a result of this independence-

assessment, the Non-Executive Directors re-

confirmed the independence of Rudolf Ferscha,

Linda Hovius, Delfin Rueda, Paul Hilgers and Karen

Frank. Jan van Kuijk was considered a non-

independent Director.

FLOW TRADERS | ANNUAL REPORT 2023 71

The Executive Directors also evaluated their own

functioning and performance as a group and

individually, guided by external consultants who are

subject matter experts in respect of Corporate

Governance and leadership effectiveness. In this

context, a 360-degree performance evaluation was

conducted as well. In the 2023 Executive Director

self-assessment, the focus was on the CEO and the

recently joined CFO and it was concluded that the

capabilities and competencies of the Executive

Directors are highly complementary to each other.

Nonetheless, the Executive Directors agreed to

regularly explore opportunities to increase their

bench strength by adding to the capability-set of the

executive team.

Furthermore, the performance of the Executive

Directors was discussed among the Non-Executive

Directors, and with each Executive Director

individually, on at least two separate occasions

throughout the year. For a detailed overview of the

performance reviews and the means by which these

were conducted, reference is made to the

Remuneration Report as included in this Annual

Report.

FLOW TRADERS | ANNUAL REPORT 2023 72

Committees

During the financial year 2023, the Board operated four committees: the Audit Committee, the Remuneration & Appointment Committee, the Trading & Technology

Committee, and the Risk Committee. For more information on the functioning and on the responsibilities of the committees, please refer to the chapter Governance.

The committees reported to the Board by sharing

their advice and recommendations during Board

meetings and by providing an update of the

deliberations during Board meeting.

Audit Committee

The Audit Committee met five times in 2023. Other

attendees besides the Committee members

included the CEO, the CFO, the Global Head of

Finance, the Investor Relations Manager, the Global

Head of Internal Audit, the Global Head of Tax, the

Global Head of Compliance and the external auditor.

During these meetings, the Audit Committee

discussed the annual results, the half-yearly results

and the quarterly results and shared the items

discussed with the Supervisory Board. Other topics

discussed include e.g. significant new and proposed

legislative initiatives related to accounting, auditing

and financial reporting, tax planning, tax strategy

and monitoring, assessing whether there were

significant deficiencies and material weaknesses in

internal control over financial reporting, the

Company’s financing strategy and capital

management policy (including dividend proposals),

assessing the Company’s compliance with rules and

regulations, the Company’s Code of Conduct and the

methods used to assess the effectiveness of the

internal and external audit processes. Topics

discussed with the external auditor included the

financial statements over the financial year 2022,

recommendations on the basis of the annual report,

their audit plan for the financial year 2023 and their

interim review report. The Audit Committee

reviewed the management letter and

recommendations included in the auditor’s report,

as issued by the external auditor and discussed the

actions taken by management to address any

recommendations and observations. The Audit

Committee evaluated the performance of the

external auditor and discusses this with the Board

and subsequently with the external auditor. In light

of this, the Audit Committee advised the Board

about the reappointment of the external auditor,

before the Board determined EY's nomination for

the appointment of the external auditor to the

General Meeting of 2023. Given the nature of our

business, the application of information and

communication technology by the Company,

including risks relating to cyber security, are

discussed in detail in the Trading & Technology

Committee. Subsequently, key items in respect of

these items are also discussed in the Audit

Committee.

External auditor

The Audit Committee and the Executive Directors

reported to the full Board on EY’s functioning as the

external auditor, the Company’s relationship with

the external auditor, on its fees, as well as on other

audit and non-audit services it provided to the

Company. EY performed a review of the Company’s

interim financial statements and issued an

unqualified review report. The Audit Committee

evaluated the qualifications, performance and

independence of EY, taking into account the

opinions of the Executive Directors. The Audit

Committee also obtained a report from the external

auditor regarding, among other topics, its internal

quality control procedures. EY confirmed its

independence from Flow Traders in accordance with

the professional standards applicable to it. Based on

the information provided by the Audit Committee,

the Board nominated EY as external auditor at the

Company’s General Meeting in 2023. Subsequently,

EY was reappointed by the General Meeting as

external auditor for the financial year 2023.

Internal Audit Function

The Internal Audit Function (IAF) carried out all

audits that were due per the 2023 Internal Audit

plan, as approved by the Supervisory Board of Flow

Traders N.V. in October 2022. Focus areas in the

2023 Internal Audit plan included amongst others

trading, risk management, IT systems and adherence

to regulatory requirements. The Audit Committee

and the Global Head of Internal Audit discussed the

internal audit results from 2023 (findings,

observations, recommendations, management

feedback and follow-up). In October 2023, the Board

approved an updated version of the Internal Audit

Charter and approved the 2024 (risk-based) Internal

Audit Plan. The Chairman of the Audit Committee

maintains regular dialogue with the Global Head of

Internal Audit, particularly in relation to ongoing

audits and outstanding audit items. More

information can be found in the chapter

Governance.

FLOW TRADERS | ANNUAL REPORT 2023 73

Remuneration & Appointment Committee

The Remuneration & Appointment Committee met

six times in 2023. Other attendees to the meetings

included the CEO and the Global Head of HR &

Recruitment. During these meetings the

Remuneration & Appointment Committee regularly

discussed Company culture in general including but

not limited to the results of the annual employee

engagement survey and any follow-up actions

resulting out of such survey. The Remuneration &

Appointment Committee further discussed the

Employee Remuneration Policy, made proposals to

the Board with respect to the the remuneration of

the individual Executive Directors. The size,

composition, functioning and succession planning of

the Board was reviewed including any findings and

conclusions. Other duties included the monitoring of

developments in rules and regulations in relation to

remuneration policies and the preparation of the

Remuneration Report. Before determining the

remuneration of the individual Executive Directors ,

the Remuneration & Appointment Committee took

note of the individual Executive Director’s views with

regard to the amount and structure of their own

remuneration.

Trading & Technology Committee

The Trading & Technology Committee met four

times in 2023. As the core business of the Company

is discussed in this committee, all of the Non-

executive directors formed part of the Trading &

Technology Committee. The committee addressed

trading topics including but not limited to, trading

performance across all specific asset classes and

regions including KPI tracking, trading strategies,

market conditions and capital management. The

Trading & Technology Committee also addressed

technology topics, including but not limited to

technology strategies, information security, and

developments with respect to rules and regulations

concerning the Company’s technology operations,

e.g. the Digital Operational Resilience Act (DORA).

Risk Committee

The Risk Committee met four times in 2023. Invitees

to the meeting were the Executive Directors and the

Global Head of Risk and/or the Head of Risk EMEA

or Head or Risk APAC. The main focus in the

meetings was the Management Board’s risk

assessment. The attendees discussed in detail the

relevant risks the Company is exposed to, the

internal controls in place to address these risks, the

Executive Directors’ views on such risks, as well as

the effectiveness of the design and operation of the

internal risk management and control system. More

information can be found in the chapter

Governance.

Non-Executive Directors

During the year 2023, two meetings were held

among the Non-Executive Directors, without the

Executive Directors being present. Both meetings

related to the profit share allocation to the Executive

Directors, which, in accordance with the Board Rules

and the Company’s Remuneration Policy, is a matter

reserved for the Non-Executive Directors. In January

2023, the Non-Executive Directors discussed and

approved the final 2022 profit share allocation to the

Executive Directors, and in December 2023, the

Non-Executive Directors discussed the preliminary

2023 profit share allocation to the Executive

Directors.

Financial statements and dividend

The 2023 financial statements were prepared by the

Board. They were discussed with the Audit

Committee, in attendance of EY. The financial

statements were audited by EY, who issued an

unqualified auditor’s report. Reference is made to

the auditor’s report of the financial statements. The

Board approved the financial statements as audited

by EY, including the Company’s dividend proposal.

We invite the General Meeting to adopt the financial

statements for 2023 and would recommend casting

an advisory vote in favor of the 2023 final dividend.

Information on the remuneration of the Executive

Directors can be found in the chapter Remuneration.

FLOW TRADERS | ANNUAL REPORT 2023 74

Board composition

Changes throughout 2023

The composition of the Board changed on multiple

occasion during the financial year 2023 as described

below. Firstly, the composition of the Supervisory

Board of Flow Traders N.V. (the Company's legal

predecessor) changed as a result of Ilonka Jankovich

having resigned from her position as per 13 January

2023. The composition of the Board of the Company

changed as a result of Dennis Dijkstra deciding not

to seek reappointment as Chief Executive Officer

and Executive Director. Effective 1 February 2023,

Mike Kuehnel assumed the role of Chief Executive

Officer. Folkert Joling decided to resign from his

position as Chief Trading Officer and Executive

Director with effect from 1 September 2023.

Hermien Smeets-Flier was elected to the Board as

Chief Financial Officer and Executive Director as per

14 September 2023. Finally, the terms of office of

Olivier Bisserier and Roger Hodenius came to an end

at the 2023 AGM and both decided not stand for re-

election. Karen Frank, Paul Hilgers and Delfin Rueda

were elected as (independent) Non-Executive

Directors at the 2023 AGM.

Rotation Schedule

Any changes in the composition of the Board require

careful consideration from a succession planning

perspective. In making nominations to the General

Meeting of Shareholders for the election of directors

to the Board, the Board tries to mitigate the

potential future risk of Directors simultaneously

retiring. The schedule on the next page is referred to

as the Board rotation schedule which gives a clear

insight into each director's term(s). The Board

rotation schedule is also available on the Company's

website.

Gender Diversity within the Board, ExCo and

subtop

We aim to incorporate diversity aspects such as

nationality, age, gender ,educational background or

professional background into decision making

concerning the composition of our workforce.

Regardless of rules and regulations, we see diversity

as a means to guarantee a safe and inclusive

environment for our employees. To the extent

possible, these aims also apply to the composition of

our Board. The current composition of the board is

diverse in terms of gender, nationality and expertise,

and has a suitable level of experience in the financial,

economic, trading, technology, social and legal

aspects of a firm like ours. Specifically with respect

to gender diversity within the Board, we have set the

following goals in 2022: (i) to have at least 1/3 female

and 1/3 male Non-Executive Directors and (ii) at

least one female and at least one male Executive

Director.

During the year 2023 we were able to achieve these

gender diversity goals, as is reflected in the

following table. We also considerably improved

gender diversity within the Executive Committee.

Gender diversity within the subtop (as defined in our

DE&I Policy, but excluding the members of the

Board of Directors) is 24% . As 2023 is the first

reporting year where the subtop was defined for

Flow Traders Ltd., there are no 2022 comparable

figures.

FLOW TRADERS | ANNUAL REPORT 2023 75


	Female	Male	Female/Male ratio
Executive Directors	1 (2022: 0)	1 (2022:3)	50% (2022: 0%)
Non-Executive Directors	2 (2022: 2)	4 (2022: 4)	33% (2022: 33%)
Board	3 (2022: 2)	5 (2022: 7)	38% (2022: 22%)
Executive Committee1	2 (2022: 0)	11 (2022: 10)	15% (2022: 0%)
Subtop2	12 (2022: n/a)	37 (2022: n/a)	24% (2022: n/a)
1.Includes Executive Directors as they are formally part of the Executive Committee
2.Excludes members of the Board of Directors. No comparative data available.

Board rotation

schedule

FLOW TRADERS | ANNUAL REPORT 2023 76

Meetings & attendance

The table below shows statistics concerning

attendance at Board and Committee meetings,

reflected as number of meetings attended out of the

total number of meetings held during the applicable

term of office of the respective Director during the

calendar year 2023. The attendance rate during the

year was 91.67% for Board meetings and 94.44%

including committee meetings and Non-Executive

Director meetings. The Executive Directors attended

each meeting in full or in part, except for the Non-

executive Director meetings and the Remuneration

& Appointment Committee meetings concerning the

profit share of the Executive Directors.


	Board	Audit Committee	Remuneration & Appointment Committee	Risk Committee	Trading & Technology Committee	Non-Executive Directors	Term of office end-date / start-date
Rudolf Ferscha	15/15	4/5	6/6	4/4	4/4	2/2	n/a
Olivier Bisserier	6/6	3/3	0/0	2/2	2/2	1/1	26 April 2023 (end-date)
Roger Hodenius	4/6	0/0	2/3	2/2	2/2	0/1	26 April 2023 (end-date)
Jan van Kuijk	14/15	5/5	6/6	4/4	4/4	2/2	n/a
Linda Hovius	13/15	0/0	6/6	4/4	4/4	2/2	n/a
Ilonka Jankovich	0/0	0/0	0/0	0/0	0/0	0/0	13 January 2023 (end-date)
Karen Frank	8/9	2/2	0/0	2/2	2/2	1/1	26 April 2023 (start-date)
Paul Hilgers	8/9	0/0	0/0	2/2	2/2	1/1	26 April 2023 (start-date)
Delfin Rueda	9/9	2/2	3/3	2/2	2/2	1/1	26 April 2023 (start-date)

FLOW TRADERS | ANNUAL REPORT 2023 77

FLOW TRADERS | ANNUAL REPORT 2023 78

Remuneration report

Letter from the Chairwoman of the

Remuneration & Appointment Committee

Flow Traders’ remuneration philosophy

Remuneration for the Board

Our remuneration approach is

focused on providing enhanced

transparency on performance to

our stakeholders

Linda Hovius | Independent

Non-Executive Director and

Chairwomen of the

Remuneration & Appointment

Committee

Letter from the

chairwoman of the

Remuneration &

Appointment

Committee

Dear Shareholder,

On behalf of the Remuneration & Appointment

Committee, I am pleased to present our 2023

Remuneration Report. This report includes a

summary of our remuneration policy currently in

place, as approved at the 2023 AGM, and the

remuneration paid out in 2023 in accordance with

this policy. As a result of a thorough legal and capital

structure review and to support our aims in

becoming more competitive as a global multi-asset

liquidity provider, last year we completed an update

to our corporate holding structure which includes a

top holding Company in Bermuda. We have retained

our existing global footprint with no change to day-

to-day operations. This includes a substantial

presence in the Netherlands as well as maintaining a

listing on Euronext Amsterdam. This year’s

remuneration report reflects the reporting

requirements originating from the updated EU

Shareholder Rights Directive and the Dutch

implementation of this Directive.

2023 Main development

2023 AGM

In 2023, we put forward our revised remuneration

policy for the Executive Directors and our enhanced

2022 remuneration report (advisory vote) for the

AGM’s approval. 76.9% of shareholders voted in favor

of the remuneration report, which has been a great

recognition of our efforts in enhancing the

transparency and clarity of our report. This year’s

report builds on the steps taken towards enhanced

transparency and provides enhanced clarity on the

weighting of our Company (financial and non-

financial) versus individual KPI’s. The revised policy

for the Executive Directors was approved by 76.01%

of our shareholders, meaning it obtained the

required 75% super majority from the AGM. As a

result, we have now commenced operating under

the newly approved Remuneration policy, including

important enhancements such as formally

introduced share-based compensation, enhanced

deferral and vesting provisions, share-ownership

encouragement and a formal cap on compensation.

Leadership changes

In 2023 we have had a number of leadership

changes. Firstly, Dennis Dijkstra our former Chief

Executive Officer (CEO) decided not to seek

reappointment in 2023 as CEO and member of the

Flow Traders Ltd. In addition, one of our Co-

Founders Roger Hodenius also decided not to seek

reappointment as Non-Executive member of the

Board. Mike Kuehnel, until then serving as Chief

Financial Officer (CFO) has succeeded Dennis and

became CEO effective 1 February 2023. Following

Mike’s appointment as CEO. Hermien Smeets-Flier

joined us from Achmea Investment Management

and became Executive Director of the Board and

CFO on Thursday 14 September 2023, through a

special general meeting during which shareholders

elected her with a majority of 99.8%. In September,

Folkert Joling decided to step down as Chief Trading

Officer and Executive Director of the Flow Traders

Ltd. Board. At the same time, also a number of other

appointments were made to the Executive

Committee, including a newly appointed Global

Head of Risk and Global Head of Compliance. On

behalf of the Board and of all Flow Traders

employees I want to express our gratitude to Dennis,

Folkert and Roger for their impactful contributions

to the success of the Company over many years.

With regard to the composition of the Board, we are

very happy with our three new Non-Executive

Directors (Karen Frank, Delfin Rueda and Paul

Hilgers), who joined the Flow Traders Board in 2023

bringing a wealth of experience and insights. Delfin

Rueda took the role of Chair of the Audit Committee

and Paul Hilgers stepped in as Chair of the Risk

Committee.

Organization and culture

Across 2023, the objective of the Board has been to

expand the broader leadership group across regions

and functions, to ensure clearer accountability as

well as increasing alignment. This has been a key

priority for the Remuneration & Appointment

Committee, who have regularly discussed the

division of roles and responsibilities in order to

increase the effectiveness and efficiency of Flow

Traders as well as to create opportunities for

leadership to grow at different levels in the

organization. Furthermore, the topic of culture and

tone at the top is a recurring item on our agenda, as

is DE&I and employee engagement. Engagement is

an important element for the development of a

culture in which employees can flourish and in light

of the lower 2023 employee engagement scores, we

have asked the Executive Directors to develop and

implement a plan to increase employee engagement

in 2024.

FLOW TRADERS | ANNUAL REPORT 2023 79

Company performance and remuneration

Flow Traders delivered subdued financial and

trading performance in 2023 compared to 2022,

reflecting a less active trading environment. We

recorded Normalized Total Income in 2023 of €299.8

million and demonstrated a healthy Normalized

EBITDA margin of 30.8% with Normalized EBITDA of

€92.2 million. Ultimately, we posted Normalized Net

Profit of €59.4 million with Normalized Basic EPS of

€1.38. This allowed the Company to pay a total

dividend of €0.45 per share to shareholders, in-line

with our dividend policy. The Non-Executive

Directors, in close consultation with, and supported

by, the Executive Directors have decided that the

2023 firm-wide variable remuneration pool will be

€34.7 million (2022: €86.6 million), corresponding to

32.5% of operating result in 2023.

Linda Hovius

Chairwoman of the Remuneration & Appointment

Committee

FLOW TRADERS | ANNUAL REPORT 2023 80

Flow Traders’

remuneration

philosophy

We believe in operating a single & straightforward

policy, where we reward all our employees,

including the Executive Directors, based on the

same remuneration philosophy and according to

several defined principles. While we recognize that

the corporate governance landscape has evolved in

recent years, we believe that the principles that

underline our approach remain relevant. The defined

principles as described below guide the

Remuneration and Nomination Committee when

making decisions on the remuneration policy and its

implementation.

Profit sharing

It is in our corporate DNA to share our profits fairly

with our shareholders and employees, and we have

done so since we were founded. Given good

performance employees from any role and office are

entitled to receive variable remuneration relative to

their contribution to the firm as a whole. We share

one singular firm-wide variable remuneration pool.

The total profit pool available for all employees and

the Board is 32.5% of operating profit. In addition, we

have a formal cap on compensation in place for any

individual Executive Director of the Board where

compensation is capped at 20 times the average FTE

total remuneration.

Rewarding for exceptional performance

Our remuneration consists of a relatively modest

base salary and a variable remuneration component.

Positive Company performance enables employees

in any role to receive variable compensation relative

to their contribution to the firm. The variable

remuneration profit share is paid out partly in equity

and directly reflects Company and personal

performance. The pay-mix is skewed towards

variable remuneration in good (financial) years. At

the same time, if we make no profit, we do not pay-

out variable remuneration – and reclaim outstanding

deferrals if we sustain a loss.

Guarding long-term interests & stimulating

risk awareness

We align employee pay with the interests of

shareholders and our financial performance. Where

Flow Traders is successful, the profits are shared

with all stakeholders, including our employees. As

such, variable pay is only possible in a year when a

profit is made, and a significant part of any profit

sharing (62.5%) is deferred for a multi-year period

(up to 4 years) that remains at risk in full during this

period. The cash component of the profit share vests

on a pro-rata basis over a two-year period, with the

first tranche vesting on the date of award. This aligns

the interests of the Company and its shareholders

with those of our employees by building long-term

value and creating ‘skin in the game’ as well as

continued loyalty. Where Flow Traders is less

successful, there is a corresponding downwards

impact on variable remuneration levels creating a

risk aware culture and creating larger alignment with

long term growth and reward (as deferred variable

remuneration remains at risk until vesting).

Emphasizing share ownership

We see the advantages of employee ownership,

ranging from positive effects on employee

commitment (attracting and retaining employees),

corporate innovation, our business performance

(productivity and profitability as well as

competitiveness to our peers), through greater work

effort of employees and a more cooperative and

entrepreneurial corporate culture.

Social responsibility

The Company and its management believe in being

a socially responsible Company. Enabling equal

opportunities and fostering ownership is embraced

across all areas of how we do business.

Flow Traders’ approach to Executive

Director remuneration

Our Executive Director remuneration policy aims to

attract, motivate and retain Executive Directors to

lead Flow Traders and sustainably execute Flow

Traders’ strategy. We aim to provide total

remuneration that is competitive with our

predominantly international, and in many cases

privately-owned, competitors and design our

remuneration structures to encourage our

employees to stay with us for the longer term. Our

Executive Director remuneration policy reflects our

mission, corporate identity and values and fosters

our unique Flow Traders culture. We provide our

Executive Directors a remuneration package that

consists of fixed remuneration and variable

remuneration. The Executive Directors do not

receive material ancillary benefits beyond variable

remuneration. As permitted by the remuneration

policy, total remuneration of Executive Directors is

formally capped at a multiple of the average

employee total remuneration. We present detailed

insights into our Executive Director remuneration

policy in the next section.

FLOW TRADERS | ANNUAL REPORT 2023 81

Executive Director Remuneration at a glance

In accordance with our Remuneration Philosophy, we provide Executive Directors

with a remuneration package that consists of fixed remuneration, in the form of a

relatively modest base salary, and variable remuneration that is aligned with

Company performance.

The table below provides insight into the main elements of our Remuneration

policy


Base salary	▪ Relatively modest base salary
Variable pay	Policy ▪ Executive Directors may be awarded a variable remuneration entitlement in the form of a percentage of the firm-wide variable remuneration pool. ▪ No variable remuneration pool will be available where Flow Traders was not profitable in a performance year. ▪ Up to 32.5% of Flow Traders’ operating result over the performance year shall be available for variable remuneration. ▪ The majority of variable compensation is deferred over multiple years to create long-term perspective and align with long-term shareholder value. ▪ Total remuneration for any individual Executive Director of the board is formally capped at 20 times the average FTE total remuneration.
	Operation ▪ Performance is measured over a one-year performance period. ▪ Variable remuneration awards are predominantly based on Flow Traders’ operating profit. ▪ The performance of the Executives Directors will be assessed by the Non-Executive Board members against Company KPI’s (70% weight) and individual targets (30% weight). ▪ The Company KPI scorecard consists of both financial and non- financial performance metrics.


Variable pay	Deferral and vesting ▪ 50% of variable remuneration is paid out in equity. ▪ To enhance the long-term perspective and alignment with long-term shareholder value, 62.5% of the variable remuneration is deferred over a period of up to four years. ▪ The cash component of the variable remuneration will vest on a pro-rata basis over a two-year period, whereby the first tranche will vest at the date of award. ▪ The equity component of the variable remuneration will vest over a 4-year period on a pro-rata basis, whereby the first tranche will vest at date of award. ▪ All equity awards that vest are subject to a holding period of one year.
Variable pay	Equity awards ▪ Variable remuneration will be settled in both cash and Flow Traders’ equity. ▪ 50% of any variable remuneration shall be paid out in the form of equity, which will vest over a four-year period
Encourage share ownership	▪ Executive Directors shall retain 50% of the shares granted as part of remuneration until at least 12 months have lapsed after the end of employment, equalling 25% of total variable remuneration granted.

FLOW TRADERS | ANNUAL REPORT 2023 82

2023 remuneration for

the Executive

Directors of the Board

Introduction

The remuneration (and other arrangements) for the

Executive Directors are determined by the Non-

Executive Directors of the Board (following

proposals from the Remuneration & Appointment

Committee). The Non-Executive Directors have

assessed the remuneration of the Executive

Directors based on their performance - both

individual and as a team- and in accordance with

Company performance in 2023. A detailed

explanation of the assessment is included in the

"Performance assessment" section on page 86.

Total remuneration

The table below shows the total remuneration

awarded to individual Executive Directors in 2023.

▪ Flow Traders delivered a subdued financial and

trading performance in 2023 compared to 2022,

reflecting a less active market trading

environment. We recorded Total Income in 2023

of €303.9 million and demonstrated a healthy

EBITDA margin of 22% with EBITDA of €67.5

million. Ultimately, we posted Net Profit of €36.2

million with Basic EPS of €0.84.

▪ Despite the trading environment, we continued

to make progress in terms of executing our

strategic growth agenda with the further

expansion of our ETP market making activities in

Shanghai and Chicago, the growth of our fixed

income market making capabilities, and the

broadening and deepening of our digital assets

footprint with the launch of AllUnity, a Euro-

denominated stablecoin venture with DWS and

Galaxy Digital.

▪ The subdued financial performance translated to

a smaller variable remuneration pool in 2023

compared to 2022. The firm-wide variable

remuneration pool in 2023 represents 32.5% of

the operating result, in line with the existing

remuneration policy.

▪ In line with the proposed cap on total

remuneration in the 2023 remuneration policy,

the hard cap on total remuneration for each

Executive Director in 2023 is €3,032,000. The cap

is based on average employee total pay of

€ 151,600, calculated according to the

recommendation of the Dutch Monitoring

Commission.

FLOW TRADERS | ANNUAL REPORT 2023 83


Total remuneration of Executive Directors of the Board (in thousands of euro)
	Fixed remuneration		Variable Remuneration						Extraordinary items		Pension scheme		Total remuneration		Proportional split (%) of remuneration in fixed/variable
Name	Base salary		Cash				Company shares’								Variable
	2023	2022	2023		2022		2023	2022	2023	2022	2023	2022	2023	2022	2023	2022
			Upfront	Deferred	Upfront	Deferred
Mike Kuehnel, CEO (2023 -)1	156	95	125	125	425	425	250	850	—	—	—	—	656	1,795	24%/76%	5%/95%
Hermien Smeets-Flier, CFO (2023 -)2	134	—	100	100	—	—	200	—	—	—	—	—	534	—	25%/75%	-
Dennis Dijkstra3	8	95	—	—	425	425	—	850	—	—	—	—	8	1,795	100%/0%	5%/95%
Folkert Joling4	67	95	400	—	425	425	—	850	8	8	—	—	475	1,803	14%/86%	5%/95%

1. Mike Kuehnel was appointed Chief executive Officer, succeeding Dennis Dijkstra, as per 1 February 2023, until then serving as Chief Financial Officer. Following a rebalancing of base salaries to be able to attract a new CFO externally, Mike Kuehnel’s base salary was increased as of 14 September 2023. Mike Kuehnel joined Flow Traders as CFO in 2021.
2. Hermien Smeets-Flier was hired on 17 July 2023 and succeeded Mike Kuehnel as Chief Financial Officer, appointed to the Board on 14 September 2023.
3. Dennis Dijkstra stepped down as Chief Executive Officer and a member of the Board as per 1 February, 2023. The remuneration granted in capacity as CEO is shown in the table above. Given the resignation, no variable remuneration has been granted in 2023.
4. Folkert Joling stepped down as Chief Trading Officer and member of the Board as per 5 September 2023. The variable remuneration disclosed includes the total amount as agreed per the termination agreement.
For the year ended 31 December 2023 and 2022, 90% of total remuneration of Executive Directors of the Board was charged to subsidiaries through an intergroup cost-sharing arrangement.

FLOW TRADERS | ANNUAL REPORT 2023 84

Base salary

In 2023, we had a few leadership changes. Our

former Chief Executive Officer (CEO) Dennis Dijkstra

decided not to seek reappointment and was

succeeded by Mike Kuehnel, until then serving as

Chief Financial Officer (CFO). Succeeding Mike,

Hermien Smeets-Flier joined us from Achmea

Investment Management as CFO. Following these

leadership changes some amendments had to be

made to the base salaries of the board members, as

some rebalancing was conducted to be able to

attract our new CFO externally. Even after the

rebalancing, the CEO and CFO continue to receive a

relatively modest annual base salary for the size of

their role and responsibilities of €300,000. This

modest base salary remains aligned with our

Remuneration Philosophy, which heavily relies on

variable remuneration based on positive Company

performance.

Variable remuneration

The design of our variable remuneration reflects our

remuneration principles. We operate a single

incentive plan that drives and rewards both annual

and long-term performance with a significant focus

on the long-term through the multi-year pay-out

mechanism and half of the award being paid in Flow

Traders equity. The value of the equity is directly

linked to performance of the Flow Traders’ share

price from the date of grant to vesting. Further, any

outstanding variable remuneration (deferred or

unvested) remains at risk in full for future years.In

line with our guiding principles, the Executive

Directors share in the same firm-wide variable

remuneration pool as all other employees. This pool

of variable remuneration is primarily a function of

operating results. While this structure is uncommon

among listed companies, it is in line with the

practice in our industry among both listed and non-

listed peer companies, and necessary to be able to

attract, retain and motivate individuals of the

highest caliber.

Executive Directors performance

assessment

To determine the Executive Directors’ variable

remuneration awards, the Non-Executive Directors

conduct a holistic assessment of the performance of

each Executive Director and the Executive Directors

as a whole in accordance with a defined scorecard.

In this holistic performance assessment, the Non-

Executive Directors consider performance against

Company targets, which have a weight of 70% and

include both financial and non-financial key

performance indicators (KPIs). To ensure a balanced

assessment, our KPIs do not have pre-determined

weightings, allowing the Remuneration Committee

to determine the overall outcome and ensure

appropriateness in wider circumstances. Objectives

for the KPIs included in the scorecard are set prior to

the beginning of the year and where appropriate

quantitative targets are predefined to ensure the

assessment is robust. Individual performance is

assessed alongside Company performance with a

30% weighting to determine the final variable

compensation outcomes. Below we present the

Company KPIs and the explanation on the

performance assessment as conducted for 2023.

Total remuneration amounts are formally capped for

any individual Executive Director of the Board at 20

times the average FTE total remuneration.

FLOW TRADERS | ANNUAL REPORT 2023 85

Performance

assessment

Flow Traders introduced in 2022 a scorecard which

demonstrates Company performance through six

specific performance criteria. The criteria were

chosen to align with our business, our strategy and

include a range of financial and non-financial

metrics. During 2023 the same Company

performance criteria were applied as in 2022, with a

weighting of 70%. The remaining 30% is based on

individual performance metrics. Aligned with 2022,

below we present the measures, targets and actual

results for 2023 on the defined Company

performance criteria.

The criteria were set ahead of the performance

period, ensuring that the achievement of targets is

challenging, and were as follows:

1. Median daily net trading income (NTI)

normalized for volatility:

We believe that the median daily NTI normalized by

volatility provides a statistically clean picture of

overall business growth. The distribution of daily NTI

is not normally distributed but more shaped like a

Poisson or Gamma distribution with a few negatives

days and more higher profitability days. Due to the

fact that the higher profitability days are

independent, a simple average of daily NTI is

statistically less relevant than the median of the daily

NTI. It is Flow Traders’ ambition to increase this

median NTI for equal volatility scenarios. Therefore,

it is necessary to normalize the observed daily NTI by

the volatility. Since volatility does not have a linear

effect, but a moderately exponential impact, it has

been determined that the most appropriate

calculation option is to divide the daily median NTI

by the square root of the volatility. This exercise has

been performed on our historical results and the

average VIX value has been used to normalize the

NTI. It is important to note that for a business with a

global footprint which is exposed to multiple

different asset classes, VIX is a simplified proxy for

overall volatility (VIX is the implied volatility of the

S&P500). However, it does provide a measure of

general market sentiment.

The target value set by the Company is to have this

metric increase by 10 points every year which equals

an increase of approximately €50,000 per trading

day. The target for this metric was set at 237 for

2023 and we achieved an actual result of 234.

2. Normalized EBITDA margin

Normalized EBITDA margin is a profitability ratio that

measures how much in earnings a Company is

generating before interest, taxes, depreciation, and

amortization, as a percentage of the Total Income.

Normalized EBITDA and margin are based on the

relevant profit share percentage of operating result

for the relevant financial period without any IFRS 2

adjustments for share-based payments.

On the cost side, Normalized fixed operating

expenses increased to €174.1 million in 2023 (2022:

€161.6 million). The main drivers of the increase in

fixed expenses related to the base salary adjustment

conducted in Q2 2022 across the Company,

continued technology investment, and general price

inflation reflected across all expenses categorizes at

year end decreased by 2.1% percent to 646.

Normalized variable employee expenses decreased

to €33.5 million (2022: €90.8 million) which reflects

the less favorable financial performance of the

business during the year and the adjusted profit

sharing percentage of 32.5% which was

implemented the previous year to ensure the base

compensation increases were income statement

neutral.

A target Normalized EBITDA of 40% was set for 2023.

This is reflective of prior annual outcomes and is at a

level which ensures a sustainable and growing

business for all internal and external stakeholders.

Flow Traders delivered a Normalized EBITDA margin

of 30.8% (2022: 45.2%) with Normalized EBITDA of

€92.2 million (2022: €208.2 million) which was the

result of the income and cost dynamics described

above.

3. Average return on shareholders' equity

The average return on shareholders' equity shows

how much money is returned to our shareholders as

a percentage of the money that has been invested

or retained in Flow Traders. It is calculated by

dividing Flow Traders normalized net profit for the

year by the average total shareholders' equity for the

year (i.e. the average of the opening and closing

FLOW TRADERS | ANNUAL REPORT 2023 86

shareholders' equity balances, expressed as a

percentage).

In 2023, Flow Traders recorded average return on

equity of 10.0% reflecting normalized net profit of

€59.4 million and average shareholders' equity of

€596.1 million. This compares to 27.0% average

return on shareholders' equity delivered in 2022. The

realization of a 10.0% average return on equity is the

result of a lower NTI performance during the year as

well as the operating expenses dynamics which

reflect both fixed operating expenses as well as

variable employee remuneration which is

determined by the 32.5% profit share arrangement.

The target average return on shareholders' equity for

2023 was set at 20% which is an approximation of

Flow Traders’ cost of equity and steers towards

delivering a return on shareholders' equity that is

greater than the Company’s cost of equity.

4. Business development

It is an ongoing goal of the Company to further grow

and diversify our trading activities each year,

particularly in the context of the broader market

volumes. We revised the business development KPI

this year to more closely align with the Company’s

stated growth and diversification agenda, now with

four components contributing to this KPI. An

important component of our trading is off-exchange

with institutional counterparties and the value

traded per active counterparty help measures the

development in this area. As we diversify our trading

into different asset classes, the Net Trading Income

we derive from Fixed Income and CCC as a portion

of total Net Trading Income measures the growing

diversification of the business. In a similar vein, the

Net Trading Income we derive from the Americas

and Asia as a portion of total Net Trading Income

measures the growth of the business outside of our

core European market. And lastly, our own ETP value

traded compared to the market ETP value traded

measures our share of the overall market.

This business development score provides a relative

score based on an algorithm comprised of several

input levers including the number of active

counterparties, off-exchange value traded, our Net

Trading Income by asset class and by region, our

own ETP value traded and total market ETP value

traded. At the end of 2023, Flow Traders had 1,183

active counterparties and off-exchange value traded

amounted to €511 billion for the year. Fixed Income

and CCC accounted for 47% of total NTI and the

Americas and Asia accounted for 46% of total NTI.

Flow Traders ETP value traded amounted to €1,464

billion and market ETP value traded amounted to

€42,997 billion.

Given these inputs and developments, Flow Traders

scored 1.70 in 2023 in this KPI, compared to the 2023

target and 2022 score of 1.61.

5. Compliance awareness score

The metric represents incidents that Compliance

was made aware of on a timely basis that resulted in

further action (e.g., document, escalation, and or

remedial measures) and categorized by level of

materiality.

Incident management was successful overall; issues

were identified and escalated through transparent

channels. Opportunities remain for improvement

with respect to implementing cross-departmental

enhancements and structural solutions rather than

ad hoc improvements.

Flow Traders achieved a 100% outcome with respect

to its compliance awareness score which is in line

with the 2023 target set for the executives. All

incidents were reported on a timely basis and Flow

Traders relies on the procedures and training of the

Compliance team to ensure any breach of

obligations are sufficiently escalated and acted

upon.

6. Engagement score

This is the average score given by our employees in

response to the main engagement question in our

annual global employee engagement survey.

Engagement is a measure of how committed and

enthusiastic employees are about their work and the

organization. When people are engaged, they feel

more comfortable being themselves at work.

Different factors contribute to employee

engagement, including organizational culture, work

environment, work relationships, and development

opportunities.

On the engagement score, a 7.0 was scored, this is

9% below the Company target of 7.7 for 2023. We do

see it as our goal to increase the score vs the

benchmark next year.

2023 performance summary

The performance on the Company scorecard in

combination with the Executive Directors’ individual

performance have determined the individual

variable compensation outcome. The weighting of

the Company performance measures is 70%, while

the individual measures attain to 30%. As mentioned,

our KPIs do not have further pre-determined

weightings, allowing the Remuneration and

Nomination Committee to determine the overall

outcome and ensure appropriateness in overall

circumstances. Despite 2023 being a challenging

year due to the subdued market trading

environment, still the target levels were achieved

and exceeded on our Business development index

FLOW TRADERS | ANNUAL REPORT 2023 87

and Compliance Awareness score performance

metrics.

While the results of the Median daily net trading

income, EBITDA margin, Return on shareholders'

equity, and Engagement score measures came in

below target, performance on these metrics was still

viewed to be in the acceptable range and the

rationale for not reaching the targets has been

understood given the market circumstances. In

addition to the Company performance metrics, the

individual performance for the CEO and CFO was

also considered in setting the variable remuneration

levels.

In addition to a lower total variable remuneration

pool being available in 2023 when compared to

2022, also a lower portion of this has been awarded

to the executives as a result of the performance

assessment, measured against the aforementioned

Company and individual performance criteria. As

such we believe the variable compensation

determined is set at a justified level. Aligned with

our remuneration philosophy and our aim of long-

term value creation, the variable compensation is

partly paid out in equity deferred over multiple

years.

2024 scorecard

The Non-Executive Directors of the Board have

determined that the six KPIs used to assess

Executive Director performance in 2023 will be

retained for the 2024 performance year. The specific

targets relating to each of these KPIs are

commercially sensitive and accordingly the target

ranges and actual performance outcomes achieved

will be disclosed retrospectively together with

appropriate commentary in the next annual report.

The weighting of the Company versus individual

targets will remain at 70% versus 30%.

FLOW TRADERS | ANNUAL REPORT 2023 88

Annual Report_performance metric 2023.jpg


Years of vesting for granted shares & share-like instruments (in thousands of euro)
Executive Directors of the Board	2023	2024	2025	2026	2027
Mike Kuehnel, CEO
2021	125	125	125	125	—
2022	—	213	213	213	213
2023	—	63	63	63	63
Hermien Smeets-Flier, CFO
2023	—	50	50	50	50
Dennis Dijkstra
2020	963	963	963	—	—
2021	181	181	181	181	—
2022	—	213	213	213	213
2023	—	—	—	—	—
Folkert Joling
2020	963	963	963	—	—
2021	181	181	181	181	—
2022	—	213	213	213	213
2023	—	—	—	—	—
Thomas Wolff
2020	481	481	481	—	—
2021	100	100	100	100	—
Britta Achmann
2020	60	60	60	—	—
2021	12	12	12	12	—

Deferral and vesting of variable pay

We believe in creating a culture of ownership, risk awareness and entrepreneurial

spirit and we embrace an approach which truly connects our people to the

business in sharing profit and risk. To ensure that the variable remuneration

award of the Executive Directors is aligned with our beliefs and contributes to

long-term value creation and shareholder experience, 50% of the 2023 award to

the Executive Directors is paid out in equity deferred over multiple years. This

approach allows us to take a longer-term outlook on remuneration. The value of

these instruments is directly linked to performance of the Flow Traders’ share

price from the date of grant to vesting. Further, any outstanding variable

remuneration (deferred or unvested) remains at risk in full for future years. All

equity-based awards are subject to a holding period of one-year post-vesting.

The remaining 50% is settled in cash, paid in equal installments in 2024 and 2025.

The above approach accords with our culture and remuneration philosophy of

encouraging management and employee share ownership, creating alignment

with the Company’s long-term success.

FLOW TRADERS | ANNUAL REPORT 2023 89

Comparative overview of Company

performance and remuneration

The long-standing foundation of our remuneration

policy reflects a relatively modest base salary and

variable remuneration that is aligned with Company

performance – which varies each year depending on

successful or less successful (financial) years. This is

clearly illustrated in the table below which shows

the development of the Company performance and

the awarded (full-time) remuneration of executives

and average employee remuneration over the last 5

years.

Internal pay ratios

The 2023 pay ratio (CEO total pay vs average total

employee pay) is 4.33 compared to 7.61 in 2022. This

is well below the cap of 20 times average total

employee pay.

Comparative remuneration table on remuneration and Company performance

over the last five years


(in thousands of euro)	2019	2020	2021	2022	2023
The Board: Total remuneration awarded (Actual)
Mike Kuehnel, CEO (2023 - )	—	—	1,040	1,795	656
Hermien Smeets-Flier, CFO (2023 - )				—	534
Dennis Dijkstra, CEO (2014 - 2022 )	695	7,795	1,545	1,795	41
Folkert Joling, CTrO (2018 - 2023)	695	7,803	1,553	1,803	475
Comparative Company Performance (Comparative)	2018:2019	2019:2020	2020:2021	2021:2022	2022:2023
Net Trading Income (NTI)	(44%)	331%	(59%)	20%	(35%)
Normalized EBITDA	(36%)	251%	(52%)	(67%)	(55%)
Basic EPS	307%	(67%)	129%	1%	11%
FTE Total Remuneration	2018:2019	2019:2020	2020:2021	2021:2022	2022:2023
Average FTE total remuneration	(27%)	306%	(59%)	4%	(36%)

FLOW TRADERS | ANNUAL REPORT 2023 90

Scenario analyses

The Board carries out yearly scenario analyses when

determining the structure and level of Executive

Director remuneration outcomes, in accordance

with the Dutch Corporate Governance Code. This

includes the calculation of remuneration under

different scenarios, whereby different performance

assumptions are considered. By considering

different performance assumptions, the possible

outcomes of variable components and the resulting

impact on the total remuneration of the Executive

Directors is understood and examined. The Board

believes the current remuneration structure and

outcomes are appropriate and aligned with

shareholder experiences. The Board will continue to

assess the adequacy of the remuneration structure,

including performance measures used for variable

remuneration components.

No pensions, loans and other benefits

In 2023, no personal loans, guarantees or related

benefits were granted by the Company to the

members of the Board as part of their compensation

package. No loans, guarantees or similar instruments

to the members of the Board were outstanding on 31

December 2023.

We have not reserved nor accrued any amounts to

cover pension claims or retirement claims. We do

not provide any other ancillary benefits for any

member of the Board.

Clawback variable remuneration

Malus and clawback provisions are in place that are

comprehensive, irreversible and substantially exceed

regulatory requirements. No variable remuneration

has been clawed back during 2023.

Temporary deviations from the

remuneration policies

No temporary deviations took place from the

respective policies in 2023.

Shares held by employees and Executive

Board members

We have a long-standing philosophy of encouraging

management and employee share ownership,

creating alignment between the Company’s long

term success and individual personal financial

circumstances. Since IPO, we have utilized a number

of share schemes. In connection with the IPO a

significant number of current and former employees

invested in Flow Traders. Subsequently, the Flow

Traders Cash Incentive Plan (FCIP) and Flow Traders

Loyalty Incentive Plan (FLIP) were introduced. The

FCIP was replaced in 2020 by a new share plan

which provides for the award up to 50% of variable

remuneration in shares (or share-like instruments).


31 December 2023 shares held by Executive Directors	Number of shares	% of outstanding total shares
Mike Kuehnel (CEO)	25,000	0.1%
Total	25,000	0.1%

FLOW TRADERS | ANNUAL REPORT 2023 91

Non-Executive Directors of the Board

remuneration

The remuneration policy for the Non-Executive

Directors of the Board was adopted by the AGM on

26 April 2021 and applied from that date onwards.

The table below shows the total fixed compensation

awarded to the individual Non-Executive Directors.

Non-Executive Directors of the Board

remuneration


Remuneration of the non-executive directors			Committee fees, annualized (€)
	Chair	Board fee (€)	Audit Committee	Remuneration & Appointment Committee	Risk & Sustainability Committee	Trading & Technology Committee	Total annualized fees (€)	Actual fees paid, 2023 (€)
Rudolf Ferscha	Board	100,000	7,500	7,500	7,500	7,500	130,000	130,000
Jan van Kuijk	Trading & Technology	70,000	7,500	7,500	7,500	10,000	102,500	102,500
Linda Hovius	Remuneration & Appointment	70,000		15,000	7,500	7,500	100,000	100,000
Paul Hilgers	Risk & Sustainability	70,000			10,000	7,500	87,500	74,058
Delfin Rueda	Audit	70,000	15,000	7,500	7,500	7,500	107,500	82,118
Karen Frank		70,000	7,500		7,500	7,500	92,500	70,660
Olivier Bisserier	Audit Committee and Risk Committee	70,000	15,000		10,000	7,500	102,500	34,167
Roger Hodenius		70,000		7,500	7,500	7,500	92,500	30,833
Ilonka Jankovich		70,000	7,500		7,500	7,500	92,500	0
Total 2023		660,000	60,000	45,000	72,500	70,000	907,500	624,336
1. Paul Hilgers, Delfin Rueda and Karen Frank were elected as Non-Executive Directors at the 2023 AGM, held on 26 April 2023.Olivier Bisserier’s and Roger Hodenius’ term of office ended at the 2023 AGM and they decided not to go up for re-election.
2. Ilonka Jankovich stepped down as a member of the (former) Supervisory Board as per 13 January 2023

FLOW TRADERS | ANNUAL REPORT 2023 92

No variable remuneration shares, pensions,

loans and other benefits

The Non-Executive Directors did not receive variable

remuneration for their work as Board member or any

share-based remuneration, and no personal loans,

guarantees or equivalent benefits were granted by

the Company to the Non-Executive Directors as part

of their compensation package. We have not

reserved nor accrued any amounts to cover pension

claims or retirement claims. We do not provide any

other ancillary benefits for any Non-Executive

Director.

The co-founder of Flow Traders, Jan van Kuijk, is

currently a member of the Board. The table below

provides an overview of the shares indirectly held by

him on 31 December 2023 as also reflected in the

relevant AFM register.


Shares held indirectly by Non-Executive Directors
31 December 2023		% of outstanding total shares
J.T.A.G. van Kuijk (Javak Investments B.V.)	5,686,826	12.2%
Total	5,686,826	12.2%

Remuneration for other employees

Variable Remuneration

We apply an annual performance cycle. At the

beginning of each calendar year, clear objectives are

set depending on an employee’s role, which are in

line with our Company objectives for the year and

our corporate key competencies: drive,

entrepreneurship and teamwork. Performance is

reviewed twice during an annual cycle. Individual

variable remuneration payable from the collective

variable compensation pool is dependent on

Company and business unit performance, individual

performance and the individual’s contribution to the

long-term success of the Company as a whole,

discouraging a culture of ‘star’ behavior and

fostering collaboration and teamwork. Flow Traders

does not base variable remuneration directly on

financial results achieved individually. The Non-

Executive directors approve the awarding of variable

remuneration. If awarded, variable remuneration is

paid in cash, Company shares and Company share

like instruments in one to multiple annual

installments, depending on the amount of variable

remuneration awarded. The deferred variable

component acts as a first loss tranche to

compensate for any operating loss in the

subsequent year, acting as a buffer before such loss

would impact shareholder equity. This serves as an

important incentive for risk-aware behavior,

focusing on the long-term objectives of the

Company and alignment with our risk appetite. We

deem the deferral period sufficient given the

Company’s risk profile and horizon, see for further

details of our remuneration philosophy on page 81.

▪ Variable remuneration components may become

subject to reduction or claw back if it is

determined that the relevant employee did not

meet adequate norms of competence and

appropriate behavior or was responsible for

behavior that led to a substantial deterioration of

the Company’s position, in accordance with

applicable law.

▪ We do not award guaranteed variable

remuneration to employees unless the

guaranteed variable component is awarded in

relation to hiring new staff, limited to the first

year of employment, and only if we have a sound

and strong capital base.

▪ We do not award severance payments if there is

a serious imputable act or negligence by the

employee in the fulfillment of his or her function

or where an employee resigns voluntarily (unless

this is the consequence of a serious imputable

act or negligence (ernstig verwijtbaar handelen of

nalaten) by the Company).

▪ The Company does not grant its employees any

personal loans, guarantees or equivalent benefit

as part of their compensation package. We do

not provide any other ancillary benefits for any

employee. We have not reserved or accrued any

amounts to cover pension claims or retirement

claims.

FLOW TRADERS | ANNUAL REPORT 2023 93

Emphasizing share ownership

Flow Traders values ownership, both in terms of

mindset, behavior as well as a share in the

ownership of the Company. We believe that being a

shareholder aligns the interests of the Company with

those of our employees. Ever since the Company

went public and before, we have a history of offering

our employees the opportunity to become

shareholders. From 2017 until 2019, we promoted

shareholding through the Flow Cash Incentive Plan

(FCIP). From performance year 2020 onwards, we

have begun rewarding employees directly in

Company shares. The higher the variable

remuneration an individual receives, the higher the

proportion of variable compensation paid out in

shares.

We are also maintaining our FLIP (Flow Loyalty

Incentive Plan) program, whereby we award

Company shares to employees marking their two

year anniversary with the Company. Shares awarded

under the FLIP are subject to a lock-up period. All

shares awarded to employees are fully paid out from

the variable compensation pool. The terms and

conditions of the employee share plans are subject

to review by the Executive Directors annually. As a

part of these plans, shares have been and will be

bought in the market.

Pension

We encourage our employees to save for retirement.

At our headquarters in Amsterdam, we partner with

a pension provider, giving employees the freedom of

choice to select the option that best suits their

individual needs while incentivizing participation in

the Company-sponsored program. In our other

offices we offer schemes that are driven by country

specific practices and regulations.

Variable compensation granted

In 2023, the total amount of variable remuneration

awarded to all employees including the Executive

Directors was €34.7 million (2022: €86.6 million).

In 2023, Company wide average compensation

(includes salary, social security costs and variable

remuneration) paid per average FTE was €151.6K

(2022: €235.9K), while variable remuneration per

average FTE amounted to 33.8% (2022: 57.2%) of

total compensation in 2023. This excludes any

Executive Director remuneration.

FLOW TRADERS | ANNUAL REPORT 2023 94

Flow Traders

Academy

At Flow Traders we are passionate about creating an

international, diverse, and empowering culture,

which encompasses four core values: teamwork,

entrepreneurship, responsibly and drive.

We are continuously focused on empowering our

employees in their personal and professional

growth. We aim to equip employees with essential

skills and knowledge for their roles, and continuously

foster their talents.

Flow Traders Academy

To achieve this, we established a dedicated Flow

Traders Academy, which provides tailored

onboarding programs, offers various soft and hard

skills training opportunities, and facilitates internal

knowledge- sharing.

Over the past years, the Academy has structurally

enriched the training opportunities and learning

culture at Flow Traders to maximize our employees’

potential. We have created internal training

programs to help employees improve their business

knowledge and in 2023, we introduced a

consolidated training offering which aligns with our

global capability frameworks and focus on

developing the soft skills of our employees in each

level of the framework. These initiatives help

employees create and realize clearer growth paths

and help them in further former their own

development journey within the Company. Essential

areas covered in the offerings are, but not limited to,

business knowledge and skills, behavioral skills/

competencies, and leadership skills.

Graduates and interns

Interns and recent graduates are a key talent pool

for Flow Traders. Graduates and interns bring

enthusiasm, eagerness to learn and energy which

are key ingredients for high potentials within Flow

Traders. Next to this, they bring diversity (we hire

more than 25% of global nationalities at Flow

Traders, and the graduates are an important group

for our long-term succession planning).

Therefore, we have expanded our existing Graduate

Development and Internship Programs facilitated in

our Amsterdam and New York locations with a new

Graduate Developer Program in our Cluj office as

well as a Trading Internship Program in our Hong

Kong office.

As a technology enabled firm, we also facilitate

opportunities for talent in technology. After

successfully launching the Graduate Software

Development Program in our Amsterdam office, we

have seen the positive result. Many of our talented

developers started as a graduate within the Product

Development department.

Across all our Graduate Programs, participants

receive continuous support from dedicated mentors

and team leads in their personal and professional

development. During the internship, students work

closely with our Traders and Quantitative

Researchers, and they add value by working on real

trading projects.

FLOW TRADERS | ANNUAL REPORT 2023 95

Case study

Fostering talent

and culture

2023 Financial

statements


Consolidated statement of financial position	97
Consolidated statement of profit and loss and other comprehensive income	98
Consolidate statement of changes in equity	99
Consolidated statement of cash flows	100
Supplementary notes to the financial statements	102
Parent Company financial statements	142


Consolidated statement of financial position (in thousands of euro)		As of 31 December
	Note	2023	2022
Cash and cash equivalents	15	5,708	8,612
Financial assets held for trading	16	5,496,795	4,876,590
Trading receivables	17	8,101,646	6,022,355
Other assets held for trading	18	169,821	58,347
Other receivables	19	20,675	24,708
Investments measured at fair value through OCI	20	20,083	19,839
Investments measured at fair value through PL	21	6,485	1,928
Equity-accounted investments	22	4,807	4,958
Property and equipment	23	72,434	77,081
Intangible assets	24	2,678	1,967
Current tax assets	14	6,073	2,800
Deferred tax assets	14	9,945	5,503
Total assets		13,917,150	11,104,688
Financial liabilities held for trading	25	3,067,053	2,956,640
Trading payables	26	9,879,497	7,326,169
Other liabilities held for trading	27	243,765	32,115
Lease liabilities	28	53,042	54,100
Other liabilities	29	77,719	115,730
Provisions	31	4,111	—
Current tax liabilities	14	3,616	11,246
Deferred tax liabilities	14	2,509	2,372
Total liabilities		13,331,312	10,498,372
Share capital	30	162,871	162,871
Share premium	30	556	2,372
Treasury shares	30	(88,008)	(103,536)
Share based payment reserve	30	40,740	56,865
Retained earnings	30	449,336	460,804
Currency translation reserve	30	18,072	24,899
Fair value reserve	30	2,271	2,040
Total equity		585,838	606,315
Total equity and liabilities		13,917,150	11,104,688

The supplementary notes on pages 102 to 141 are an integral part of these consolidated financial statements.

FLOW TRADERS | ANNUAL REPORT 2023 97


Consolidated statement of profit and loss and other comprehensive income (in thousands of euro)		For the year ended 31 December

	Note	2023	2022
Gross trading income		577,097	677,205
Fees related to the trading activities		98,591	113,491
Net financial expenses related to the trading activities		178,195	103,523
Net trading income	10	300,311	460,191
Other income	11	3,565	(1,518)
Total income		303,876	458,673
Employee expenses	12	133,950	176,837
Depreciation of property and equipment	23	17,688	16,274
Amortization of intangible assets	24	606	542
Write off of (in)tangible assets	23	76	161
Other expenses	13	102,383	102,497
Operating expenses		254,703	296,311
Operating result		49,173	162,362
Impairment of equity-accounted investments	22	(4,445)	—
Share of profit/(loss) of equity-accounted investees, net of tax	22	(74)	(631)
Profit before tax		44,654	161,731
Tax expense	14	8,503	34,904
Profit for the year attributable to the owners of the Company		36,151	126,827
Other comprehensive income (loss)
Items that are or may be reclassified subsequently to profit or loss
Foreign currency translation differences - foreign operations	30	(6,827)	9,389
Items that will not be reclassified subsequently to profit or loss
Changes in investments at fair value through other comprehensive income		231	791
Other comprehensive income for the year, net of tax		(6,596)	10,180
Net other comprehensive income for the year attributable to the owners of the Company		29,555	137,007
Earnings per share
Basic earnings per share	9	0.84	2.92
Diluted earnings per share	9	0.81	2.76

The supplementary notes on pages 102 to 141 are an integral part of these consolidated financial statements.

FLOW TRADERS | ANNUAL REPORT 2023 98


Consolidated statement of changes in equity (in thousands of euro)									2023
	Note	Share capital	Share premium	Treasury shares	Share based payment reserve	Currency translation reserve	Fair value reserve	Retained earnings	Total
Balance at 1 January 2023		162,871	2,372	(103,536)	56,865	24,899	2,040	460,804	606,315
Profit		—	—	—	—	—	—	36,151	36,151
Total other comprehensive income	—	—	—	—	—	(6,827)	231	—	(6,596)
Total comprehensive income for the period		—	—	—	—	(6,827)	231	36,151	29,555
Transactions with owners of the Company
Dividends	30	—	—	—	—	—	—	(47,619)	(47,619)
Repurchase of shares	30	—	—	(8,761)	—	—	—	—	(8,761)
Share based payments	30	—	(1,816)	24,289	(16,125)	—	—	—	6,348
Total transactions with owners of the Company		—	(1,816)	15,528	(16,125)	—	—	(47,619)	(50,032)
Balance at 31 December 2023		162,871	556	(88,008)	40,740	18,072	2,271	449,336	585,838


Consolidated statement of changes in equity (in thousands of euro)									2022
	Note	Share capital	Share premium	Treasury shares	Share based payment reserve	Currency translation reserve	Fair value reserve	Retained earnings	Total
Balance at 1 January 2022		4,653	161,974	(105,644)	50,523	15,510	1,249	379,904	508,169
Profit		–	–	–	–	–	–	126,827	126,827
Total other comprehensive income		–	–	–	–	9,389	791	–	10,180
Total comprehensive income for the period		–	–	–	–	9,389	791	126,827	137,007
Transactions with owners of the Company
Conversion of share premium to share capital	30	158,218	(158,218)	–	–	–	–	–	–
Dividends	30	–	–	–	–	–	–	(45,927)	(45,927)
Repurchase of shares	30	–	–	(15,046)	–	–	–	–	(15,046)
Share based payments	30	–	(1,384)	17,154	6,342	–	–	–	22,112
Total transactions with owners of the Company		158,218	(159,602)	2,108	6,342	–	–	(45,927)	(38,861)
Balance at 31 December 2022		162,871	2,372	(103,536)	56,865	24,899	2,040	460,804	606,315

The supplementary notes on pages 102 to 141 are an integral part of these consolidated financial statements.

FLOW TRADERS | ANNUAL REPORT 2023 99


Consolidated statement of cash flows (in thousands of euro)		For the year ended 31 December
	Note	2023	2022
Cash flows from operating activities
Profit for the year		36,151	126,827
Adjusted for:
Depreciation of property and equipment	23	17,688	16,274
Amortization of intangible assets	24	606	542
Write off of (in) tangible assets	23	76	161
Impairment of equity-accounted investees	22	4,445	—
Share of profit/(loss) of equity-accounted investees (net of tax)	22	74	631
Equity-settled share-based payments	12	16,930	33,253
Tax expense	14	8,503	34,904

Changes in working capital
▪ (increase)/decrease financial assets held for trading	16	(620,205)	(375,493)
▪ (increase)/decrease trading receivables	17	(2,079,291)	137,883
▪ (increase)/decrease other assets held for trading	18	(111,474)	19,775
▪ (increase)/decrease other receivables	19	4,032	(9,980)
▪ increase/(decrease) financial liabilities held for trading	25	110,413	818,568
▪ increase/(decrease) trading payables	26	2,553,328	(643,803)
▪ increase/(decrease) other liabilities held for trading	27	211,650	6,344
▪ increase/(decrease) other liabilities	29	(53,842)	(48,065)
▪ Corporate income tax paid	14	(23,711)	(24,068)
▪ Change in provisions	31	4,111	—
Cash flows from operating activities		79,484	93,753
Cash flows from investing activities
Investments and acquisitions of financial assets held at FVOCI	20	(478)	(9,105)
Investments and acquisitions of financial assets held at FVPL	21	(1,063)	(1,936)
Investments and acquisitions of equity-accounted investees	22	(4,224)	(3,012)
Disposals or sales of financial assets held at FVOCI	20	275	1,622
Disposals or sales of financial assets held at FVPL	21	—	310
Disposals or sales of equity-accounted investees	22	78	—
Acquisition of property and equipment	23	(11,951)	(7,444)
Acquisition of intangible assets	24	(107)	(156)
Cash flows from investing activities		(17,470)	(19,721)

FLOW TRADERS | ANNUAL REPORT 2023 100


Cash flows from financing activities
Dividend paid	30	(47,619)	(45,927)
Payment of lease liabilities	28	(8,310)	(9,613)
Repurchases of shares	30	(8,761)	(15,046)
Cash flows from financing activities		(64,690)	(70,586)
Effect of movements in exchange rates on cash and cash equivalents		(228)	217
Change in cash and cash equivalents		(2,904)	3,663
Change in cash and cash equivalents
Cash and cash equivalents at opening	15	8,612	4,949
Cash and cash equivalents at close	15	5,708	8,612
Change in cash and cash equivalents		(2,904)	3,663

For the period ended 31 December 2023 the interest paid amounted to €256.4 million (2022: €115.5 million), which includes €256.1 million (2022: €115.2 million) related to

trading income and €0.3 million (2022: €0.3 million) to other income. The interest received for the period 31 December 2023 is €77.9 million (2022: €10.9 million). This

interest is all trading related. Within the payment of lease liabilities there is interest paid of €1.9 million (2022: €0.8 million).

The section notes to the consolidated financial statements is an integral part of these consolidated financial statements.

FLOW TRADERS | ANNUAL REPORT 2023 101

Notes to the consolidated financial statements

All amounts in thousands of euro, unless stated otherwise.

1. Reporting entity

Flow Traders Ltd. (referred to as the “Company”) is an exempted Company

limited by shares registered under the Companies Act 1981 of Bermuda, as

amended (the “Companies Act”). Flow Traders Ltd. was incorporated on 13

January 2023 with its registered office at Canon's Court, 22 Victoria Street, PO

Box HM 179, Hamilton HM 12 Bermuda. The Company's principal place of

business is located at Jacob Bontiusplaats 9, 1018 LL Amsterdam, the

Netherlands. Flow Traders Ltd. is registered with the Dutch Trade Register of

the Chamber of Commerce under number 88926257 as a company formally

registered abroad (“formeel buitenlandse kapitaalvennootschap”). This term is

referred to in the Dutch Companies Formally Registered Abroad Act (“Wet op de

formeel buitenlandse vennootschappen”), which means the Company is

deemed a Dutch resident company for corporate reporting purposes in

accordance with applicable Dutch laws.

These consolidated financial statements comprise the Company and its

subsidiaries (together referred to as the ‘Group’). Prior to 13 January 2023, the

Group's ultimate parent was Flow Traders N.V. As of 13 January 2023, Flow

Traders N.V. had been legally merged via a cross border legal merger into Flow

Traders S.A.; following this merger Flow Traders S.A. converted into a Bermuda

limited company, Flow Traders Ltd. Flow Traders Ltd. is the legal successor and

reporting entity of Flow Traders N.V. and the Group's ultimate parent.

The Group is a leading technology-enabled global multi-asset class liquidity

provider with its core business in Exchange Traded Products (ETP) actively

expanding in fixed income, FX, commodities and digital assets, while

systemically increasing its presence in the global ecosystem through strategic

partnerships and investments.

The consolidated financial statements of the Group for the year ended 31

December 2023 incorporate financial information of Flow Traders Ltd., its

subsidiaries and associates. The annual financial statements were authorized for

issue by the Company’s Board on 29 February 2024 subject to adoption by the

general meeting of shareholders.

2. Predecessor and continuation accounting

a) Changes to corporate structure

On 13 January 2023, the Group completed the update to its corporate holding

structure. This followed receipt of shareholder approval at an Extraordinary

General Meeting held on 2 December 2022 and fulfillment of all regulatory and

other customary closing conditions. As a result of the update, the Group’s top

holding company is now Flow Traders Ltd. The update of the corporate holding

structure enables Flow Traders to become more competitive as a global liquidity

provider, particularly in relation to regulatory capital management.

As part of the change of its corporate holding structure Flow Traders N.V.

entered into a cross-border legal merger in which (i) all Flow Traders N.V.'s

assets, liabilities, rights, obligations and other legal relationships were acquired

by Flow Traders S.A. incorporated under the laws of Luxembourg, (ii) Flow

Traders N.V. ceased to exist and (iii) each Shareholder received one Flow Traders

S.A. share for each Flow Traders N.V. share. Following this merger Flow Traders

S.A. converted into a Bermuda limited company and changed its registered

address to Bermuda.

The change in the Group's corporate holding structure had no impact on the

profit and loss or equity of the Company. A predecessor value method is used to

determine the carrying value of all assets and liabilities that transfer as part of

the merger. As at 13 January 2023 the assets and liabilities of Flow Traders N.V.

are consolidated in the financial statements of Flow Traders S.A. at their

carrying amount on this date, in accordance with the predecessor value

method. Similarly for comparative numbers, amounts are presented as if the

combination had taken place at the beginning of the earliest comparative

period presented, being years 2023 and 2022.

The pooling of interests method is generally considered to involve the

combining parties being presented as if they had always been combined. To this

effect, the receiving entity accounts for the transaction from the beginning of

the period in which the combination occurs (irrespective of its actual date) and

presented comparatives to include all combining parties.

b) Capital management

Different capital requirements apply following the update of the holding

structure which are expected to expand Flow Traders' strategic growth options.

FLOW TRADERS | ANNUAL REPORT 2023 102

Furthermore, it creates a more level playing field with global peers with respect

to the regulatory capital framework. Flow Traders’ regulated entities continue to

be subject to supervision by their respective regulators, however Flow Traders

will no longer be subject to consolidated IFR/IFD supervision. Flow Traders

obtained an unconditional declaration of no objection from the Dutch Central

Bank (DNB) in connection with the update of the corporate holding structure.

c) Common control

As Flow Traders N.V. and Flow Traders S.A. are under common control at the

time they entered into the cross-border legal merger, IFRS 3 Business

Combinations is not applicable.

3. Basis of preparation

a) Statement of compliance

The Group applies International Financial Reporting Standards as adopted by

the European Union (‘IFRS-EU’) and title 9 book 2 of Dutch Civil Code. IFRS-EU

provides several options in accounting principles. The Group’s accounting

principles IFRS-EU and its decisions regarding the options available are set out

in the section ‘material accounting policies’ below.

b) Going concern basis of accounting

These consolidated financial statements have been prepared on the basis of the

going concern assumption.

c) Functional and presentation currency

These consolidated financial statements are presented in euros, which is also

the functional currency of the parent company, Flow Traders Ltd. All financial

information presented in euros has been rounded to the nearest thousand,

except when otherwise indicated.

d) Use of estimates and judgements

The preparation of these consolidate financial statements requires management

to form opinions and make estimates and assumptions that influence the

reported value of assets and liabilities and of income and expenditure. The

actual results may differ from these estimates.

Information about estimates and judgements made in applying accounting

policies that have the most significant effects on the amounts recognized in the

consolidated financial statements is included in the following notes;

▪ Note 7: Fair value measurement

▪ Note 12: Share based payments

▪ Note 31: Provisions and contingencies

The accounting treatment of digital assets and the blockchain industry have not

yet been specifically addressed by IFRS guidance. If specific guidance is enacted

in the future, the impact may result in changes to the Group's financial position.

e) Principles for the preparation of the consolidated statement of

cash flows

Cash flows from operating activities are presented in the consolidated

statement of cash flows using the indirect method. Cash flows from investing

activities and financing activities are presented in the consolidated statement of

cash flows using the direct method.

The cash flows are split into cash flows from operations, trading activities,

investment activities and financing activities. Receivables from and payables to

clearing organizations are included in the cash flow from operating activities.

The Group has elected to classify interest received and interest paid (including

interest on lease liabilities and interest arising from revenue contracts, if there is

any) as cash flows from operating activities.

The Group has elected to classify interest received and interest paid as cash

flows from operating activities. Investment activities are comprised of

acquisitions, sales and redemptions in respect of financial investments other

than in the course of operations, as well as acquisitions and sales of subsidiaries

and associates, property and equipment. Financing activities include the

payment of dividend to shareholders, the (re)-purchase of shares, the issuance

and repayment of financial debt, including financial lease liabilities, and capital

contributions.

f) Change in accounting

In the prior year, trading receivables and trading payables were designated at

fair value through profit or loss. In the current year, it has been determined that

they do not meet the criteria for that designation resulting in a change in

FLOW TRADERS | ANNUAL REPORT 2023 103

accounting to classify these assets and liabilities at amortized cost. Due to the

short-term nature of these assets and liabilities, their carrying amount is a

reasonable approximation of fair value. As such, there was nil impact in the prior

year and amounts.

4. Material accounting policies

The Group has consistently applied the accounting policies as set out below to

all periods presented in these consolidated financial statements.

General

a) Basis of consolidation

The Group accounting policies have been applied consistently by all group

entities. Intra-group balances and transactions, and any unrealized income and

expenses arising from intra-group transactions, are eliminated in preparing the

consolidated financial statements. Unrealized gains arising from transactions

with equity-accounted investees are eliminated against the investment to the

extent of the Group’s interest in the investee. Unrealized losses are eliminated in

the same way as unrealized gains, but only to the extent that there is no

evidence of impairment.

Subsidiaries

Subsidiaries are investees controlled by the Group. The Group controls an

investee if it is exposed to, or has rights to, variable returns from its involvement

with the investee and has the ability to affect those returns through power over

the investee. The financial statements of subsidiaries are included in the

consolidated financial statements from the date on which control commences

until the date when control ceases.

When the Group loses control over a subsidiary it derecognizes the assets and

liabilities of the subsidiary, any related non-controlled interest and other

components of equity. Any resulting gain or loss is recognized in profit or loss.

Any interest retained in the former subsidiary is measured at fair value when

control is lost.

Equity-accounted investees

Associates are those entities in which the Group has significant influence, but

not control or joint control, over its financial and operating activities. A joint

venture is an arrangement in which the Group has joint control, whereby the

Group has rights to the net assets of the arrangement, rather than rights to its

assets and obligations for its liabilities.

Interests in associates and joint ventures are accounted for using the equity

method and are recognized initially at cost. Subsequent to initial recognition,

the consolidated financial statements include the Group's share of the profit or

loss and OCI of equity-accounted investees, until the date on which significant

influence or joint control ceases.

Business combinations

Business combinations are accounted for using the acquisition method as at the

date control is transferred to the Group. The consideration transferred in the

acquisition is measured at fair value, as are the identifiable net assets acquired.

Any goodwill that arises is tested annually for impairment. Any gain on a bargain

purchase is recognized in profit or loss immediately. Transaction costs are

expensed as incurred, except if they are related to the issue of debt or equity

securities.Contingent consideration is measured at fair value at the acquisition

date. Any gain or loss resulting from the fair value remeasurement of contingent

consideration is recognized in profit or loss.

b) Foreign currency

Foreign currency transactions

Transactions in foreign currencies are translated to the functional currencies of

the respective entities of the Group at exchange rates at the dates of the

transactions.

Monetary assets and liabilities denominated in foreign currencies are translated

into the functional currency at the exchange rate at the reporting date, with the

foreign currency difference being recognized in profit or loss. Differences arising

on the translation of investments measured at fair value through other

comprehensive income are recognized in other comprehensive income unless

the instrument is impaired.

Non-monetary assets and liabilities denominated in foreign currencies that are

measured at fair value are translated into the functional currency at the

exchange rate at the date that the fair value was determined. Non-monetary

items in a foreign currency that are measured based on historical cost are

translated using the exchange rate at the date of the transaction.

FLOW TRADERS | ANNUAL REPORT 2023 104

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value

adjustments arising on acquisition, are translated into euros at exchange rates

at the reporting date. The income and expenses of foreign operations are

translated to euros at exchange rates at the dates of the transactions.

Foreign currency differences are recognized in other comprehensive income,

and presented in the foreign currency translation reserve (translation reserve) of

equity. When a foreign operation is disposed of such that control, significant

influence or joint control is lost, the cumulative amount in the translation

reserve related to that foreign operation is reclassified to profit or loss as part of

the gain or loss on disposal.

c) Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with

maturities of three months or less from the acquisition date that are subject to

an insignificant risk of changes in their fair value, and are used by the Group in

the management of its short-term commitments.

d) Financial assets and liabilities

Recognition

The Group initially recognizes loans and advances on the date on which they are

originated. All other financial instruments (including regular-way purchases and

sales of financial assets) are recognized on the trade date, which is the date on

which the Group becomes a party to the contractual provisions of the

instrument.

A financial asset or financial liability is measured initially at fair value plus or

minus, for an item not at fair value through profit or loss, transaction costs that

are directly attributable to its acquisition or issue.

Classification

The Group classifies its financial assets into the following categories:

▪ trading receivables, measured at amortized cost;

▪ investments measured at fair value through other comprehensive income;

▪ investments measured at fair value through profit and loss;

▪ financial assets held for trading at fair value through profit and loss; and

▪ other financial assets at amortized costs.

The Group classifies its financial liabilities, other than financial guarantees and

loan commitments, into the following categories:

▪ trading payables, measured at amortized cost;

▪ financial liabilities held for trading at fair value through profit or loss; and

▪ other financial liabilities measured at amortized costs.

Financial assets and liabilities held for trading

Trading assets and liabilities are those assets and liabilities that the Group

acquires or incurs principally for the purpose of selling or repurchasing in the

near term, or holds as part of a portfolio that is managed together for short-

term profit.

Trading assets and liabilities are initially recognized and subsequently measured

at fair value in the statement of financial position, with transaction costs

recognized in profit or loss. All changes in fair value are recognized as part of net

trading income in profit or loss. Trading assets and liabilities are not reclassified

subsequent to their initial recognition.

Trading receivables and payables

Such assets and liabilities are recognized initially at fair value minus/plus any

directly attributable transaction costs. Subsequently, these assets and liabilities

are measured at amortized cost.

Investments measured at fair value through other comprehensive

income ('OCI')

Investments measured at fair value through other comprehensive income are

non-derivative equity investments that the Group considers long-term strategic

investments. Investments measured at fair value through other comprehensive

income are recognized initially at fair value. Transaction costs are recognized in

other comprehensive income as part of the change in fair value at the next

remeasurement. They are never reclassified into profit or loss.

Subsequent to initial recognition, they are measured at fair value and changes

therein are recognized in other comprehensive income and presented in the fair

value reserve in equity. When an investment is derecognized, the gain or loss

accumulated in equity is not reclassified to profit or loss.

FLOW TRADERS | ANNUAL REPORT 2023 105

Investments measured at fair value through profit and loss ('PL')

Investments measured at fair value through profit and loss are non-derivative

equity investments that the Group holds for long term trading purposes.

Investments measured at fair value through profit and loss are recognized

initially at fair value. Transaction costs are recognized in the profit and loss as

part of the change in fair value, any re-measurement of the investments is

classified to profit or loss.

Subsequent to initial recognition, they are measured at fair value and changes

therein, are recognized in profit and loss. When an investment is derecognized,

the gain or loss is classified to profit or loss.

Other financial liabilities

Non-derivative financial liabilities are recognized initially at fair value less any

directly attributable transaction costs. Subsequent to initial recognition, these

financial liabilities are measured at amortized cost using the effective interest

method. The Group derecognizes a financial liability when its contractual

obligations are discharged, cancelled or expired.

Hedge of a net investment in foreign operations

The Group applies hedge accounting to hedge the exposure to foreign

exchange risk associated with its capital contributions to the United States and

Singapore subsidiaries. Gains or losses on the hedging instrument relating to the

effective portion of the hedge are recognized as OCI while any gains or losses

relating to the ineffective portion are recognized in the statement of profit or

loss. On disposal of the foreign operation, the cumulative value of any such

gains or losses recorded in equity is transferred to the statement of profit or

loss.

Offsetting

Financial assets and liabilities are presented on a net basis when a legal right of

offset is agreed between the parties and the Group intends either to settle on a

net basis or to realize the asset and settle the liability simultaneously.

Income and expenses are presented on a net basis only when permitted under

IFRS-EU, for gains and losses arising from a group of similar transactions such as

in the Group’s trading activities.

Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a

liability in an orderly transaction between independent market participants at

the measurement date in the principal or, in its absence, the most

advantageous market to which the Group has access at that date. The fair value

of a liability reflects its non-performance risk.

The Group measures the fair value of an instrument using the quoted price in an

active market for that instrument. A market is regarded as active if transactions

for the asset or liability take place with sufficient frequency and volume to

provide pricing information on an ongoing basis.

The best evidence of the fair value of a financial instrument at initial recognition

is normally the transaction price – i.e. the fair value of the consideration given or

received. If the Group determines that the fair value at initial recognition differs

from the transaction price and the fair value is evidenced neither by a quoted

price in an active market for an identical asset or liability nor based on a

valuation technique that uses only data from observable markets, then the

financial instrument is initially measured at fair value, adjusted to defer the

difference between the fair value at initial recognition and the transaction price.

Subsequently, that difference is recognized in profit or loss on an appropriate

basis over the life of the instrument but no later than when the valuation is

wholly supported by observable market data or the transaction is closed out.

The Group prices its daily trading positions based on estimated prices whereby

the price differences are recorded through the profit or loss account. Those

estimated prices can differ from quoted market prices. The Group’s risk and

mid-office department monitors whether all differences can be substantiated.

Portfolios of financial assets and financial liabilities that are managed by the

Group on the basis of the net exposure to either their market or credit risk are

measured on the basis of a price that would be received to sell a net long

position or paid to transfer a net short position for a particular risk exposure.

Those portfolio-level adjustments are allocated to the individual assets and

liabilities on the basis of the relative risk exposure of each of the individual

instruments in the portfolio.

FLOW TRADERS | ANNUAL REPORT 2023 106

The Group recognizes transfers between levels of the fair value hierarchy as of

the end of the reporting period during which the change has occurred.

e) Other assets held for trading

Other assets held for trading comprise the amount of digital assets that the

Group holds as a broker-trader. The Group applies IAS 2 for its digital assets and

these are measured at fair value less cost to sell with changes in value

recognized profit and loss.

For the determination of the fair value, the Group collects reference price points

on an on-going basis from multiple crypto exchanges and active markets. If

assets are not actively traded the valuation is based upon quoted prices or

observable inputs from similar assets.

f) Property and equipment

Recognition and measurement

Items of property and equipment are measured at cost less accumulated

depreciation and accumulated impairment losses. Cost includes expenditure

that is directly attributable to the acquisition of the asset. When parts of an item

of property and equipment have different useful lives, they are accounted for as

separate items (major components) of property and equipment.

Any gain or loss on disposal of an item of property and equipment (calculated as

the difference between the net proceeds from disposal and the carrying

amount of the item) is recognized in other income in profit or loss.

Subsequent expenditure is capitalized only when it is probable that the future

economic benefits associated with the expenditure will flow to the Group.

Ongoing repairs and maintenance costs are expensed once incurred.

Items of property and equipment are depreciated on a straight-line basis in

profit or loss over the estimated useful lives of each component.

The estimated useful lives for the current and comparative years of significant

items of property and equipment are as follows:

▪ hardware: 5 years;

▪ office fixtures: 5 years;

▪ other: 5 years.

The depreciation method, useful lives and residual values are reviewed at each

reporting date and adjusted if appropriate.

Right-of-use assets

The Group recognizes right-of-use assets at the commencement date of the

lease (i.e., the date the underlying asset is available for use). Right-of-use assets

are measured at cost, less any accumulated depreciation and impairment

losses, and adjusted for any remeasurement of lease liabilities. The cost of right-

of-use assets includes the amount of lease liabilities recognized less any lease

incentives received. The recognized right-of-use assets are depreciated on a

straight-line basis over the shorter of its estimated useful life and the lease

term. Right-of-use assets are subject to impairment. Right-of-use assets are

recorded in property and equipment and intangible assets on the statement of

financial position.

g) Intangible assets

Recognition and measurement

Intangible assets are amortized on a straight-line basis in profit or loss over the

estimated useful lives of each component. The estimated useful life of

significant intangible assets is 5 years.

h) Impairment

Non-derivative financial assets

The allowance for expected credit losses (“ECL allowance”) for all loans and

other debt financial assets not held at fair value through profit and loss is based

on the credit losses expected to arise over the life of the asset (the lifetime

expected credit loss or LTECL), unless there has been no significant increase in

credit risk since origination, in which case, the allowance is based on the 12

months’ expected credit loss (12mECL).

For other receivables, the Group applies a simplified approach in calculating

ECLs as these receivables relate to operating activities of the Group. Therefore,

the Group does not track changes in credit risk, but instead recognizes a loss

allowance based on lifetime ECLs at each reporting date. The Group has

established a provision matrix that is based on its historical credit loss

FLOW TRADERS | ANNUAL REPORT 2023 107

experience, adjusted for forward-looking factors specific to the debtors and the

economic environment.

The Group considers a financial asset in default when contractual payments are

90 days past due. However in certain cases, the Group may reconsider a

financial asset to be in default when internal or external information indicated

that the Group is unlikely to receive the outstanding contractual amounts in full

before taking into account any credit enhancements held by the Group. A

financial asset is written off when there is no reasonable expectation of

recovering the contractual cash flows.

Non-financial assets

The carrying amounts of the Group’s non-financial assets, other than deferred

tax assets, are reviewed at each reporting date to determine whether there is

any indication of impairment. If any such indication exists, then the asset’s

recoverable amount is estimated. Goodwill and indefinite-lived intangible assets

are tested annually for impairment. An impairment loss is recognized if the

carrying amount of an asset or cash-generating unit (CGU) exceeds its

recoverable amount.

The recoverable amount of an asset or CGU is the greater of its value in use and

its fair value less cost of disposal. In assessing value in use, the estimated future

cash flows are discounted to their present value using a pre-tax discount rate

that reflects current market assessments of the time value of money and the

risks specific to the asset or CGU. For the purpose of impairment testing, assets

are grouped together into the smallest group of assets that generates cash

inflows from continuing use that are largely independent of the cash inflows of

other assets or CGUs. Subject to an operating segment ceiling test, CGUs to

which goodwill has been allocated are aggregated so that the level at which

impairment testing is performed reflects the lowest level at which goodwill is

monitored for internal reporting purposes. Goodwill acquired in a business

combination is allocated to groups of CGUs that are expected to benefit from

the synergies of the combination.

Impairment losses are recognized in profit or loss. Impairment losses recognized

in respect of CGUs are allocated first to reduce the carrying amount of any

goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying

amounts of the other assets in the CGU (group of CGUs) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an

impairment loss is reversed only to the extent that the asset’s carrying amount

does not exceed the carrying amount that would have been determined, net of

depreciation or amortization, if no impairment loss had been recognized.

An impairment loss in respect of an equity-accounted investee is measured by

comparing the recoverable amount of the investment with its carrying amount.

An impairment loss is recognized in profit or loss, and is reversed if there has

been a favorable change in the estimates used to determine the recoverable

amount.

i) Employee benefits

Short-term employee benefits

Short-term employee benefit obligations are expensed as the related service is

provided. A liability is recognized for the amount expected to be paid under

short-term cash variable compensation or (profit-sharing) structures if the

Group has a present legal or constructive obligation to pay this amount as a

result of past service provided by the employee, and the obligation can be

estimated reliably.

j) Share based payments

The fair value of equity-settled transactions granted to employees is

determined by the fair value of the shares at the date when the grant is made.

When employees render services as consideration for equity instruments, the

expense is recognized in employee expenses, together with a corresponding

increase in equity, over the period in which the service conditions are fulfilled

(the vesting period). The awards vest in tranches on various dates over a total

period of up to five years. Graded vesting is applied where needed. Vesting is

conditional upon the employee being actively employed by the Group on the

vesting date. If the employee is terminated or resigns, any unvested tranches of

the award will be forfeited. The cumulative expense recognized for equity-

settled transactions at each reporting date until the vesting date reflects the

extent to which the vesting period has expired and the Group’s best estimate of

the number of equity instruments that will ultimately vest. The expense or

credit in the statement of profit or loss for a period represents the movement in

cumulative expense recognized as at the beginning and end of that period.

Service and non-market performance conditions are not taken into account

when determining the grant date fair value of awards, but the likelihood of the

conditions being met is assessed as part of the Group’s best estimate of the

FLOW TRADERS | ANNUAL REPORT 2023 108

number of equity instruments that will ultimately vest. Market performance

conditions are reflected within the grant date fair value. Any other conditions

attached to an award, but without an associated service requirement, are

considered to be non-vesting conditions. Non-vesting conditions are reflected

in the fair value of an award and lead to an immediate expensing of an award

unless there are also service and/or performance conditions. No expense is

recognized for awards that do not ultimately vest because non-market

performance and/or service conditions have not been met. Where awards

include a market or non-vesting condition, the transactions are treated as

vested irrespective of whether the market or non-vesting condition is satisfied,

provided that all other performance and/or service conditions are satisfied.

The fair value of share appreciation rights (SARs) granted to employees, which

are cash-settled, is recognized in employee expenses, together with a

corresponding increase in other liabilities, over the period during which the

service conditions are fulfilled (the vesting period). The liability is remeasured at

the end of each reporting period up to the date of settlement, with any changes

in fair value recognized in profit or loss. Estimates used are reassessed at the

end of each reporting period.

k) Other liabilities held for trading

As part of its trading activities, the Company enters into digital asset payables.

The borrowed digital assets payables are measured at fair value through profit

or loss.

l) Provisions

A provision is recognized if, as a result of a past event, the Group has a present

legal or constructive obligation that can be estimated reliably, and it is probable

that an outflow of economic benefits will be required to settle the obligation.

Provisions are determined by discounting the expected future cash flows at a

pre-tax rate that reflects current market assessments of the time value of

money and the risks specific to the liability. The unwinding of the discount is

recognized as finance cost.

m) Lease liabilities

At the commencement date of the lease, the Group recognizes lease liabilities

on the statement of financial position measured at the present value of lease

payments to be made over the lease term. In calculating the present value of

lease payments, the Group uses the incremental borrowing rate at the lease

commencement date. After the commencement date, the amount of lease

liabilities is increased to reflect the accretion of interest and reduced for the

lease payments made. In addition, the carrying amount of lease liabilities is

remeasured if there is a change in the lease term or in case of other

reassessments or modifications.

n) Income recognition

Net trading income comprises gross trading income less fees and net financial

expenses related to the trading activities.

The fees and net financial expenses are directly linked to the trading activity and

are therefore directly recognized in the profit and loss account under trading

income.

o) Tax

Tax expense comprises current and deferred tax. Current tax and deferred tax

are recognized in profit or loss except to the extent it relates to a business

combination, or items recognized directly in equity or in other comprehensive

income.

Current tax is the expected tax payable or receivable on the taxable income or

loss for the year, using tax rates enacted or substantively enacted at the

reporting date, and any adjustment to tax payable or receivable in respect of

previous years. Current tax payable also includes any withholding tax liability

arising from the declaration of dividends.

Deferred tax is recognized in respect of temporary differences between the

carrying amounts of assets and liabilities for financial reporting purposes and

their tax bases. Deferred tax is not recognized for:

▪ temporary differences on the initial recognition of assets or liabilities in a

transaction that is not a business combination and that affects neither

accounting nor taxable profit or loss;

▪ temporary differences related to investments in subsidiaries and jointly

controlled entities to the extent that it is probable that they will be revised in

the foreseeable future; and

▪ taxable temporary differences arising on the initial recognition of goodwill.

FLOW TRADERS | ANNUAL REPORT 2023 109

Deferred tax is measured at the tax rates that are expected to be applied to

temporary differences when they reverse, using tax rates enacted or

substantively enacted at the reporting date.

In determining the amount of current and deferred tax, the Group takes into

account the impact of uncertain tax positions and whether additional taxes and

interest may be due. The Group believes that its accruals for tax liabilities are

adequate for all open tax years based on its assessment of many factors,

including interpretations of tax law and management judgement. This

assessment relies on estimates and assumptions and may involve judgement

about future events. New information may become available that would cause

the Group to change its judgement regarding the adequacy of existing tax

liabilities or the collectability of tax assets. Such changes will impact tax

expense in the period that such a change in estimate is made.

Deferred tax assets and liabilities are offset if there is a legally enforceable right

to offset current tax liabilities and assets, and they relate to taxes levied by the

same tax authority on the same taxable entity which intend to settle current tax

liabilities and assets on a net basis or the tax assets and liabilities will be realized

simultaneously.

A deferred tax asset is recognized for unused tax losses, tax credits and

deductible temporary differences to the extent it is probable that future taxable

profits will be available against which they can be utilized. Deferred tax assets

are reviewed at each reporting date.

p) Treasury shares

The Group’s own equity instruments that are reacquired (treasury shares) are

recognized at cost and deducted from equity. No gain or loss is recognized in

profit or loss on the purchase, sale, issue or cancellation of the Group’s own

equity instruments. Any difference between the carrying amount and the

consideration, if reissued, is recognized in the share premium.

5. New standards and interpretations

All accounting policies are the same as those applied in the Group’s

consolidated financial statements for the year ending 31 December 2022. In

addition to the policies disclosed as part of the financial statements for the year

ending 31 December 2023, Flow Traders has applied its accounting policy with

respect to predecessor and continuation accounting as outlined in note 2.

New amendments and interpretations apply for the first time in 2023, but do

not have a material impact on the consolidated financial statements of the

Group. Additionally, the accounting standards issued but not yet effective

related to IAS 1 and IFRS 16 will not have a material effect on the Group.

a) Material accounting policy information

The Group also adopted Disclosure of Accounting Policies (Amendments to IAS 1

and IFRS Practice Statement 2) from 1 January 2023. Although the amendments

did not result in any changes to the accounting policies themselves, they

impacted the accounting policy information disclosed in the financial

statements.

The amendments require the disclosure of 'material', rather than 'significant'

accounting policies. The amendments also provide guidance on the application

of materiality to disclosure of accounting policies, assisting entities to provide

useful, entity specific accounting policy information that users need to

understand other information in the financial statements.

The following policies were previously disclosed as significant accounting

policies but have been removed from the financial statements as they were not

considered material accounting policies under the amended IAS 1:

▪ Business combinations

▪ Goodwill

▪ Non-current assets held for sale

a) Deferred tax related to assets and liabilities arising from a single

transaction

The Group has adopted Deferred Tax related to Assets and Liabilities arising

from a Single Transaction (Amendments to IAS 12) from 1 January 2023. The

Group had not previous taken the initial recognition exemption and, therefore,

there was no impact on the statement of financial position or to opening

retained earnings as of 1 January 2023.

b) Global minimum top-up tax

The Group has adopted International Tax Reform - Pillar Two Model Rules

(Amendments to IAS 12) upon their release on 23 May 2023. The amendments

provide a temporary mandatory exemption from deferred tax accounting for

the top-up tax, which is effective immediately, and require new disclosures

FLOW TRADERS | ANNUAL REPORT 2023 110

about the Pillar Two exposure. However, because no new legislation to

implement the top-up tax was enacted or substantively enacted at 31 December

2022 in any jurisdiction in which the Group operates and no related deferred tax

was recognized at that date, the retrospective application has no impact on the

Group’s consolidated financial statements.

6. Operating segments

The chief operating decision makers of the Group examine performance from a

regional perspective and have identified three reportable segments of its global

trading business: Europe, the Americas and Asia.

Europe consists of activities in the Netherlands with institutional trading

activities in France, UK, Italy, trading activities in Jersey and IT activities in

Romania. Americas consists of the subsidiaries in the USA. Asia contains our

subsidiaries in Hong Kong and Singapore and a Chinese representative office in

Shanghai. The executive directors of the Board consider this segmentation to be

relevant to understand the Group financial performance because it allows

investors to understand the primary method used by management to evaluate

the operating performance and decision making about allocation of resources

and trading capital.

The Group measures results on an IFRS basis and reconciles the total segment

results on net trading income, profit before tax and net profit. Significant

transactions and balances between geographic regions occur primarily as result

of Group operating companies incurring the operating expenses such as

employee compensation, communication, software development and data

processing and overhead costs for the purpose of providing services to affiliated

operating companies (line items intercompany recharge income and expenses).

The Group’s trading assets and liabilities attributable to each segment are

reported to management on the basis of net trading capital. Consequently, the

reported total assets in each segment are net of the segment’s financial

liabilities held for trading, trading payables and other liabilities held for trading.


Segment reporting	For the year ended 31 December			2023
	Europe	Americas	Asia	Total
Gross trading income	323,773	175,391	77,933	577,097
Fees related to the trading activities	59,270	31,168	8,153	98,591
Net financial expenses related to the trading activities	102,265	61,018	14,912	178,195
Net trading income	162,238	83,205	54,868	300,311
Other income	3,575	(10)	—	3,565
Total Income	165,813	83,195	54,868	303,876
Intercompany recharge	22,344	—	—	22,344
Total revenues	188,157	83,195	54,868	326,220
Employee expenses	83,376	32,112	18,462	133,950
Intercompany recharge	—	10,737	11,607	22,344
Other expenses	64,670	25,914	11,799	102,383
Total operating expenses	148,046	68,763	41,868	258,677
EBITDA	40,111	14,432	13,000	67,543
Depreciation of property and equipment	9,290	4,786	3,612	17,688
Amortization of intangible assets	566	38	2	606
Write off of (in) tangible assets	33	43	—	76
Operating result	30,222	9,565	9,386	49,173
Result/(impairment) of equity-accounted investees	(470)	(4,049)	—	(4,519)
Profit before tax	29,752	5,516	9,386	44,654
Tax expense	7,447	1,061	-5	8,503
Profit for the year	22,306	4,455	9,391	36,151
Assets	360,757	277,114	88,964	726,835
Liabilities	63,818	59,424	17,755	140,997
Capital expenditure	1,982	520	1,154	3,657
FTE	450	111	85	646

FLOW TRADERS | ANNUAL REPORT 2023 111


Segment reporting	For the year ended 31 December 2022
	Europe	Americas	Asia	Total
Gross trading income	427,136	173,711	76,359	677,205
Fees related to the trading activities	65,098	37,397	10,996	113,491
Net financial expenses related to the trading activities	46,534	46,827	10,163	103,524
Net trading income	315,504	89,487	55,200	460,191
Other income	(89)	(1,429)	—	(1,518)
Total Income	315,415	88,058	55,200	458,672
Intercompany recharge	17,183	—	—	17,183
Total revenues	332,598	88,058	55,200	475,856
Personnel expenses	112,436	42,829	21,572	176,837
Intercompany recharge	—	7,191	9,992	17,183
Other expenses	66,902	23,998	11,597	102,497
Total operating expenses	179,338	74,018	43,161	296,517
EBITDA	153,260	14,041	12,039	179,339
Depreciation of property and equipment	7,794	4,579	3,900	16,273
Amortization of intangible assets	482	44	16	542
Write off of (in) tangible assets	7	132	23	162
Operating result	144,977	9,286	8,100	162,362
Result/(impairment) of equity- accounted investees	(568)	(63)	—	(631)
Profit before tax	144,409	9,223	8,100	161,731
Tax expense	32,842	1,517	545	34,904
Profit for the year	111,567	7,706	7,555	126,828
Assets	440,603	263,499	83,734	787,836
Liabilities	87,196	69,231	25,094	181,521
Capital expenditure	1,982	520	1,154	3,657
FTE	456	119	85	660

7. Fair value measurement

Fair values have been determined for measurement and/or disclosure purposes

based on the following methods. When applicable, further information about

the assumptions made in determining fair values is disclosed in the notes

specific to that asset or liability.

Valuation models

The objective of valuation techniques is to arrive at a fair value measurement

that reflects the price that would be received to sell the asset or paid to transfer

the liability in an orderly transaction between independent market participants

at the measurement date.

The Group measures fair values using the following fair value hierarchy,

depending on the inputs used for making the measurements.

▪ Level 1: fair value of financial instruments based upon inputs that are quoted,

unadjusted, market prices in active markets for identical instruments;

▪ Level 2: inputs other than quoted prices included within Level 1, that are

observable either directly (i.e. as prices) or indirectly (i.e. derived from

prices). This category includes instruments valued using: quoted market

prices in active markets for similar instruments; quoted prices for identical or

similar instruments in markets that are not considered active; or other

valuation techniques in which all significant inputs are directly or indirectly

observable from market data;

▪ Level 3: inputs that are unobservable. This category includes all instruments

for which the valuation technique includes unobservable inputs that have a

significant effect on the instrument’s valuation. This category includes

instruments that are valued based on quoted prices for similar instruments

but for which significant unobservable adjustments or assumptions are

required to reflect differences between the instruments, for example

unlisted equity securities.

The fair values of financial assets and financial liabilities that are traded in active

markets are based on prices obtained directly from an exchange on which the

instruments are traded or obtained from a broker that provides an unadjusted

quoted price from an active market for identical instruments. For all other

financial instruments, the Group determines fair values using other valuation

techniques.

FLOW TRADERS | ANNUAL REPORT 2023 112

When the Group measures portfolios of financial assets and financial liabilities

on the basis of net exposures to market risks, it applies judgement in

determining appropriate portfolio-level adjustments such as bid-ask spreads.

Such adjustments are derived from observable bid-ask spreads for similar

instruments and adjusted for factors specific to the portfolio.

Similarly, when the Group measures portfolios of financial assets and financial

liabilities on the basis of net exposure to the credit risk of a particular

counterparty, it takes into account any existing arrangements that mitigate the

credit risk exposure (e.g. master netting agreements with the counterparty).

a. Sensitivity analysis table


Type	Valuation technique	Significant unobservable input	Inter-relationship between significant unobservable input and fair value measurement
Investments measured at Fair value through profit and loss	Market approach	Management performance adjustment (50% - 75%)	The estimated fair value would increase (decrease) if Management concluded the performance adjustment were (higher) or lower
		Management performance adjustment (50% - 75%)	Management concluded the discount for liquidity were (higher) or lower
		Illiquidity discount (65%-75%)
Investments measured at Fair value through OCI	Market approach	Management performance adjustment (50% - 75%)	The estimated fair value would increase (decrease) if Management concluded the performance adjustment were (higher) or lower
Investments measured at Fair value through OCI	Market approach	Illiquidity discount (65%-80%)	Management concluded the discount for liquidity were (higher) or lower
Other liabilities held for trading	Market approach	Implied Volatility (80%-120%)	If implied volatility were to increase, the fair value would increase

A reasonably possible alternative assumption to the management performance

adjustment is an increase or decrease of the percentage by 25 percent. For

investments measured at FVTPL, this would not have a material effect. For

investments measured at FVOCI, this would increase/decrease the fair value by

a total of €227k. A reasonably possible alternative assumption to the illiquidity

discount is an increase or decrease of the percentage by 5 percent. For

investments measured at FVTPL, this would increase/decrease the total fair

value by €837k. For investments measured at FVOCI, this would increase/

decrease the total fair value by a €125k.

A reasonably possible alternative assumption for applying the range of implied

volatility would be to apply a 120 percent implied volatility for all other liabilities

held for trading measured using a significant unobservable input of implied

volatility. This would result in a decrease in total fair value other liabilities held

for trading by €190k. If those instruments were to all have an 80 percent implied

volatility, the impact would be a decrease in total fair value of other liabilities

held for trading of €1.1m.

b. Financial assets and liabilities held for trading

The valuation of trading positions, both long and short positions, is determined

by reference to last traded prices from identical instruments from the

exchanges at the reporting date. Such financial assets and liabilities are

classified as Level 1.

A substantial part of the financial assets and liabilities held for trading which are

carried at fair value are based on theoretical prices which can differ from quoted

market prices. The theoretical prices reflect price adjustments primarily caused

by the fact that the Group continuously prices its financial assets and liabilities

based on all available information. This includes prices for identical and near-

identical positions, as well as the prices for securities underlying the Group’s

positions, on other exchanges that are open after the exchange on which the

financial asset or liability is primarily traded closes. Consequently, such financial

assets and liabilities are classified as Level 2.

For offsetting (delta neutral) positions, the Group uses mid-market prices to

determine fair value.

c. Investments measured at fair value through other

comprehensive income ('OCI')

The fair value of investments measured at fair value through other

comprehensive income is determined by reference to their quoted closing bid

price at the reporting date, or if unquoted, determined using a valuation

technique and are classified as Level 2 or Level 3, conditional upon the regular

availability of quoted closing bid prices.

FLOW TRADERS | ANNUAL REPORT 2023 113

d. Investments measured at fair value through profit and loss

The fair value of investments measured at fair value through profit and loss is

determined by reference to their quoted closing bid price at the reporting date,

or if unquoted, determined using a valuation technique and are classified as

Level 2 or Level 3, conditional upon the regular availability of quoted closing bid

prices.

e. Other assets held for trading

Other assets held for trading comprises the amount of digital assets that the

Group holds as a broker-dealer. The Group applies IAS 2 for its digital assets and

these are measured at fair value through profit and loss. As the Company uses

its own fair value models based on quoted prices or observable inputs for the

valuation of the digital assets, these assets are classified as Level 2.

f. Other liabilities held for trading

The Group borrows digital assets as part of its trading strategy. The borrowed

digital assets are measured at fair value through profit or losses. As the

Company uses its own fair value models based on quoted prices, observable

inputs or unobservable inputs for the valuation of the borrowed digital assets,

these liabilities are classified as Level 2 and Level 3.

g. Fair value hierarchy

The following table shows the carrying amounts and fair values of financial

assets and liabilities according to their fair value hierarchy.


Fair value hierarchy	At 31 December 2023
	Level 1	Level 2	Level 3	Total
Long positions in equity securities - trading	28,166	5,189,803	—	5,217,969
Long positions in debt securities - trading	—	277,814	—	277,814
Mark to market derivatives assets	17	995	—	1,013
Financial assets held for trading	28,183	5,468,612	—	5,496,795
Other assets held for trading	—	169,821	—	169,821
Investments measured at fair value through PL	—	—	6,485	6,485
Investments measured at fair value through OCI	—	1,196	18,887	20,083
Total long positions	28,183	5,639,629	25,372	5,693,184
Short positions in equity securities- trading	44,850	2,598,156	—	2,643,006
Short positions in debt securities- trading	—	423,394	—	423,394
Mark to market derivatives liabilities	3	650	—	653
Financial liabilities held for trading	44,853	3,022,200	—	3,067,053
Other liabilities held for trading	5,081	169,212	69,472	243,765
Total short positions	49,934	3,191,412	69,472	3,310,818

FLOW TRADERS | ANNUAL REPORT 2023 114


Fair value hierarchy	At 31 December 2022
	Level 1	Level 2	Level 3	Total
Long positions in equity securities - trading	96,214	4,337,438	–	4,433,652
Long positions in debt securities - trading	–	434,853	–	434,853
Mark to market derivatives assets	274	7,811	–	8,085
Financial assets held for trading	96,488	4,780,102	–	4,876,590
Other assets held for trading	–	58,347	–	58,347
Investments measured at fair value through PL	–	–	1,928	1,928
Investments measured at fair value through OCI	–	1,381	18,458	19,839
Total long positions	96,488	4,839,830	20,386	4,956,704
Short positions in equity securities-trading	33,671	2,483,631	–	2,517,302
Short positions in debt securities- trading	–	431,195	–	431,195
Mark to market derivatives liabilities	66	8,077	–	8,143
Financial liabilities held for trading	33,737	2,922,903	–	2,956,640
Other liabilities held for trading	–	19,889	12,226	32,115
Total short positions	33,737	2,942,792	12,226	2,988,755

In 2023, no transfers in or out of level 3 took place (2022: nil). The following table

show the movement in level 3 assets. Please also refer to note 20, 21 & 22. The

following investments consist of equity investments.


Level 3 Investments
Carrying amounts at 31 December 2023
	FVPL	FVOCI	Total
Net book amount 1 January	1,928	18,458	20,386
Additions	1,063	478	1,541
Disposals	—	(275)	(275)
Unrealized gain/(loss)	3,525	1,048	4,573
Effect of movement in foreign exchange differences	(31)	(822)	(853)
Net book amount 31 December	6,485	18,887	25,372


Level 3 Investments
Carrying amounts at 31 December 2022
	FVPL	FVOCI	Total
Net book amount 1 January	1,716	8,209	9,925
Additions	1,936	9,114	11,050
Disposals	(310)	(1,622)	(1,932)
Unrealized gain/(loss)	(1,518)	2,283	765
Effect of movement in foreign exchange differences	104	474	578
Net book amount 31 December	1,928	18,458	20,386

FLOW TRADERS | ANNUAL REPORT 2023 115


Other Liabilities held for trading	Level 3
Fair value at 31 December
	2023	2022
Net book amount 1 January	12,226	—
Additions	51,374	12,226
Disposals	(3,259)	—
Unrealized gain/(loss)	9,131	—
Fair value at 31 December	69,472	12,226

8. Hedge of net investments in foreign operations

Included in financial liabilities held for trading at 31 December 2023 was a

borrowing of USD 19.3 million (2022: USD 19.9 million) which has been

designated as a hedge of the net investment in the United States and Singapore

subsidiaries, which have their functional currency in USD. This borrowing is

being used to hedge the Group’s exposure to the USD foreign exchange risk on

this investment. Gains or losses on the retranslation of this borrowing are

transferred to other comprehensive income to offset any gains or losses on

translation of the net investments in the subsidiaries.

There is an economic relationship between the hedged item and the hedging

instrument as the net investment creates a translation risk that will match the

foreign exchange risk on the USD borrowing. The Group has established a hedge

ratio of 1:1 as the underlying risk of the hedging instrument is identical to the

hedged risk component. The hedge ineffectiveness will arise when the amount

of the investment in the foreign subsidiary becomes lower than the amount of

the borrowing. The hedging gain recognized in other comprehensive income

before tax is equal to the change in fair value used for measuring effectiveness.

There is no ineffectiveness recognized in profit or loss.

The impact of the hedging instrument recorded in financial liabilities held for

trading on the statement of financial position is as follows:


Foreign currency denominated borrowings
For the year ended 31 December 2023
Notional amount (US$000)	Carrying amount (€000)	Change in fair value used for measuring ineffectiveness for the period(€000)
19,300	17,472	695


Foreign currency denominated borrowings
For the year ended 31 December 2022
Notional amount (US$000)	Carrying amount (€000)	Change in fair value used for measuring ineffectiveness for the period(€000)
19,900	18,646	7,555


Net investment in foreign subsidiaries
For the year ended 31 December 2023
	Change in fair value used for measuring ineffectiveness (€000)	Foreign currency translation reserve (€000)
Investment in foreign subsidiaries	(695)	(695)


Net investment in foreign subsidiaries
For the year ended 31 December 2022
	Change in fair value used for measuring ineffectiveness (€000)	Foreign currency translation reserve (€000)
Investment in foreign subsidiaries	7,555	7,555

FLOW TRADERS | ANNUAL REPORT 2023 116


Impact to currency translation reserve
For the year ended 31 December 2023
	Change in fair value used for measuring ineffectiveness	Continuing hedges	Discontinued hedges
Investment in SG subsidiaries	981	477	—
Investment in US subsidiary	(288)	—	(2,178)
Total	695	477	(2,178)


Impact to currency translation reserve
For the year ended 31 December 2022
	Change in fair value used for measuring ineffectiveness	Continuing hedges	Discontinued hedges
Investment in SG subsidiaries	239	505	—
Investment in US subsidiary	7,316	1,890	—
Total	7,555	2,395	—

9. Earnings per share

The Group presents basic and diluted EPS data for its ordinary shares. Basic EPS

is calculated by dividing the profit for the year attributable to ordinary

shareholders and the number of ordinary shares outstanding.

The weighted average number of shares takes into account the weighted

average effect of changes in treasury shares during the year.

Diluted earnings per share is determined by adjusting the basic earnings per

share for the effects of all dilutive share-based payments to employees.


Earnings per share
	For the year ended
	2023	2022
Profit for the year	36,151	126,827
Profit attributable to ordinary shareholders	36,151	126,827
Weighted average number of ordinary shares	43,223,129	43,476,991
Dilutive effect of share-based payments	1,358,066	2,435,078
Weighted average number of ordinary shares for diluted net profit	44,581,195	45,912,069

Basic earnings per share	0.84	2.92

Diluted earnings per share	0.81	2.76

10. Net trading income

Gross trading income comprises the realized and unrealized income on financial

instruments, digital assets and certain fees which the Group receives as a

liquidity provider from exchanges and issuers of products.

Fees related to the trading activities consist of expenses such as exchange fees,

clearing fees and other trading related fees. Net financial expenses related to

the trading activities mainly relate to interest expense on the credit facilities

with the prime brokers calculated on the drawn amount during the year.

11. Other income

Other income includes gains and losses from investments measured at fair value

through profit and loss. For further details please refer to note 21.

FLOW TRADERS | ANNUAL REPORT 2023 117

12. Employee expenses


	For the year ended
	2023	2022
Wages and salaries	59,758	56,224
Social security charges	6,522	5,834
Recruitment and other employment costs	9,735	11,104
Variable compensation paid in cash	41,005	70,420
Variable compensation paid in shares	16,930	33,253
Employee expenses	133,950	176,837

Share-based payments

Shares of the Company are awarded to employees as part of their variable

compensation. Variable remuneration shares are awarded on a gross basis and

net settled, such that the Company settles income tax obligations in cash on

behalf of the employees. Company loyalty and sign-on package shares are

awarded on a net basis, which gives rise to income tax obligations settled in

cash by the Company on the employee's behalf. The Group expects to pay

€10.3m to settle the tax obligations on behalf of the employees in 2024 (2023:

€10.7m).

In either case the Group is responsible for withholding wage taxes upon vesting

in the Netherlands and in most other countries of operations. The estimated

amount of wage taxes can be up to 50%, for which future cash outflows may be

covered by the sale of treasury shares.

Following the update to the Group's corporate structure at 13 January 2023 the

change in the issuer of the shares from Flow Traders N.V. to Flow Traders Ltd.

including the name of the company, legal seat and ISIN constitutes a

modification to share-based payments. The Group measured the fair value of

the outstanding share options based on the closing share price at 13 January

2023 and concluded that this change was a non-beneficial modification and

continued to measure the fair value at original grant date. No incremental

expenses related to the fair value of the share options was included in profit or

loss.


Share-based payment expense per plan	For the year ended
	2023	2022
Variable remuneration share plans	15,975	31,169
Company loyalty and sign-on package share plans	954	2,085
Total expenses arising from equity settled share-based payments	16,930	33,253
Expenses arising from cash settled share-based payments	1,744	3,554
Total expenses arising from share-based payments	18,673	36,807


Total share awards outstanding per plan (number of shares)
	At 31 December
		2022
Company loyalty and sign-on package share plans	111,590	163,418
Variable remuneration share plans	1,902,516	2,935,616
Total number of shares outstanding	2,014,106	3,099,034

a) Variable remuneration share plans - equity settled

Under the variable remuneration share plans, shares are granted to employees

as part of their variable compensation. The shares vest in four equal installments

during the first quarter of the subsequent year over a period of three or four

years subject to the condition that the employee remains employed on the

vesting date.

Employees are granted shares based on a fixed monetary value. As part of the

2023 variable remuneration plan the Company awarded shares to employees

based on a fixed monetary value of €3.2 million. The number of shares granted

are estimated based on the monetary value divided by the fair value of the

share price at grant date. The final number of shares granted are determined

based on the volume weighted average price (VWAP) of the first open period of

the following year, resulting in an updated calculation of the shares awarded, as

is shown in the tables below. These awards have a nil exercise price.

FLOW TRADERS | ANNUAL REPORT 2023 118

Prior year variable remuneration plans have been adjusted as follows:


Variable remuneration share plan year	2022	2021	2020
Fixed monetary value	27,432	20,943	96,318
Fair value share price at grant date	€23.26	€33.10	€28.58
VWAP share price of first open period	€26.64	€28.91	€32.20

The following table illustrates the number of shares and movements in share

awards during the year. The expense recognized during the year was €16.0

million (2022: €31.2 million).


Number of shares
	For the year ended
	2023	2022
Outstanding at 1 January	2,935,616	2,601,716
Granted during the year	184,693	1,179,378
Changes due to dividend reinvestment	91,405	78,977
Vested during the year	(1,054,589)	(859,556)
Forfeited during the year	(261,567)	(179,347)
Changes in shares recalculated based on final VWAP	6,958	114,448
Outstanding at 31 December	1,902,516	2,935,616

b) Company loyalty and sign-on package share plans - equity

settled

Under the Company loyalty and sign-on package share plans, shares are granted

as a part of variable compensation to certain employees. The shares vest over a

period of one to five years, depending on the share plan and agreement with

the employee, subject to the condition that the employee remains employed on

the vesting date.

The fair value of the share options is estimated at the grant date. The fair value

of shares granted to employees during 2023 is estimated at grant date at €1.1

million (2022: €2.0 million), reflecting a weighted average fair value of shares

granted of €22.9 (2022: €26.8). The exercise price of the share option is equal to

the market price of the underlying shares on the date of grant. The expense

recognized during the year was €1.0 million (2022: €2.1 million).


Number of shares
	For the year ended
	2023	2022
Outstanding at 1 January	163,418	162,471
Granted during the year	60,064	74,700
Changes due to dividend reinvestment	2,695	4,559
Vested during the year	(90,252)	(65,376)
Forfeited during the year	(24,335)	(12,936)
Outstanding at 31 December	111,590	163,418

c) Share appreciation rights - cash settled

Certain employees are awarded share appreciation rights (SARs) as part of their

variable remuneration, settled in cash. The SARs vest in equal installments over

a period of four to five years subject to the condition that the employee remains

employed on the vesting date. The liability for the SARs is measured, initially

and at the end of each reporting period until settled, at the fair value of the

SARs. The carrying amount of the liability relating to the SARs at 31 December

2023 was €8.6 million (2022: €10.4 million). The expense recognized during the

year was €1.7 million (2022: €3.6 million). At year end there are no vested SARs

that are unpaid.

FLOW TRADERS | ANNUAL REPORT 2023 119

13. Other expenses


	For the year ended
	2023	2022
Technology	64,416	61,171
Housing	5,499	3,718
Regulatory costs	2,716	3,073
Advisors and assurance	5,002	4,910
Strategic advisory costs	4,304	14,057
Fixed exchange costs	7,178	8,161
Travel expenses	2,679	2,634
Various expenses	10,589	4,774
Other expenses	102,383	102,497

The total of our operating expenses under the EU Taxonomy Regulation

comprises of technology, housing, fixed exchange and other expenses. The total

for 2023 was €87,682 (2022: €77,826).

14. Taxation


	For the year ended
	2023	2022
Tax recognized in profit or loss	8,503	34,904
Current tax expense	14,033	33,402
Movement deferred tax asset	(4,442)	2,125
Movement deferred tax liability	(134)	60
Adjustment for prior years	(954)	(684)
Tax expense excluding share of tax of equity-accounted investees	8,503	34,904

Reconciliation of the weighted average statutory income rate to the Group’s

effective income tax rate is as follows:


Reconciliation of effective tax rate
	For the year ended
	2023	2022
Profit before tax	44,654	161,730
Dutch standard tax rate	25.8%	25.8%
Income tax expected	11,521	41,727
Actual income tax charge	8,503	34,904
In percentage	19.0%	21.6%
Difference in tax expense	(6.8)%	(4.2)%


Reconciliation of effective tax rate
For the year ended 31 December
	2023 (€)	2023	2022 (€)	2022
Dutch standard tax rate	11,521	25.8%	41,727	25.8%
Different weighted average statutory rate of group	(2,410)	(5.4%)	(1,749)	(1.1%)
Income (partly) exempted	(2,654)	(5.9%)	(10,401)	(6.4%)
Other non deductible costs	2,045	4.6%	5,327	3.3%
Subtotal	(3,018)	(6.8%)	(6,823)	(4.2%)
Effective tax rate	8,503	19.0%	34,904	21.6%

The effective tax rate differs from the (nominal) statutory tax rate. This

difference is mainly caused by applying the participation exemption and Dutch

innovation box regime. In addition the effective tax rate is impacted by non-

deductible share plan costs that occur in each region.

FLOW TRADERS | ANNUAL REPORT 2023 120

Effective tax rate per region

An overview of the effective tax rate per region is presented in the table below.


	For the year ended 31 December 2023
	Statutory tax rate	Effective tax rate
Europe	25.8%	25.0%
Americas	21.0%	19.2%
Asia	16.5%	(0.1%)
Group		19.0%


	For the year ended 31 December 2022
	Statutory tax rate	Effective tax rate
Europe	25.8%	22.7%
Americas	21.0%	16.4%
Asia	16.6%	6.7%
Group		21.6%

Current tax assets and liabilities per region


	At 31 December
	2023	2022
Assets
Europe	4,744	622
Americas	706	2,036
Asia	623	142
Total current tax assets	6,073	2,800

Liabilities
Europe	1,725	10,412
Americas	1,322	99
Asia	569	735
Total current tax liabilities	3,616	11,246

Recognized deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:


	At 31 December
	2023	2022
Assets
Deferred tax assets	9,945	5,503

Liabilities
Property and equipment	(395)	(500)
Investments measured fair value through OCI	(1,581)	(1,064)
Other assets	(533)	(808)
Net asset/(liability)	7,436	3,131

Taxes paid per region

An overview of the taxes paid is presented in the table below.


For the year ended 31 December 2023
	Corporate income tax	Value added tax	Payroll tax	Dividend WHT	Total
Europe	21,547	1,248	43,310	6,460	72,566
Americas	1,532	9	1,712	—	3,253
Asia	632	(1)	61	—	692
Total	23,711	1,256	45,083	6,460	76,511

FLOW TRADERS | ANNUAL REPORT 2023 121


For the year ended 31 December 2022
	Corporate income tax	Value added tax	Payroll tax	Dividend WHT	Total
Europe	23,824	1,464	58,776	5,255	89,319
Americas	62	9	1,940	—	2,011
Asia	181	36	2	—	219
Total	24,067	1,509	60,717	5,255	91,548

15. Cash and cash equivalents


	At 31 December
	2023	2022
Europe	1,946	1,837
Americas	309	203
Asia	3,453	6,572
Total cash and cash equivalents	5,708	8,612

Cash and cash equivalents are available on demand and used by the Group in

the management of its short term commitments.

16. Financial assets held for trading


	At 31 December
	2023	2022
Long position in equity securities-trading	5,217,969	4,433,651
Long position in debt securities-trading	277,814	434,853
Mark to market derivatives assets	1,012	8,086
Total financial assets held for trading	5,496,795	4,876,590

The table above shows the fair values of derivative financial instruments

recorded as assets.

The Group enters into derivative contracts such as futures, forwards, swaps and

options for trading and economic hedge purposes. Futures contracts are

transacted at standardized amounts on regulated exchanges and are subject to

cash margin requirements. Forwards are customized contracts transacted in the

over–the–counter market. Swaps are contractual agreements between two

parties to exchange streams of payments over time based on specified notional

amounts, in relation to movements in a specified underlying index .The Group’s

derivative assets and liabilities are generally not offset in the statement of

financial position unless the IFRS netting criteria are met. The Group’s trading

capital exposures including derivative contracts is monitored on daily basis as

part of its overall risk management framework.

Please also refer to note 17, 25 and 26.

17. Trading receivables


	At 31 December
	2023	2022
Receivables for securities sold	7,831,027	5,466,900
Due from brokers and exchanges	268,340	553,610
Unsettled mark to market derivatives assets	2,279	1,844
Total trading receivables	8,101,646	6,022,354

In accordance with the Group’s policy of trade date accounting for regular way

sale and purchase transactions, receivables for securities sold represent

amounts of receivables for securities that are sold, but not yet settled as at the

reporting date and amounts due from brokers and exchanges. Trading

receivables are measured at amortized cost. Given the short-term nature of

these assets, their carrying amount is a reasonable approximation of fair value.

Additionally, the expected credit loss is immaterial.

Please also refer to note 16, 25 and 26.

18. Other assets held for trading


	At 31 December
	2023	2022
Other assets held for trading	169,821	58,347
Total other assets held for trading	169,821	58,347

FLOW TRADERS | ANNUAL REPORT 2023 122

The carrying amount of other assets held for trading at year end was €169.8

million (2022 €58.3 million). This amount includes digital assets traded on

centralized and decentralized exchanges.

19. Other receivables


	At 31 December
	2023	2022
Prepayments	7,361	9,978
Dividend withholding tax	1,688	1,152
Security deposits	3,146	3,017
Receivable from employees	256	977
Other receivables	8,224	9,583
Total other receivables	20,675	24,708

20. Investments measured at fair value through other

comprehensive income


	At 31 December
	2023	2022
Net book amount 1 January	19,839	9,282
Acquisitions / investments	478	9,114
Disposals	(275)	(1,622)
Unrealized gains/(losses)	447	2,563
Effect of movements in exchange rate	(406)	502
Total Investments measured at fair value through OCI	20,083	19,839

Total gains/(losses) on investments measured at fair value through other

comprehensive income is presented in the Changes in investments at fair value

through other comprehensive income line on the Consolidated statement of

profit and loss and other comprehensive income.

21. Investments measured at fair value through profit and loss


	At 31 December
	2023	2022
Net book amount 1 January	1,928	1,716
Acquisitions / investments	1,063	1,936
Disposals	—	(310)
Remeasurement recognized in profit or loss	3,565	(1,518)
Effect of movement in foreign exchange differences	(72)	104
Total Investments measured at fair value through PL	6,485	1,928

Total gains/(losses) on investments measured at fair value through profit and

loss in the Other income line on the Consolidated statement of profit and loss

and other comprehensive income.

22. Equity-accounted investees

At 31 December 2022, equity-accounted investees were presented as

Investment in associates on the Statement of Financial Position. As of 31

December 2023, equity-accounted investees includes both investments in

associates and joint ventures. As such, the presentation on the Statement of

Financial Position is now Equity-accounted investees.

a) Individually immaterial equity accounted investees


	At 31 December
	2023	2022
Net book amount 1 January	4,958	2,670
Investments	—	3,012
Cash distribution	(78)	(9)
Impairment	(4,445)	(354)
Result from equity-accounted investees	(43)	(298)
Effect of movement in foreign exchange differences	222	(63)
Total investments in individually immaterial equity-accounted investees	614	4,958

FLOW TRADERS | ANNUAL REPORT 2023 123

The Group recognized an impairment of €4.3 million in its investment in an

associate, LedgerEdge Inc. As of 31 December 2023, the estimated recoverable

amount of LedgerEdge Inc. is nil and there is no expectation of reversal in future

periods as the company and its subsidiary are in the process of liquidation.

b) Joint Venture

The Group has invested in a joint venture in which the Group has joint control

and 17.43% ownership interest through voting preferred shares. The Group,

along with the other investors identified in the Shareholder Agreement as Major

Investors, must each approve (unanimous consent) of matters in regard to the

relevant activities of the joint venture. This results in collective control of the

arrangement.

The Group does not consider the assessment of control a significant judgement

under IAS 1 given the nature of those contractual terms and the activities which

require agreement from each major investor. As per the shareholders'

agreement, the Group is considered a major investor.

The investee is developing a trading technology platform in the Asian Pacific

region. In accordance with acquisition agreement, the Group may make an

additional investment dependent on future events.

The following table summarizes the joint venture's financial statements for the

period ending 30 November 2023. The Group uses the 30 November 2023

financial statements due to operational constraints of the investee.


	At 31 December
	2023	2022
Percentage ownership Interest	21.60%	—
Non-current assets	2,690	—
Current Assets (inc. €4.8m in cash)	5,760	—
Current financial liabilities	(28)	—
Non-current financial liabilities	—	—
Net assets	8,423	—
Gain /(loss) on foreign exchange translation		—
Group's share of net assets (ownership %)	1,819	—
Goodwill	2,373	—
Carrying amount of interest in joint venture	4,193	—

Loss from continuing operations	(145)	—
Other comprehensive income	—	—
Total comprehensive Income (ownership %)	(31)	—

FLOW TRADERS | ANNUAL REPORT 2023 124

23. Property and equipment


	Hardware	Office fixtures	Office space right-of-use assets	Hardware right- of-use assets	Total
Cost
Balance at 1 January 2022	33,911	10,214	23,401	12,586	80,113
Additions	3,017	4,426	42,041	3,085	52,570
Disposals	(3,183)	(5,140)	(1,870)	(3,381)	(13,574)
Exchange rate differences	988	573	1,266	298	3,124
Balance at 31 December 2022	34,734	10,073	64,838	12,588	122,233

Balance at 1 January 2023	34,734	10,073	64,838	12,588	122,307
Additions	4,802	7,149	1,070	2,191	15,212
Disposals	(7,838)	(4,127)	(661)	(2,533)	(15,159)
Effect of movements in exchange rates	(410)	(176)	(1,687)	(76)	(2,423)
Balance at 31 December 2023	31,288	12,919	63,560	12,170	119,937

Depreciation and impairment losses
Balance at 1 January 2022	12,777	6,410	13,277	8,040	40,504
Depreciation for the year	5,617	1,734	5,665	3,419	16,435
Disposals	(3,287)	(3,494)	(1,870)	(4,900)	(13,551)
Exchange rate differences	468	342	619	335	1,764
Balance at 31 December 2022	15,575	4,992	17,691	6,894	45,152

Balance at 1 January 2023	15,575	4,992	17,691	6,894	45,192
Depreciation for the year	6,339	1,509	7,405	2,511	17,764
Disposals	(7,394)	(3,874)	(746)	(2,533)	(14,547)
Exchange rate differences	(238)	(71)	(514)	(43)	(906)
Balance at 31 December 2023	14,282	2,556	23,836	6,829	47,503

Carrying amounts
At 1 January 2022	21,134	3,804	10,124	4,546	39,609
At 31 December 2022	19,159	5,081	47,147	5,694	77,081
At 31 December 2023	18,802	10,363	39,724	3,545	72,434

Right-of-use assets are disclosed in more detail in note 28 and must be considered along with software right-of-use assets in note 24. Assets that have been fully

depreciated and are considered obsolete are disposed of, the Group does not generate sale proceeds from disposed assets. The Depreciation for the year line item

includes €0.07 million in written off tangible assets for the year ended 31 December 2023 (2022: € 0.161 million).

FLOW TRADERS | ANNUAL REPORT 2023 125

24. Intangible assets


	Software	Software right-of- use assets	Goodwill	Total
Cost
Balance at 1 January 2022	2,257	638	502	3,397
Additions	156	3	—	159
Disposals	(223)	(172)	—	(395)
Exchange rate differences	22	1	—	23
Balance at 31 December 2022	2,212	470	502	3,184

Balance at 1 January 2023	2,212	470	502	3,184
Additions	107	1,228	—	1,335
Disposals	(258)	—	—	(258)
Exchange rate differences	(6)	—	—	(6)
Balance at 31 December 2023	2,055	1,698	502	4,255

Depreciation and impairment losses
Balance at 1 January 2022	754	298	—	1,052
Depreciation for the year	432	110	—	542
Disposals	(220)	(172)	—	(392)
Exchange rate differences	15	—	—	15
Balance at 31 December 2022	981	236	—	1,217

Balance at 1 January 2023	981	236	—	1,216
Depreciation for the year	425	181	—	606
Disposals	(209)	—	—	(209)
Exchange rate differences	(37)	—	—	(3)
Balance at 31 December 2023	1,160	417	—	1,610

Carrying amounts
At 1 January 2022	1,503	340	502	2,345
At 31 December 2022	1,231	234	502	1,967
At 31 December 2023	895	1,281	502	2,678

Right-of-use assets are disclosed in more detail in note 28 and must be

considered along with office space and hardware right-of-use assets in note 23.

Assets that have been fully depreciated and are considered obsolete are

disposed of, the Group does not generate sale proceeds from disposed assets.

Goodwill

In December 2010 the Group obtained control of TradeSense Solutions B.V. and

its subsidiary Flow Traders Technologies SRL (formerly TradeSense Solutions

SRL), a software development company with special focus on trading in

electronic markets. The goodwill amounted to €0.5 million.

There were no additions or impairments to the goodwill in 2023 and 2022.

25. Financial liabilities held for trading


	At 31 December
	2023	2022
Short positions in equity securities-trading	2,643,006	2,517,302
Short positions in debt securities-trading	423,394	431,195
Mark to market derivatives liabilities	653	8,143
Total financial liabilities held for trading	3,067,053	2,956,640

Please also refer to note 16, 17 and 26.

26. Trading payables


	At 31 December
	2023	2022
Payables for cash market products	7,906,239	5,694,655
Credit facilities	1,970,248	1,629,316
Unsettled mark to market derivatives liabilities	3,010	2,199
Total trading payables	9,879,497	7,326,169

Due to the short-term nature of these liabilities, their carrying amount is a

reasonable approximation of fair value. Please also refer to note 16, 17 and 25.

FLOW TRADERS | ANNUAL REPORT 2023 126

Payables for securities bought

In accordance with the Group’s policy of trade date accounting for regular sale

and purchase transactions, payables for securities bought represent amounts

payables for securities that were purchased, but not yet settled as at the

reporting date. The amount payable is based on the net unsettled amount per

clearing institution.

Credit Facilities

The Group maintains portfolio financing facilities with its prime brokers to

facilitate the trading activities (i.e. to finance the purchase and settlement of

financial instruments). The drawn amounts on these facilities continuously

fluctuate based on our trading positions at any given moment.

The Group entered into interest-bearing credit facilities with ABN AMRO

Clearing Bank N.V. (AACB), totaling €2,825 million per year end, comprising of a

EUR denominated facility of €2,350 million and a USD denominated facility of

$540 million. In addition, the Group entered into interest-bearing credit facilities

for portfolio margin financing with Bank of America Merrill Lynch (BA ML),

Goldman Sachs, Barclays Bank, Mizrahi-Tefahot Bank. These facilities can be

modified or terminated at any time. The facilities are exclusively for the

financing of positions of the financial instruments traded in the ordinary course

of the trading activities using the various prime brokers.

Our prime brokers require the Group to post cash to cover the haircut or margin

requirements (representing a minor portion of our portfolio’s size, which is

variable and calculated on a daily basis depending on portfolio size and

composition) in cash or securities as security for our positions held with the

relevant prime broker. The positions are subject to pledge and collateral

arrangements.

Covenants

Pursuant to the main covenants included in our facilities, the Group is required

to comply with a net liquidation balance that exceeds the haircut calculated by

the prime broker. Both the net liquidation balance and haircut are variable and

calculated on a daily basis, depending on portfolio size and composition. The

main covenants prescribe certain maximum portfolio-to loan size (variable and

calculated on a daily basis, depending on portfolio composition). In addition, for

our Asian operations they require us to maintain a solvency ratio of at least 4%,

calculated by shareholders' equity divided by credit limit.

The main covenants also require the Group to supply our prime brokers with

financial statements and other information, including information on our trading

activities and trading counterparties. Furthermore, they require us to maintain

all relevant authorizations and memberships required in order to conduct our

business, and comply with all applicable laws, rules and regulations and place

restrictions on mergers and disposition of our assets outside the ordinary course

of our business.

The Group has not had any defaults or other breaches with regard to any

liabilities during 2023 or 2022.

27. Other liabilities held for trading


	At 31 December
	2023	2022
Other liabilities held for trading	243,765	32,115
Total other liabilities held for trading	243,765	32,115

Per year end the Group had other liabilities held for trading with a total value of

€243.8 million (2022: €32.1 million) comprising of loans denominated in digital

currencies or held with digital asset brokers.

FLOW TRADERS | ANNUAL REPORT 2023 127

28. Leases

The Group has lease contracts for office space, software and hardware with

lease terms between one and ten years.

Set out below are the carrying amounts of the Group’s right-of-use assets

(included under property and equipment and intangible assets) and lease

liabilities and the movements during the period:


At 31 December 2023
	Right-of-use assets	Lease liabilities
As at 1 January 2023	53,075	54,100
Additions	4,489	6,431
Depreciation expense	(10,097)	—
Disposals	—	—
Interest expense	—	2,296
Payments	—	(8,309)
Exchange rate differences	(1,121)	(1,476)
As of 31 December 2023	46,346	53,042


At 31 December 2022
	Right-of-use assets	Lease liabilities
As at 1 January 2022	15,010	16,175
Additions	45,129	43,403
Depreciation expense	(9,194)	—
Disposals	1,518	—
Interest expense	—	589
Payments	—	(9,613)
Exchange rate differences	612	3,546
As of 31 December 2022	53,075	54,100

In relation to the lease liabilities for an amount of €6.6 million (2022 €5.9 million)

there are liens on the property plant & equipment, mainly related to hardware

assets. For more information, please refer to notes 23 and 24 for further details

of the right-of-use assets.

29. Other liabilities


	At 31 December
	2023	2022
Long-term variable compensation payable	13,328	27,782
Subtotal non-current liabilities	13,328	27,782

Wages and variable compensation payable	46,267	62,096
Wage tax payable	969	1,400
Creditors and accruals	17,155	24,452
Subtotal current liabilities	64,391	87,948
Total other liabilities	77,719	115,730

Current and non-current variable compensation payable include amounts

payable to employees related to the cash portion of variable remuneration and

share appreciation rights (SARs) (see note 12- Employee expenses, note 31

Provisions and contingencies). As set out in the Remuneration report, the cash

portion of variable remuneration and the SARs programs are deferred and paid

in multiple installments. If the Group faces operational losses these variable

compensation installments may be reduced or forfeited.

30. Equity

Share capital and share premium

All ordinary shares rank equally with regard to the Company’s residual assets.

There are no preferred shareholders.


	At 31 December
	2023	2022
In issue 1 January	46,534,500	46,534,500
Treasury shares	(3,422,732)	(3,699,872)
Total	43,111,768	42,834,628

FLOW TRADERS | ANNUAL REPORT 2023 128

Ordinary shares

Holders of the Company’s ordinary shares are entitled to dividends and are

entitled to one vote per share at general meetings of the Company.

On 2 December 2022 the Company increased the issued and paid up share

capital from €4,653,450 to €162.870.750 with 46,534,500 shares with a nominal

value of €3.50 each instead of €0.10 each. The share capital increase was carried

out against the Company share premium account. During the year the

authorized capital of the Company was increased from €10 million to €350

million consisting of 100 million common shares of which 46,534,500 shares are

issued.

Treasury shares

As at 31 December 2023 Flow Traders Ltd and its subsidiaries held 3,422,732

(2022: 3,699,872) of ordinary shares (treasury shares). Treasury shares held by

the Group are not cancelled and are recognized at cost and deducted from

Equity. No gain or loss is recognized in the P&L on the purchase, sale, issue or

cancellation of the Group’s own equity instruments. Any differences between

the carrying amount and the consideration, if reissued, is recognized in equity.

The purchases of treasury shares on the market are intended for hedging of our

employee share plan obligations or for capital management purposes.

Share-based payment reserve

The share based payment reserve is used to recognize the grant date fair value

of shares granted to employees including the value of reinvested dividends on

unvested shares. At the delivery of the shares to the employees the shares will

be reclassified reducing the Share Based Payment Reserve and increasing the

Share Premium Account. Please also refer to note 12 - Employee Expenses.

Currency translation reserve

The translation reserve comprises all foreign currency differences arising from

the translation of the financial statements of foreign operations. This also

includes the hedge results.

Fair value reserve

The fair value reserve comprises the fair value movements on all Investments

measured at fair value through other comprehensive income of the Group.

General distributions

Pursuant to Article 24.1 of the Company’s Articles of Association, the Board, with

the approval of the Non-Executive Directors, has decided that of the profit for

2023 (totaling €36.2 million), an amount of € 19.5 million shall be added to the

reserves. The remaining amount of € 16.7 million is at the disposal of the General

Meeting of Shareholders (General Meeting).

Dividends

The Board declared a total cash dividend of €0.45 per share and this will be paid

out to shareholders for the financial year 2023, subject to a 15% dividend

withholding tax. An interim cash dividend of €0.30 per share was paid out in

August 2023. This means that the final cash dividend proposal for a non-binding

advisory vote to the General Meeting on 13 June 2024 is €0.15 per share.

31. Provisions and contingencies

The Group operates in various legal, administrative, tax and regulatory

jurisdiction. From time to time, the Group is involved in proceedings concerning

matters arising within the normal course of business. The outcomes of these

proceedings are difficult to assess and may involve significant judgement and

estimation uncertainty.

Provisions

The Group have estimated and recognized provisions for a total of €4.1 million

as of 31 December 2023 (2022: nil) related to regulatory claims. This amount is

presented in Provisions on the Statement of Financial Position. The amount

raised relates to alleged violations of trading regulations, the outcome of which

is uncertain. The Group estimated the provision using assumptions based on

observable historical settlements from similar regulators and for similar alleged

violations in combination with internal recalculations of relevant trading

activities. The provisions are recognized within Other Expenses in the Statement

of Profit or Loss for the year ended 31 December 2023. The carrying value of the

provision is most sensitive to the assumption based on historical cases. A

reasonably possible 20% change in that assumption would result in a €360k

increase or decrease in the provisions' carrying value.

FLOW TRADERS | ANNUAL REPORT 2023 129


	Legal	Total
As at 1 January 2023	—	—
Provisions made during the year	4,111	4,111
Provisions used during the year	—	—
Provisions reversed during the year	—	—
Unwind of discount	—	—
As of 31 December 2023	4,111	4,111

The Group's judgement is that the settlement of these amounts will be within 12

months of 31 December 2023. The amount of provisions for the year ending 31

December 2022 was nil.

Cash incentive provided to employees

Up until and including 2019, eligible employees could participate in an employee

incentive plan and were eligible for a cash incentive depending on their share

position in the Company. One of the conditions for this cash incentive is that the

employee needs to be employed at the Company at time of the payment of the

cash incentive. Payments will be made in the first, second, third, fourth and fifth

year of the plan. Based on IAS 19, costs related to the cash incentive may not be

recognized until the employee fulfills the service obligation. Therefore these

costs will be recognized in future years in profit and loss. In 2023 the Company

recognized €0.4 million of costs relating to this plan (2022: €1.8 million).

As from 2020 certain employees receive part of their variable compensation in

share appreciation rights (SARs). The SARs vest in equal installments over a

period of four to five years subject to the condition that the employee remains

employed on the vesting date. The SARS are expenses and recognized in the

financial statements in line with the IFRS 2 Share based payment - cash settled

accounting rules (refer also to note 12 - Employee Expenses).

The contingent liability from these plans are as follows:


	2024	2025	2026	2027	Total
SARs 2020	105	35	—	—	140
SARs 2021	247	323	107	—	677
SARs 2022	336	222	—	—	558
Total	688	580	107	—	1,375

Guarantees

Flow Traders B.V., Flow Traders US Holding LLC, Flow Traders US LLC and Flow

Traders US Institutional Trading LLC (collectively “Guarantors”) have provided

several guarantees for the obligations of Flow Traders US Institutional Trading

LLC, Flow Traders US Holding LLC and Flow Traders US LLC (collectively

“Beneficiaries) to external counterparties in relation to trading relationships.

Obligation under the guarantees require Guarantors to fulfil claims of the

Beneficiaries once it has not fulfilled one of its obligations directly related to the

trading relationships. These guarantees are in effect for periods ranging from 1

year to an indefinitive term as of the signing date of the agreement, which can

be withdrawn with 1 week notice.

Contingent Liabilities

The Group’s calculation of tax liabilities involves dealing with uncertainties in the

application of complex tax laws in a multitude of jurisdictions across EMEA, Asia

and the Americas. In this context, it is possible that tax exposures which have

not yet materialized may result in different interpretation of local rules. As of 31

December 2023, management concluded that it is probable that the tax

authority in the Netherlands will accept our treatment of interest limitation rules

(article 15b paragraph 6(c)). It is possible that different interpretation of local

rules may result in tax exposures from timing differences.

Contingent Assets

Flow Traders Investment Limited (FTIL) held both digital assets and fiat currency

on FTX Trading Ltd.’s (FTX) digital asset exchange prior to FTX filing bankruptcy

in November 2022. As a result of that bankruptcy, FTIL derecognised their

balances held on FTX’s platform during the year ended 31 December 2022. FTIL

subsequently filed a customer claim with the bankruptcy estate in September

2023. As a result of the filing, FTIL is an FTX Debtor under the bankruptcy

proceedings.

FLOW TRADERS | ANNUAL REPORT 2023 130

In October 2023, FTX announced a proposed settlement plan which included a

Preference Settlement Amount. The Preference Settlement Amount, if

approved, would allow FTX Debtors the opportunity to resolve any liabilities and

claims with FTX on a net basis. As of 31 December 2023, the Group has

concluded that an inflow of economic benefit from the Preference Settlement

Amount is probable, but not virtually certain (hence, no asset has been

recognized as of 31 December 2023). Additionally, the financial effect is

impractical to estimate as there are unknown resolutions to specifics of the

Preference Settlement Amount. In addition to the Preference Settlement

Amount, the Group is also exploring options for a sale of its claim.

32. Related parties

General

The executive and non-executive directors of the Board are considered the

persons responsible for managing, controlling and supervising the Group.

During the year ended 31 December 2023, the Group engaged with Roger

Hodenius, a former non-executive director of the Board (cessation of

appointment in April 2023), as an advisor. There were no amounts paid for this

engagement during the year ended 31 December 2023.

Board and non-executive directors compensation

The Board and non-executive director compensation for 2023 and 2022

comprises base salaries and variable compensation paid in cash is short-term in

nature.


Remuneration of the executive and non-executive directors					2023
	Base salary	Cash from profit- share	Share- based payments	Extra- ordinary	Total
Executives	399	733	333	8	1,472
Non-executives	901				901


Remuneration of the executive and non-executive directors					2022
	Base salary	Cash from profit- share	Share- based payments	Extra- ordinary	Total
Management Board	499	2,650	2,650	16	5,815
Supervisory Board	620				620

Flow Traders Foundation

As one of Flow Traders’ Non-Executive Board members sits on the Board of the

Flow Traders Foundation (“Foundation”), the Foundation is considered a related

party.

In 2020 Flow Traders established the Flow Traders Foundation, a Charity or

Foundation (“Stichting”) to better structure its historic engagement in giving to

others in society who need (financial) help. During 2020 Flow Traders

established the funding to make sure that a significant financial basis has been

laid so that the Foundation has the financial means to make not only an annual

but also a structural impact and meets its purpose.

In 2023 Flow Traders contributed a total value of €0.5 million (2022: €0.6

million) related to the Multiyear right to appoint charities the Foundation

supports as the main shirt sponsor of a Dutch professional football club. The

Company also reserved an amount from the 2023 variable remuneration pool for

employees for donation to the Foundation of €0.2 million in 2023 (2022: €0.4

million).

In addition, as part of donation agreements between certain Non-Executive

Directors to the Board and the Foundation, the Foundation is obligated to invest

the donations received from this member into shares of the Company. In 2023

the Foundation received a donation of €0.5 million from current and former

Non-Executive Board members, which it used to purchase 21,151 shares in Flow

Traders Ltd. against a share price of €23.64.

FLOW TRADERS | ANNUAL REPORT 2023 131

33. Group companies


Subsidiaries
	Country of incorporation	Ownership interest
		2023	2022
Flow Traders B.V.	Netherlands	100%	100%
Flow Traders Technologies B.V.	Netherlands	100%	100%
INIT Capital B.V.	Netherlands	100%	100%
Flow Traders Investments B.V.	Netherlands	100%	100%
Flow Traders Holding LLC	USA	100%	100%
Flow Traders U.S. Holding LLC	USA	100%	100%
Flow Traders U.S. LLC	USA	100%	100%
Flow Traders U.S. Institutional Trading LLC	USA	100%	100%
FTTNY LLC	USA	100%	100%
Flow Traders Asia Pte. Ltd.	Singapore	100%	100%
Flow Traders Hong Kong Ltd	Hong Kong	100%	100%
Flow Traders Hong Kong Services Ltd	Hong Kong	100%	100%
Flow Traders UK Services Ltd	United Kingdom	100%	100%
Flow Traders London Ltd	United Kingdom	100%	100%
Flow Traders Technologies SRL	Romania	100%	100%
Flow Traders Investments Limited	Jersey	100%	100%

Other branches

The Group has the following branches:


	Trading Name	Country
Paris	Flow Traders B.V. (Paris Branch)	France
Milan	Flow Traders B.V. (Milan Branch)	Italy
Shanghai representative office	Flow Traders Hong Kong Ltd. (Shanghai)	China
Hong Kong	INIT Capital B.V. (Hong Kong)	China
Seoul	Flow Traders Asia Pte. Ltd. (Branch)	Korea
Chicago	Flow Traders U.S. LLC	United States

Significant restrictions

The Group does not have significant restrictions on its ability to access or use its

assets and settle its liabilities other than those resulting from the supervisory

frameworks within which its subsidiaries operate. Please refer to the Capital

Management section of this report for more information.

FLOW TRADERS | ANNUAL REPORT 2023 132

34. Financial risk management

Overview

The Group is exposed to the following risks arising from financial instruments:

▪ Operational risk;

▪ Credit risk;

▪ Market risk;

▪ Foreign exchange risk;

▪ Interest Rate risk;

▪ Liquidity risk;

▪ Concentration risk.

This note presents information about the Group’s exposure to each of the above

risks, the Group’s objectives, policies and processes for measuring and

managing risk, and the Group’s management of our liquidity and capital.

Operational risk

Operational risk is the risk of loss resulting from inadequate or failed internal

processes, people and systems or from external events.

Our Group Operational Risk framework contributes to raise awareness of these

risks to all our employees and promotes a risk mitigation culture in all our

processes. This includes documenting of procedures and periodically updating

of this documentation.

The risk governance and independence of the Risk team ensures that our risk

appetite is appropriately implemented, monitored and reported to

management on a regular basis. We maintain an internal operational risk event

database that captures any incident that may have occurred (irrespective if it

led to a financial loss/profit or not). We routinely perform an in-depth analysis

of these incidents in order to avoid a reoccurrence.

Every year, we conduct Risk Control Self Assessments (RCSA) across the

organization to update what our main inherent risks are and which could be the

most impactful in order to manage them to be within our risk appetite.

Any breach of risk appetite is escalated to management. A decision is then

made as to whether we should mitigate, defer or accept the breach. If

mitigation is considered to be the appropriate action, a Taskforce is put in place

to bring back the residual risk scoring within our risk appetite. This ongoing

vigilance ensures we dedicate the appropriate amount of time and resources to

improve our control environment in a consistent and risk-based manner.

Credit risk

Credit risk is the risk of financial loss to the Group if a counterparty to a financial

instrument fails to meet its contractual obligations, and can also arise from the

settlement of off-exchange transactions.

At the end of the reporting period, the maximum exposure to credit risk is

represented by the carrying amount of each financial asset in the consolidated

statement of financial position. These amounts significantly exceed expected

loss in the event of counterparty default, as expected loss takes into account

the likelihood of such an event and collateral or security. The likelihood of

counterparty default is deemed to be remote due to the creditworthiness of the

counterparties and the central counterparties. The maximum exposure to credit

risk at the reporting date was as follows:


Carrying amount	At 31 December
	2023	2022
Cash and cash equivalents	5,708	8,612
Trading receivables	8,101,419	6,022,354
Other receivables	20,675	24,708

Credit risk related to transactions on exchanges is limited since these are

guaranteed by the central counterparty or clearing house related to that

exchange. Members of these clearing houses are required to deposit substantial

amounts of cash, bonds or equities as collateral for any failure to settlement of

trading. While still a limited part of our business, there is an inherent risk related

to transactions on digital asset exchanges and protocols, both centralized and

decentralized. Additionally, this risk is mitigated by strict onboarding

procedures and limiting the value traded on exchange to minimize the

maximum risk.

FLOW TRADERS | ANNUAL REPORT 2023 133

The Group manages credit risk through its Risk department that provide specific

guidelines, rules and procedures for identifying, measuring and reporting credit

risk.

Policies include amongst others;

▪ limits for individual product types

▪ limits per counterparty

▪ limits on the duration of the exposure

▪ limits for settlement types

▪ strict monitoring procedures for late settlements

▪ limits to exchanges

Creditworthiness of counterparties is continuously assessed and counterparty

exposures are monitored on an intraday basis.

Offsetting financial assets and financial liabilities

The disclosures set out in this paragraph include financial assets and financial

liabilities that:

▪ are offset in the Group’s statement of financial position; or

▪ are subject to an enforceable master netting arrangement or similar

agreement that covers similar financial instruments, irrespective of whether

they are offset in the statement of financial position.

The similar agreements include derivative clearing agreements, global master

repurchase agreements, and global master securities lending agreements.

Similar financial instruments include derivatives, sales and repurchase

agreements, reverse sale and repurchase agreements, securities borrowing and

securities lending agreements. Financial instruments, such as loans and

deposits, are not disclosed in this paragraph unless they are offset in the

statement of financial position.

The ISDA and similar master netting arrangements do not meet the criteria for

offsetting in the statement of financial position. This is because they create a

right to offset recognized amounts for the parties to the agreement that is

enforceable only following an event of default, insolvency or bankruptcy of the

Group or the counterparties or following other predetermined events.

In addition, the Group and its counterparties do not intend to settle on a net

basis or to realize the assets and settle the liabilities simultaneously.

The Group has outsourced collateral management to its prime brokers. It can

receive and grant collateral in the form of cash and marketable securities in

respect of the following transactions:

▪ derivatives;

▪ sale and repurchase, and reverse sale and repurchase agreements; and

▪ securities lending and borrowing.

The Group receives and grants collateral in the form of cash and marketable

securities as set out in notes 17 and 26 in respect of derivatives (including

swaps). Such collateral is subject to standard industry terms including, where

appropriate, an ISDA Credit Support Annex. This means that securities received/

granted as collateral can be pledged or sold during the term of the transaction,

but have to be returned on maturity of the transaction. The terms also give each

party the right to terminate the related transactions on the counterparty’s

failure to post collateral.

Offsetting

The Group has various netting agreements in place with counterparties to

manage the associated credit risks. Such arrangements primarily include:

securities borrowing and lending arrangements, and over-the-counter and

exchange traded derivatives. These netting agreements and similar

arrangements generally enable the counterparties to offset liabilities against

available assets received in the ordinary course of business and/or in the event

of the counterparty’s default. The offsetting right is a legal right to settle, or

otherwise eliminate, all or a portion of an amount due by applying an amount

receivable from the same counterparty against it, thus, reducing credit

exposure. However, the offsetting criteria in IFRS 9 are not met in all cases.

FLOW TRADERS | ANNUAL REPORT 2023 134


	At 31 December 2023
	Offsetting recognized on the statement of financial position			Netting potential not recognized on the statement of financial position		Assets not subject to netting arrangements		Maximum exposure to risk
	Gross assets/ liabilities before offset	offsetting with gross liabilities (IAS 32)	Net positions recognized on the statement of financial position	Netting Potential	Positions after consideration of netting potential	Positions not subject to netting arrangements	Positions recognized in the statement of financial position	After consideration of netting potential
Financial assets
Long positions, cash market products and amounts receivable from clearing agent	14,704	(1,105)	13,598	(12,947)	652	—	13,598	652
Other assets held for trading	—	—	—	—	—	170	170	170
Total financial assets	14,704	(1,105)	13,598	(12,947)	652	170	13,768	822

Financial liabilities
Short positions, cash market products amounts payable to clearing agents, and borrowings	14,052	(1,105)	12,947	(12,947)	—	—	12,947	—
Other liabilities held for trading	—	—	—	—	—	244	244	244
Total financial liabilities	14,052	(1,105)	12,947	(12,947)	—	244	13,190	244

FLOW TRADERS | ANNUAL REPORT 2023 135


	At 31 December 2022
	Offsetting recognized on the statement of financial position			Netting potential not recognized on the statement of financial position		Assets not subject to netting arrangements		Maximum exposure to risk
	Gross assets/ liabilities before offset	offsetting with gross liabilities (IAS 32)	Net positions recognized on the statement of financial position	Netting Potential	Positions after consideratio n of netting potential	Positions not subject to netting arrangements	Positions recognized in the statement of financial position	After consideration of netting potential
Financial assets
Long positions, cash market products and amounts receivable from clearing agent	12,002	(1,103)	10,899	(10,283)	616		10,899	616
Other assets held for trading						58	58	58
Total financial assets	12,002	(1,103)	10,899	(10,283)	616	112	10,957	674

Financial liabilities
Short positions, cash market products amounts payable to clearing agents, and borrowings	11,386	(1,103)	10,283	(10,283)	—		10,283	—
Other liabilities held for trading						32	32	32
Total financial liabilities	11,386	(1,103)	10,283	(10,283)	—	32	10,315	32

FLOW TRADERS | ANNUAL REPORT 2023 136

Market risk

The market risk for the Group relates to the risk of the value of a financial

instrument fluctuating because of changes in factors including, but not limited

to, interest rates, volatilities, currency rates, future dividend expectations and

equity prices. The Risk department monitors market risk exposure on a

continuous intraday basis. Based on the limits set per product or the aggregated

risk for the Group, limit breaches will trigger action from the Risk department in

order to reduce the risk back to within our preset limits.

In addition to the Group’s Risk department, the trading positions are also

monitored daily by Operations. The applicable haircut and margins are

computed by the Group’s prime brokers. The Risk department computes the

haircut using internal models enabling intraday monitoring. Limits are set on

both capital- and credit usage. Long and short trading positions include

securities and derivatives such as: shares, American Depository Receipts (ADR’s)

s), options, warrants, futures, forward rate agreements (FRA’s), exchange-traded

products (ETP) and digital assets. All traded financial instruments are liquid

instruments. Therefore, our portfolio can always be liquidated within a short

time frame and with a limited cost impact.

The Group seeks to hedge its trading positions to minimize its risk for adverse

price movements and does not engage in long or short only positions. The

direction of market movements, i.e. what the Group considers directional

market risk taking, is not relevant for the Group because of our market-making

trading strategy. Due to the manner in which the Group hedges foreign

currency, interest rate risk and other price risk, the directional market risk is

close to zero. Therefore, no sensitivity analysis has been disclosed.

The overall market risk (including interest rate risk, credit risk, foreign currency

risk and settlement risk) of the financial assets and liabilities held for trading are

captured in the risk and margin requirements which the Group is required to

post at its prime brokers and clearing firms. The consolidated margin and

haircut requirements over 2023 are shown in the Capital management

paragraph. Although the positions are fully hedged, a minimum risk close to

zero remains as a result of inefficiencies in the models of the prime brokers.

Market risk factors relating to digital assets and liabilities

In a similar matter to traditional assets, the price of a digital asset or liability

fluctuates according to its supply and demand. We manage this risk by holding

digital assets in the same proportion as liabilities (long/short delta neutral

book). Per year end we had a total exposure to digital assets of € 0.2 million

(2022: € 0.4 million).

Foreign currency risk

The Group is exposed to currency risk arising from trading positions

denominated in a currency other than the respective functional currencies of

the Group entities, primarily the Euro, as well as United States dollars and

Singapore dollars.

Foreign currency risk also arises on net investments in foreign operations, as

well as net results of these foreign operations during the year. The Group

manages foreign currency risk through daily monitoring of the positions by

currency. Generally, the Group seeks to hedge foreign currency exposures in

currencies other than the functional currency. The Group does use financial

instruments to hedge the translation risk related to net investments in foreign

operations or net results of foreign operations. Due to the manner in which the

Group hedges foreign currency risk, the directional foreign currency risk is close

to zero. Therefore, no sensitivity analysis has been disclosed.

Interest rate risk

Interest rates will affect future profitability of the fair value of financial

instruments. The Group is exposed to interest rate risk as a result of mismatches

of arranged interest rates of assets and liabilities. The Group has limits in place

on interest rate gaps for stipulated periods. These limits ensure that interest

rate risks are hedged. Positions are monitored on a daily basis and hedging

strategies are used to ensure positions are maintained within established limits.

All financial instruments are held for trading purposes and are accounted for at

fair value on the statement of financial position. Positions carried on the

statement of financial position are short term and listed on exchanges and

therefore liquid and tradable.

As mentioned in the paragraph trading payables, the Group has a credit facility

available to facilitate the trading positions accounted for on the statement of

financial position. In order to match the liquidity and short holding period of

these trading positions, the facility has an interest rate payable, which is

floating. The Group runs a limited risk on the floating interest due to the fact

that the interest is also embedded in the funding and financing of the long/

short positions and in the ETP of the future. Due to the manner in which the

Group hedges interest rate risk, the directional interest rate risk is close to zero.

Therefore, no sensitivity analysis has been disclosed.

FLOW TRADERS | ANNUAL REPORT 2023 137

Other price risk

Equity price risk and commodity price risk arises from trading positions as well

as the Group’s investments in investments measured at fair value through other

comprehensive income or through profit and loss. In addition, for its option

positions, the implied volatility of the underlying contract is an additional risk

factor. Other factors to consider are time and dividend expectations.

The Group manages other price risks by defined limits in terms of individual

positions per product and aggregate position per trading desk relating to the

size of the exposure, concentrations, pricing and valuation parameters and

natural hedging between these long and short positions. As the Group is active

in liquidity provision and does not speculate on directional moves in underlying

values, the net delta positions of the portfolios should be close to zero.

In addition to daily internal monitoring measures, applicable haircut and

margins are computed by the Group’s prime brokers. The haircut analysis

measures all positions, individual and correlated, and reflects the different risk

components. The third-party haircut calculation confirms the internal

assessment that completes the Group’s overview of the risks that it is exposed

to on a daily and overnight basis. An overview of the overall market risk is

presented under the earlier "Market risk" section.

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the

obligations associated with its financial liabilities that are settled by delivering

cash or another financial asset. The Group’s approach to managing liquidity is to

ensure, as far as possible, that it will always have sufficient liquidity to meet its

liabilities when due, under both normal and stressed conditions, without

incurring unacceptable losses or risking damage to the Group’s reputation. The

Group’s cash position, as well as the other available credit lines with prime

brokers, is monitored on a daily basis.

Maturity based on contractual undiscounted cash flows is as follows:


	At 31 December 2023
	Carrying amount	Contractual cash flow	3 months or less
Payable for securities bought	7,906,238	7,906,238	7,906,238
Credit facilities	1,970,248	1,970,248	1,970,248
Unsettled mark to market derivatives liabilities	3,011	3,011	3,011
Total trading payables	9,879,497	9,879,497	9,879,497


	At 31 December 2022
	Carrying amount	Contractual cash flow	3 months or less
Payable for securities bought	5,694,655	5,694,655	5,694,655
Credit facilities	1,629,316	1,629,316	1,629,316
Unsettled mark to market derivatives liabilities	2,199	2,199	2,199
Total trading payables	7,326,169	7,326,169	7,326,169

Concentration risk

Concentration risk arises when a number of counterparties are engaged in

similar business activities, or activities in the same geographic region, or have

similar economic features that would cause their ability to meet contractual

obligations to be similarly affected by changes in economic, political or other

conditions. Concentrations indicate the relative sensitivity of the Group’s

performance to developments affecting a particular industry or geographic

location. The Group’s policies and procedures and the broad geographic and

industry spread of its activities limit its exposure to any concentration risk.

Additionally management has established credit limits for geographic and

counterparty exposures, which are monitored on a daily basis. We monitor the

distribution of assets and off-balance sheet items by geographic region and

industry sector on an ongoing basis.

FLOW TRADERS | ANNUAL REPORT 2023 138

Maturity analysis of financial assets and liabilities

The following table shows an analysis of the assets and liabilities according to

when they are expected to be recovered or settled.


Maturity Analysis			At 31 December 2023
	Total	Receivable/ payable on demand	Within 3 months	3 months to 1 year	>1 year
Assets
Cash and cash equivalents	5,708	5,708	—	—	—
Financial assets held for trading	5,496,795	5,496,795	—	—	—
Trading receivables	8,101,647	8,101,647	—	—	—
Digital assets held for trading	169,820	169,820	—	—	—
Other receivables	20,675	—	15,479	1,688	3,508
Investments fair value through OCI	20,083	—	—	—	20,083
Investments fair value through PL	6,485	—	—	—	6,485
Equity-accounted investments	4,807	—	—	—	4,807
Property and equipment	72,434	—	—	—	—
Intangible assets	2,678	—	—	—	—
Current tax assets	6,073	—	—	6,073	—
Deferred tax assets	9,945	—	—	—	9,945
Total assets	13,917,150	13,773,970	15,479	7,761	44,828
Liabilities
Financial liabilities held for trading	3,067,053	3,067,053	—	—	—
Trading payables	9,879,497	9,879,497	—	—	—
Digital liabilities held for trading	243,765	164,062	6,811	65,263	7,629
Lease liabilities	53,041	—	1,684	4,486	46,871
Other liabilities	81,830	—	42,277	26,225	13,328
Current tax liabilities	3,616	—	—	3,616	—
Deferred tax liabilities	2,506	—	—	2,506	—
Total liabilities	13,331,308	13,110,612	50,772	102,096	67,828

FLOW TRADERS | ANNUAL REPORT 2023 139


Maturity Analysis	At 31 December 2022
	Total	Receivable/ payable on demand	Within 3 months	3 months to 1 year	>1 year
Assets
Cash and cash equivalents	8,612	8,612	—	—	—
Financial assets held for trading	4,876,590	4,876,590	—	—	—
Trading receivables	6,022,355	6,022,355	—	—	—
Other assets held for trading	58,347	58,347	—	—	—
Other receivables	24,707	—	21,366	1,153	3,392
Investments measured at fair value through OCI	19,839	—	—	—	19,839
Investments measured at fair value through PL	1,928	—	—	—	1,928
Equity-accounted investments	4,958	—	—	—	4,958
Property and equipment	77,081	—	—	—	—
Intangible assets	1,967	—	—	—	—
Current tax assets	2,800	—	—	2,800	—
Deferred tax assets	5,503	—	—	—	5,503
Total assets	11,104,687	10,965,904	21,366	3,953	35,620

Liabilities
Financial liabilities held for trading	2,956,640	2,956,640	—	—	—
Trading payables	7,326,169	7,326,169	—	—	—
Other liabilities held for trading	32,115	—	32,115	—	—
Lease liabilities	84,611	—	53,584	—	31,027
Variable compensation payable	54,100	—	1,212	4,085	48,803
Other payables	31,119	—	—	31,119	—
Current tax liabilities	11,246	—	—	11,246	—
Deferred tax liabilities	2,372	—	—	—	2,372
Total liabilities	10,498,372	10,282,809	86,911	46,450	82,202

FLOW TRADERS | ANNUAL REPORT 2023 140

Liquidity and capital resources

Besides equity, the principal source of funds has been liquidity provided by the

prime brokers through uncommitted credit lines and margin financing, as well

as cash generated from our operating activities. As of 31 December 2023, the

Group held €5.7 million in cash and cash equivalents compared to €8.6 million

as of 31 December 2022. These balances are maintained primarily to support

operating activities, including ensuring that the Group has sufficient short-term

access to liquidity, and capital expenditures.

The Group maintains a highly liquid statement of financial position, with a large

portion of its total assets consisting of cash, highly liquid marketable securities

and short-term trading receivables (arising from securities transactions).

The Group actively manages its liquidity on an intraday basis and maintains

significant portfolio financing facilities with the prime brokers in order to

facilitate trading. These facilities are secured by cash and cash equivalents, as

well as all financial assets in accounts held at the respective prime brokers. The

Group has no outstanding borrowings other than the portfolio financing

facilities with prime brokers.

Capital management

Regulatory capital requirements

As a result of the corporate restructuring per 13 January 2023 the Group is not

subject to consolidated capital requirements under the EU Directive Investment

Firm Regulation (IFR) and Investment Firm Directive (IFD). Regulated Flow

Traders subsidiaries do comply with the local capital requirement regulations as

monitored by their respective National Competency Authority (NCA).

The Board monitors the return on capital as well as the level of dividends to

shareholders while complying with prime broker and regulatory capital

requirements. The available capital in the trading companies is monitored on a

daily basis to ensure that requirements are met at all times and sufficient capital

is available to support the Group’s strategy. Trading capital as at 31 December

2023 was €583.7 million (31 December 2022 €651.0 million).

35. Non-Financial Risks

The disclosure of non-financial risks, including information requests by the AFM

and DNB to investigate compliance with Dutch Money Laundering and Terrorist

Financing (Prevention) Act (“Wwft”), has been including on page 35.

36. Subsequent events

No material subsequent events have occurred since 31 December 2023 that

require recognition or disclosure in this year’s financial statements

37. Authorization of consolidated financial statements

Amsterdam, 29 February 2024


Executive Directors	Non-Executive Directors
▪ Mike Kuehnel (Chief Executive Officer)	▪ Rudolf Ferscha (Chairman)
▪ Hermien Smeets-Flier (Chief Financial Officer)	▪ Jan van Kuijk (Vice-Chairman)
	▪ Linda Hovius
	▪ Delfin Rueda
	▪ Paul Hilgers
	▪ Karen Frank

FLOW TRADERS | ANNUAL REPORT 2023 141

FLOW TRADERS | ANNUAL REPORT 2023 142

Flow Traders Ltd.


Parent Company balance sheet (Before result appropriation in thousands of euro)
For the year ended 31 December
	Note	2023	2022 (restated)
Assets
Equity-accounted investments	1	562,534	574,564
Total non-current assets		562,534	574,564
Cash and cash equivalents		23	591
Receivables from related parties	2	38,567	54,663
Other receivables		267	880
Current tax assets		236	—
Total current assets		39,093	56,134
Total assets		601,627	630,698
Liabilities
Liabilities to related parties	3	5,380	881
Other liabilities	6	3,393	3,625
Current tax liabilities	4	1,182	10,288
Total current liabilities		9,955	14,794
Deferred tax liabilities		—	729
Other non-current liabilities		5,835	8,860
Total non-current liabilities	5	5,835	9,589
Total liabilities		15,790	24,383
Equity
Share capital	7	162,871	162,871
Share premium	7	556	2,372
Fair value reserve	7	2,271	2,040
Currency translation reserve	7	18,072	24,899
Retained earnings	7	219,594	200,479
Other legal reserves	7	206,516	164,119
Treasury shares	7	(88,009)	(103,536)
Share based payment reserve	7	40,740	56,865
Results for the year	7	23,226	96,206
Total Equity before result appropriation		585,837	606,315
Total equity and liabilities		601,627	630,698

FLOW TRADERS | ANNUAL REPORT 2023 143


Parent Company income statement (in thousands of euro)
For the year ended 31 December
	Note	2023	2022 (restated)
Intercompany revenue	8	4,778	13,430
Intercompany expenses		380	313

Personnel expenses	9	3,726	6,331
Other expenses	10	3,005	14,977
Operating expenses		6,731	21,308

Operating result		(2,333)	(8,192)

Profit before tax		(2,333)	(8,192)
Tax expense	11	(901)	(1,544)
Share in result from participating interests, after taxation	1	37,583	133,475
Profit for the year		36,151	126,827

FLOW TRADERS | ANNUAL REPORT 2023 144

Notes to the parent company financial statements

All amounts in thousands of euro, unless stated otherwise.

Principles for the measurement of assets and liabilities and the

determination of the result

In setting the principles for the recognition and measurement of assets and

liabilities and determination of the result for its parent Company financial

statements, the Group applies the option provided in section 2:362 (8) of the

Netherlands Civil Code. The principles for the recognition and measurement of

assets and liabilities and determination of the result (hereinafter referred to as

principles for recognition and measurement) of the parent Company financial

statements are the same as those applied for the consolidated IFRS -EU financial

statements. Participating interests over which the Company has significant

influence, are measured at equity value. Please see notes to consolidated

statements chapter 1 to 4 for a description of the Group’s IFRS -EU principles.

The profit from participating interests consists of the Company’s share in the

results of these participating interests. Results on transactions, comparing the

transfer of assets and liabilities between (i) the Group and its participating

interests on (ii) between participating interests themselves, are not recognized.

Restatement of prior period error

Intercompany Cost-Sharing Arrangement

During 2023, the Company identified that management-related expenses

incurred by the Company which should have been recharged to subsidiaries

through a cost-sharing arrangement (“Arrangement”). The Arrangement allows

for the recharge of expenses to Flow Traders Holdings LLC and Flow Traders B.V..

The Arrangement allocates a percentage of expenses to each subsidiary (“Cost

Base”) as well as an additional mark-up (“Mark-up”). The Company concluded that

the financial effects of the Arrangement only became material from the year

ended 31 December 2018 onwards. The Company also identified that it had not

recognized expenses to which it pays a recharge to Flow Traders B.V. (“Upstream

expense”). The Upstream Revenue is a result of certain employees in Flow Traders

B.V. providing services to Flow Traders Ltd. (e.g. investor relations).

There was nil impact to the opening total equity before result appropriation as of

1 January 2022. This is a result of the following factors:

▪ The effect on profit after tax was nil for the period as the increase in

intergroup revenue by an amount of €37.7m was equally offset by a

combination of the decrease in share of results from equity-accounted

investments by an amount of €31.3m, the increase in expenses due to the

Upstream expense of €0.9m and an increase in tax expense by an €5.5m.

▪ There was no impact to the Balance Sheet due to the offsetting of the

increase in investment in subsidiary by €31.2m, due to the Company receiving

payment in-kind for the Arrangement, by the decrease from the impact of its

share in the results of the subsidiary. Additionally, the Company was in the

same fiscal unity group of the impacted subsidiary resulting in a nil impact to

tax liabilities.

There was nil impact to the closing total equity before result appropriation as of

31 December 2022. This is a result of the following factors:

▪ The effect on profit after tax was nil for the period as the increase in

intergroup revenue by an amount of €13.4m was equally offset by a

combination of the decrease in share of results from equity-accounted

investments by an amount of €10.9m, the increase in expenses due to the

Upstream expense of €0.3m and the increase in tax expense by an €2.2m.

▪ There was no impact to the Balance Sheet due to the offsetting of the

increase in investment in subsidiary by €10.9m, due to the Company receiving

payment in-kind for the Arrangement, by the decrease from the impact of its

share in the results of the subsidiary. Additionally, the Company was in the

same fiscal unity group of the impacted subsidiary resulting in a nil impact to

tax liabilities.

FLOW TRADERS | ANNUAL REPORT 2023 145

Finally, given the restated intergroup expenses, there was a change in

presentation of the intergroup revenue and intergroup expenses in the Income

Statement. The change in presentation is to present the gross revenues and gross

expenses where they had previously been stated net. There was nil impact to

Intergroup Result and Profit for the year as a result of this change in presentation

for any of the periods presented.

Reclassification of current liabilities to non-current liabilities

Long-term bonus payables of €8.86m had previously been incorrectly presented

as current liabilities in the 31 December 2022 financial statements. These liabilities

have been reclassified in the comparative figures to be presented Other non-

current liabilities within total non-current liabilities. The reclassification has nil

impact on the profit and loss or changes in equity. The relevant notes (Note 5 and

Note 6) have also been restated to incorporate the reclassification.

Reclassification of retained earnings into other legal reserves

As of 31 December 2023, it was determined that a portion of retained earnings

should be reclassified into an other legal reserves as required by the Dutch Civil

Code (see note 16). As a result, retained earnings as of 1 January 2022 and 31

December 2022 have been restated to reclassify €164.1m of retained earnings into

the other legal reserve. Of the €164.1m, €117.4m was reclassified as of 1 January

2022 and €46.7m was reclassified during the year ending 31 December 2022. The

reclassification is reflected in the Company’s balance sheet and Note 7. There was

nil impact to net profit/(loss). There was nil impact to net assets.

1. Equity accounted investments


	For the year ended
	2023	2022
Equity - accounted investments	562,534	574,564
Total investments in group companies	562,534	574,564

The movements of the investments in Group companies is as follows:


	For the year ended
	2023	2022
Balance at 1 January	574,564	549,979
Changes:
▪ exchange rate differences	(6,844)	9,389
▪ revaluation reserve	231	791
▪ share in result of investments	37,583	133,474
▪ dividend declared	(43,000)	(130,000)
▪ addition		10,931
Balance at 31 December	562,534	574,564

2. Receivables from related parties


	At 31 December
	2023	2022
Share based payment receivable subsidiaries	38,406	53,965
Current accounts	32	30
Receivables from employees	129	668
Balance at 31 December	38,567	54,663

Per 31 December 2023, the parent Company had mainly share based payment

receivables towards Flow Traders B.V. for € 23.6 million (2022: € 32.9 million),

Flow Traders US LLC € 8.5 million (2022: € 12.7 million) and Flow Traders Hong

Kong Services Ltd for € 4.4 million (2022: € 5.5 million).

3. Liabilities to related parties


	At 31 December
	2023	2022
Intercompany loans from group companies	5,380	881
Balance at 31 December	5,380	881

The liabilities to group companies pertain mainly to an intercompany loan from

Flow Traders Holding LLC of € 5.4 million (2022: € 0.9 million).

FLOW TRADERS | ANNUAL REPORT 2023 146

4. Current tax liabilities


	At 31 December
	2023	2022
Corporate income tax	1,182	10,288
Total current tax liabilities	1,182	10,288

5. Non-current liabilities


	At 31 December
	2023	2022 (restated)
Long term bonus payable	5,835	8,860
Deferred tax liabilities	—	729
Subtotal non-current liabilities	5,835	9,589

6. Other liabilities


	At 31 December
	2023	2022 (restated)
Wages and bonuses payables	1,963	2,561
Wages tax payable	413	33
Other current liabilities	1,017	1,031
Subtotal current liabilities	3,393	3,625

FLOW TRADERS | ANNUAL REPORT 2023 147

7. Equity


Statement of changes in equity (in thousands of euro)										2023
	Share capital	Share premium	Treasury Shares	Share based payment reserve	Currency translation reserve	Fair value reserve	Other legal reserves (restated)	Retained earnings (restated)	Net Profit / (loss)	Total
Balance at 1 January 2023	162,871	2,372	(103,536)	56,865	24,899	2,040	164,119	200,479	96,206	606,315
Profit	—	—	—	—	—	—	—	—	36,151	36,151
Total other comprehensive income	—	—	—	—	(6,827)	231	—	—	—	(6,596)
Total comprehensive income for the period	—	—	—	—	(6,827)	231	—	—	36,151	29,555

Transactions with owners of the Company
Transfer to retained earnings	—	—	—	—	—	—	—	96,206	(96,206)	—
Transfer to other legal reserve	—	—	—	—	—	—	42,397	(42,397)	—	—
Dividends	—	—	—	—	—	—	—	(34,632)	(12,988)	(47,620)
Repurchase of shares	—	—	15,528	—	—	—	—			15,528
Share based payments	—	(1,816)		(16,125)	—	—	—			(17,941)
Total transactions with owners of the Company	—	(1,816)	15,528	(16,125)	—	—	42,397	19,177	(109,194)	(50,033)
Balance at 31 December 2023	162,871	556	(88,008)	40,740	18,072	2,271	206,516	219,656	23,163	585,837

The Board declared a total cash dividend of €0.45 per share and this will be paid out to shareholders for the financial year 2023, subject to a 15% dividend withholding

tax. An interim cash dividend of € 0.30 per share was paid out on 19 August 2023. This means that the final cash dividend proposal for a non-binding advisory vote to the

General Meeting of 13 June 2024 is € 0.15 per share.

*please see note 16 for additional information about legal reserves.

FLOW TRADERS | ANNUAL REPORT 2023 148


Statement of changes in equity (in thousands of euro)										2022
	Share capital	Share premium	Treasury Shares	Share based payment reserve	Currency translation reserve*	Fair value reserve*	Other legal reserve (restated)*	Retained earnings (restated)	Net Profit / (loss)	Total
Balance at 1 January 2022	4,653	161,974	(105,644)	50,523	15,510	1,249	117,417	191,103	71,384	508,169
Profit	—	—	—	—	—	—	—	—	126,827	126,827
Total other comprehensive income	—	—	—	—	9,389	1,936	—	—	—	11,325
Total comprehensive income for the period	—	—	—	—	9,389	791	—	1,145	126,827	138,152
Conversion of share premium to share capital	158,218	(158,218)	—	—	—	—	—	—	—	—
Transfer to retained earnings							—	71,384	(71,384)	—
Transfer to other legal reserve	—	—	—	—	—	—	46,702	(46,702)	—	—
Dividends	—	—	—	—	—	—	—	(15,306)	(30,621)	(45,927)
Repurchase of shares	—	—	(15,046)		—	—	—	—	—	(15,046)
Share based payments	—	(1,384)	17,154	6,342	—	—	—	—	—	22,112
Total transactions with owners of the Company	158,218	(159,602)	2,108	6,342	—	—	46,702	8,231	(102,005)	(40,006)
Balance at 31 December 2022	162,871	2,372	(103,536)	56,865	24,899	2,040	164,119	200,479	96,206	606,315

*please see note 16 for additional information about legal reserves.

FLOW TRADERS | ANNUAL REPORT 2023 149

8. Intergroup revenues

The Company generates revenues providing management services to its

subsidiaries (customers). There were no other sources of revenue from contracts

with customers.

The Company’s performance obligation is to provide management services

throughout the course of the year. The consideration for these services is

recognized on a cost-plus margin arrangement, where the cost base is

determined based on the costs incurred to provide the services. Revenue is

recognized as and when the control of the services is transferred to the

customers.

9. Employee expenses


	For the year ended
	2023	2022
Wages and salaries	950	1,119
Social security charges	29	58
Recruitment and other employment costs	511	58
Variable compensation paid in cash and shares	2,236	5,096
Total employee expenses	3,726	6,331

10. Other expenses


	For the year ended
	2023	2022
Advisors and assurance	2,365	14,494
Regulatory costs	66	56
Shareholder meeting costs	149	178
Various expenses	426	249
Other expenses	3,006	14,977

11. Taxation


	For the year ended
	2023	2022
Tax recognized in profit or loss	(901)	(3,708)
Current tax expense	(390)	(4,437)
Movement deferred tax asset	—	—
Movement deferred tax liability	—	729
Adjustment for prior years	(511)	—
Tax expense	(901)	(3,708)

Reconciliation of effective tax rate


	For the year ended
	2023	2022
Profit before tax	(8,224)	(21,287)
Dutch standard tax rate	25.8%	25.8%
Income tax expected	(2,122)	(5,492)
Actual income tax charge	(901)	(3,707)
In percentage	11.0%	17.4%
Difference in tax expense	(14.8%)	(8.4%)

The effective tax rate differs from the (nominal) statutory tax rate. This difference

is mainly caused by applying the Dutch innovation box regime and by non-

deductible share plan costs.

12. Other contingent liabilities

Fiscal unity

The parent Company formed part of the Group fiscal unity for corporate income

tax purposes until January 2023. All companies in the fiscal unity are jointly and

severally liable for the tax obligations of the fiscal unity. The parent Company’s

tax assets or liabilities face the tax authorities on behalf of the fiscal unity. The

parent Company is no longer part of the Group’s fiscal unity after January 2023.

FLOW TRADERS | ANNUAL REPORT 2023 150

Cash incentive provided to employees

As from 2020 certain employees receive part of their variable compensation in

share appreciation rights (SARs). The SARs vest in equal installments over a

period of four to five years subject to the condition that the employee remains

employed on the vesting date. The SARS are expenses and recognized in the

financial statements in line with the IFRS 2 Share based payment - cash settled

accounting rules (refer also to note 9 - Employee Expenses).

The contingent liability from these plans are as follows:


	2024	2025	2026	2027	Total
SARs 2021	24	35	—	—	59
SARs 2022	65	93	107	—	265
SARs 2023	—	—	—	—	—
Total	89	128	107	—	324

Claims

The Company is not involved in any significant legal procedures and/or claims.

There are no other contingent liabilities.

13. Related parties

For more information, refer to note 32 related parties in the consolidated financial

statements.

14. Profit appropriation

For more information, refer to note 9 earnings per share and note 30 equity in the

consolidated financial statements.

15. Auditor fees

With reference to Section 2:382a (1) and (2) of the Netherlands Civil Code, the

following fees for the financial year have been charged by Ernst & Young

Accountants LLP and its member firms and affiliates to the Group, its subsidiaries

and other consolidated entities, which did not include tax advice:


		For the year ended 2023
	Ernst & Young Accountants LLP	Other EY member firms and affiliates	Total EY
Statutory audit of annual accounts	650	85	735
Other assurance services	350	7	357
Tax advice	—
Other non audit services
Total auditor fees	1,000	92	1,092


		For the year ended 2022
	Ernst & Young Accountants LLP	Other EY member firms and affiliates	Total EY
Statutory audit of annual accounts	382	78	459
Other assurance services	28	16	43
Other non audit services	49	0	49
Total auditor fees	458	94	552

16. Legal Reserve

As per the Dutch Civil Code requirement, the Company has a legal reserve which

is comprised of foreign currency translation reserve, fair value reserve and our

minimum regulatory capital requirements across the Company’s subsidiaries

(Other legal reserve).

17. Subsequent events

There were no material or significant subsequent events of the Company which

require disclosure.

FLOW TRADERS | ANNUAL REPORT 2023 151

Authorization of Company financial statements

Amsterdam, 29 February 2023


Executive Directors	Non-Executive Directors
▪ Mike Kuehnel (Chief Executive Officer)	▪ Rudolf Ferscha (Chairman)
▪ Hermien Smeets-Flier (Chief Financial Officer)	▪ Jan van Kuijk (Vice-Chairman)
	▪ Linda Hovius
	▪ Delfin Rueda
	▪ Paul Hilgers
	▪ Karen Frank

FLOW TRADERS | ANNUAL REPORT 2023 152

FLOW TRADERS | ANNUAL REPORT 2023 153

Other

Information

2023

Investor Relations

Investor Relations (IR) focuses on optimizing the

communication and understanding between Flow

Traders and the investor community, its advisors and

the analyst community. By attending broker

conferences, organizing roadshows to institutional

investors after Half Year and Full Year results,

organizing investor conference calls, analyst days

and the Annual General Meeting, Flow Traders

further optimizes the information stream to the

market. Flow Traders has a corporate website

(www.flowtraders.com/investors) where, among

other information, its financial calendar, press

releases, presentations, reports and the dividend

policy can be found. IR is the first point of contact

for interested investors, shareholders and analysts.


Investor Relations contact information
Eric Pan	Head of Investor Relations
Telephone	+31 207 996 180
E-mail	investor.relations@flowtraders.com

FLOW TRADERS | ANNUAL REPORT 2023 154

Share information

Flow Traders Ltd. (formerly known as Flow

Traders N.V.) shares are listed on Euronext

Amsterdam and are included in the

Amsterdam Midcap Index (AMX), carrying a

weight of 1.18 percent as of the end of 2023.

Flow Traders shares are also included in

several other indices issued by leading index

providers, such as MSCI (MSCI Netherlands

IMI 25/50 Price Return USD Index), FTSE

(FTSE Developed ex US All Cap Net Tax

Index) and Euronext (Euronext AEX All-

Share Index, AEX All-Tradable Index,

Euronext 150 Index, AEX Financials Index).

Introduction and key figures


Key share information
ISIN*	NL0011279492
Bloomberg ticker:	FLOW NA
Reuters ticker:	FLOW.AS
Number of shares outstanding	46,534,500
Number of shares in treasury	3,422,732
Free float**	70%
Market cap at year end (€)	€835,759,620

Source: Euronext as per 31 December 2023

* ISIN as of 16 January 2023: BMG3602E1084


Share price performance
Opening price 2 January 2023	€21.72
Annual highest price (closing)	€26.90
Annual lowest price (closing)	€16.07
Closing price 29 December 2023	€17.96

Source: Euronext.

Performance and key figures


Key share information
Normalized earnings per share	€1.38
Normalized P/E ratio	13.0x
Interim dividend per share	€0.30
Final dividend per share	€0.15
Total dividend per share	€0.45
Dividend yield	2.5%
Year-end share price*	€17.96

*Source: Euronext, based on year-end closing.

Financial calendar


Financial calendar
Q1 Trading Update	25/04/2024
Annual General Meeting	13/06/2024
Final dividend 2023 ex-div. date	17/06/2024
Final dividend 2023 record date	19/06/2024
Final dividend 2023 payment date	21/06/2024
Q2 / H1 results release	25/07/2024

FLOW TRADERS | ANNUAL REPORT 2023 155

Double materiality

In 2023 we refreshed the materiality assessment

which was conducted in late 2020. A double

materiality assessment was conducted as a critical

input for the ESG sustainability strategy to be

implemented in the course of 2024. Based on the

guidance from the European Sustainability

Reporting standards (ESRS), the double materiality

assessment (DMA) reflects the impact materiality

and the financial materiality.

Double Materiality Process

The DMA was conducted by a cross-business

project team, assessing - by means of group

dialogue - 120 ESG topics from nearly 90 sub-sub

topics stipulated by the ESRS 1 standard, enriched

with around 30 additional topics from examples of

IROs provided in the ESRS topical standards. Flow

Traders’ double materiality process consists of

eight steps as outlined below:

1. Understanding context

Stakeholders that are or could be affected by Flow

Traders, and stakeholders that affect or could

affect Flow Traders are central to the materiality

assessment process. We have the following five

stakeholder groupings: political & regulatory,

suppliers, own organization, institutional

counterparties, financial & social interest. To

understand their concerns and how their interests

may be impacted, we continuously engage with

these stakeholders to support identification of

impacts, risks, and opportunities that should be

considered in the materiality assessment. We

collect insights for improvement actions and

receive feedback on strategy, performance and

progress.

2. Determining potentially relevant

sustainability matters topics

We monitor the sustainability context of our

activities and business relationships by reviewing

relevant sources of information about our industry

and peers, international standards and (upcoming)

legislation, media and ESG rating agencies. Based

on these analyses, insights from stakeholder

engagement and internal impact and risk

assessments, an initial list of potential material

sustainability matters per value chain actor is

drafted.

3. Identifying impacts, risks and

opportunities

We use the insights gained from stakeholder

engagements during the year and other relevant

sources to identify sustainability matters and

impacts, risks and opportunities (IROs) that are

relevant to us. Impacts include positive and

negative, actual and potential, and short- and

long-term impacts from our operations and across

our value chain. Risks and opportunities relate to

our ability to continue to use or obtain the

resources needed in our business processes and

our ability to rely on relationships needed in

business processes on acceptable terms. Risks and

opportunities may pertain to financial capital,

intellectual capital, human capital, social and

relationship capital, and natural capital. When

identifying material IROs, all relevant direct and

indirect value chain actors were considered.

However, in accordance with the ESRS IRO

guidance, the relationships that are likely to be

associated with material IROs are those which we

have leverage or may be able to exert influence.

4. Assessing the impact materiality

To identify the sustainability matters that are most

relevant to us and our stakeholders, the materiality

assessment is conducted on the most granular

level, so-called sub-sub topics. We assess the

materiality of positive and negative impacts

resulting from our business activities, based on the

scale, scope, and irremediable character (the

severity) including the likelihood that the event will

occur, and the level of stakeholder concern. For

potential negative human-rights related impacts,

severity takes precedence over likelihood.

5. Assessing the financial materiality

To identify the sustainability matters that are most

relevant to us related to (potential) future financial

effects, we applied the sub-sub topics identical as

in step 4. We assess the anticipated financial effect

of each risk and opportunity based on magnitude

and likelihood. The magnitude of the financial

effect considers effects on the ability to continue

to use resources, including access, availability and

prices. It also includes our ability to continue to

rely on relationships, and taking into account

reputational effects and potential actions by

stakeholders in the short, medium and long term.

Likelihood reflects the probability that a risk or

opportunity event will occur.

6. Deciding on thresholds for materiality

The assessment results in a materiality score for

each impact, risk and opportunity, and we use

these impact scores to apply thresholds for

materiality. Thresholds are determined separately

for negative impacts, positive impacts, risks and

opportunities. For creating an overview of material

sustainability matters, impacts, risks and

opportunities are clustered into material

sustainability matters. Sustainability matters may

be material from the impact perspective, the

financial perspective or both.

FLOW TRADERS | ANNUAL REPORT 2023 156

7. Strategic implications

The outcomes of the materiality assessment serve

as input for the ESG sustainability strategy.

Material ESG sustainability matters are linked to

themes in the ESG sustainability strategy, and the

relevant value drivers for each of those strategic

themes. If new material ESG sustainability matters

are identified, they are added to the ESG

sustainability strategy. If new ESG sustainability

risks are identified, they are included in our risk

inventory and managed in line with our Enterprise

Risk Management Framework. We define

measures to manage the related impacts, risks and

opportunities for each material ESG sustainability

topic, including metrics, targets, policies and

action plans.

8. Results of the 2023 Double Materiality

Assessment

Initial results of the Double Materiality Assessment,

conducted by a cross-business project team,

ascertained 17 material ESG topics. We have

engaged with our stakeholders in the value chain

to obtain their input. Two amendments were made

after the results from stakeholder validation.

The double materiality matrix including the impact

areas and strategic themes were approved and

signed-off by the Board. The double materiality

matrix, as shown on the right, can be seen with the

material ESG topics contained in the upper two

boxes. No topics were identified which is deemed

material from solely a financial material

perspective.

FLOW TRADERS | ANNUAL REPORT 2023 157

Our impact areas

We want to grow our business and increase our positive impact while minimizing our negative impacts on the environment and people. When identifying the materiality of each ESG

topic we looked at the area in our value chain where positive or negative impacts, or both are likely to occur and those actors which we have leverage or may be able to exert

influence. By doing this, we keep our focus on the ESG topics where we can have the greatest impact.

Read more about the actors in our value chain in section “Our value chain”.


ESG Strategic Theme	ESG material topic	ESRS topic	Upstream value chain		Own organisation	Downstream value chain
			Political & regulatory parties	Suppliers (tier-1)	Flow Traders	Institutional counterparties	Financial & social interest groups
Environment			Identified material impacts (positive, negative or both)
Environmental footprint	GHG emissions – scope 2 (electricity)	E1			negative
Environmental footprint	GHG emissions – reduction mechanism	E1		positive	positive
Social
Sustainable employment	Diversity and inclusion	S1			positive
Sustainable employment	Employee engagement	S1			positive
	Human capital development	S1			positive
	Human rights (incl. equal treatment)	S1			negative
	Labor practices	S1			positive
	Health and safety	S1			negative
	Privacy and data protection	S1, G1		both	both	both
Responsible supply chain	(ESG) Due diligence	S2, IRO		both	both	both
Responsible supply chain	Procurement practice	S2, IRO		positive	positive
Governance
Good governance	Business conduct	G1	positive	positive	positive	positive	positive
	Public affairs	G1	both		both	both	both
	Tax	G1, SBM, IRO	both		both
	Cyber security	G1, SBM, IRO			both	both
Sustainable green transition	Innovation management	G1, SBM, IRO		positive	positive	positive
Sustainable green transition	Social impact	S3, S4, G1			positive	positive	positive

FLOW TRADERS | ANNUAL REPORT 2023 158

About the non-

financial indicators

Reporting scope

The sustainability ESG related data indicators and

value creation model disclosed in this 2023 Annual

Report is based on the material topics identified

through the 2020 materiality assessment.

In 2023, a double materiality assessment was

conducted as a critical input for the ESG

sustainability strategy to be implemented in the

course of 2024. As the DMA guidance from the

ESRS were formalized late 2023, in this 2023

Annual Report we report on the results of the DMA

and the strategic pillars, after which in 2024 we will

work on developing the strategy and deployment

plans for each of the five pillars.

The non-financial indicators generally covers Flow

Traders worldwide performance from 1 January

2023 to 31 December 2023.

Reporting methodology

The non-financial data disclosed in this report is

derived from various sources, and the way data is

processed differs across our operating subsidiaries

and departments. This causes a degree of

uncertainty, because of limitations in measuring

and estimating data. We continue to work on

improving our ESG sustainability data control

environment and data collection processes.

Remarks on GHG emissions data indicators

The CO2e emissions reported are in line with the

greenhouse gas (GHG) Protocol. For scope 1 and

scope 2 emissions, Flow Traders applies the

operational control approach for the consolidation of

its CO2e emissions footprint. This means that Flow

Traders accounts for all emissions from the

operations over which it has control.

The operations, i.e. office locations, as presented

below have therewith been included in this CO2e

emissions footprint calculation.


Office	Country	Region
Amsterdam	Netherlands	Europe
London	United Kingdom	Europe
Paris	France	Europe
Milan	Italy	Europe
Cluj	Romania	Europe
Hong Kong	China	Asia
Shanghai	China	Asia
Seoul	South Korea	Asia
Singapore	Singapore	Asia
New York	Americas	Americas
Chicago	Americas	Americas

In addition to the office locations, the use of server

space from data centers is particularly relevant to

Flow Traders’ business activities. These have been

included in the scope 3 CO2e emissions footprint

calculation. Due to the confidentiality of the

information, the locations of the data centers will

not be disclosed.

Data quality

The calculated CO2e footprint of GHG emissions

emitted, through Flow Traders own business

activities and those through its value chain, contains

several factors of uncertainties, primarily due to

limitations in the availability of actual emissions

data.

The table on next the page provides an overview of

the uncertainties and data limitations for each

emission category included in the calculation.

Facilitated emissions

Capital Markets sit at the nexus of financial flows

that must increasingly be directed towards more

sustainable practices if we are to avoid the worst

effects of climate change. Furthermore, a capital

market issuances that occurs in a particular year will

impact the climate for many subsequent years.

Actors within these markets have an opportunity to

help those financial flows move into activities that

minimize climate impact. The PCAF Facilitated

Emissions Standard allows financial institutions to

consistently measure and disclose emissions

associated with capital market business activities.

The Facilitated Emissions Standard aims to increase

transparency across this category of financial

transactions. The standard covers the primary

issuance of capital markets instruments and loan

syndication. A primary issuance refers to new

securities to provide debt-based or equity-based

financing, including new issuance of various types of

bonds issued for general purposes, common stock,

equity and debt investments in private companies,

preferred shares, and syndicated loans.

We have review the PCAF framework and concluded

that facilitated emissions are not applicable to Flow

Traders, whereas Flow Traders operated in the

secondary markets and does not involve with

primary issuance of capital or financial instruments.

FLOW TRADERS | ANNUAL REPORT 2023 159

FLOW TRADERS | ANNUAL REPORT 2023 160


GHG Protocol emissions category	Uncertainty and data limitations	Reporting scope	CO2e emissions 2023
Scope 1: Heating (natural gas)	Calculation based on secondary data method, by: ▪ Average natural gas consumption (in m3) per m2 office floor, for commercial (office) buildings after 1994; ▪ The m2 office floor is based on the lease contract; ▪ Multiplied by the emission factor of natural gas to CO2e.	Applicable to Amsterdam and Cluj only	231 tCO2e
Scope 1: Company cars	Calculation based on primary data method, by: ▪ Distance driven in KM; ▪ Multiplied by average emission factors of car (unknown).	World wide	1 tCO2 e
Scope 2: Electricity (location-based)	Calculation based on primary data method, by: ▪ Amsterdam office: average electricity consumption (in kWh) per m2 office floor, for commercial (office) buildings after 1994 multiplied by country specific emission factor of the electricity grid; ▪ New York, Singapore, Hong Kong, London, Cluj office: actual electricity consumption (in kWh) as provided by the landlord on the invoices, multiplied by country specific emission factor of the electricity grid; ▪ Other offices: estimate based on floor size	World wide	966 tCO2 e
Scope 3: Cat. 1 – Purchased services from data center server space	Calculation based on secondary data method, by: ▪ Total server space capacity purchased (from contract agreement / invoice) in kVa (kilo volt ampere); ▪ Converted kVa to full year kWh; ▪ The percentage of electricity consumption from renewable and non- renewable sources are as provided by the data center supplier; ▪ Multiplied by country specific emission factor of the electricity grid	World wide	274 tCO2 e
Scope 3: Cat. 1 – Purchased goods from hardware	Calculation based on primary data method, by: ▪ Spend-based method for scope 3 calculation; ▪ Total hardware related spend includes servers, storage hardware, networking peripherals, switches, laptops, screens, data communication, computers, racks and other hardware; ▪ Multiplied by supply chain industry (NACE) specific emission factors.	World wide	864 tCO2 e
Scope 3: Cat. 2 - Capital goods	Relevant, but not included due to data not available	—	unknown
Scope 3: Cat. 3 - Fuel- and energy-related activities	Not relevant to the business activities	n/a	n/a


GHG Protocol emissions category	Uncertainty and data limitations	Reporting scope	CO2e emissions 2023
Scope 3: Cat. 4 - Upstream transportation and distribution	Not relevant to the business activities. Emissions from transportation of cat. 1 - Purchased goods and services, are already included in the cat. 1 cradle-to-gate calculation.	n/a	n/a
Scope 3: Cat. 5 - Waste generated in operations	Relevant, but not included due to data not available.	—	unknown
Scope 3: Cat. 6 – Business travel	Calculation based on primary data method, by: ▪ Itinerary of travel by air or railway; ▪ US: the distance and CO2 emissions per flight are calculated using the US data source from ICAO; ▪ EMEA: the distance and CO2 emissions per travel as provided by the travel service agency; ▪ Asia (Singapore and Hong Kong): the distance and CO2 emissions per travel as provided by the travel service agency	World wide	1,293 tCO2 e
Scope 3: Cat. 7 – Employee commuting	This category includes Amsterdam office employees only, based on assumption distance from home to office and commute by car.	Amsterdam	527 tCO2 e
Scope 3: Cat. 8 - Upstream leased assets	Not relevant under operational control approach. These are considered in scope 1 and 2.	n/a	n/a
Scope 3: Cat. 9 - Downstream transportation and distribution	Not relevant to the business activities.	n/a	n/a
Scope 3: Cat. 10 - Processing of sold products	Not relevant to the business activities.	n/a	n/a
Scope 3: Cat. 11 - Use of sold products	Not relevant to the business activities.	n/a	n/a
Scope 3: Cat. 12 - End-of life treatment of sold products	Not relevant to the business activities.	n/a	n/a
Scope 3: Cat. 13 - Downstream leased assets	Not relevant to the business activities.	n/a	n/a
Scope 3: Cat. 14 - Franchises	Not relevant to the business activities.	n/a	n/a
Scope 3: Cat. 15 - Investments	Relevant, but not included due to data not available.	—	unknown

FLOW TRADERS | ANNUAL REPORT 2023 161

EU Taxonomy

The EU Taxonomy is a classification system, which

will be used to determine, and report on, which

activities are sustainable, through the creation of

activity specific sustainability criteria. As financial

and non-financial actors must report on their

performance in reference to the same criteria, the

Taxonomy will create a common language for

companies, investors and society alike. Corporate

activities (known as economic activities under the

Taxonomy regulation), will need to be aligned with

the following three elements to be considered

sustainable or “green” under the Taxonomy

Regulation: a) Substantially contribute to at least

one of the six environmental objectives per the

Technical Screening Criteria (TSC) defined in the

Regulation; b) Do no significant harm to any of the

remaining five environmental objectives; and c)

Comply with the minimum social safeguards. The

European Commission (EC) is defining TSC for the six

environmental objectives at a sector and economic

activity level. The TSC for Climate Change

Adaptation (CCA) and Climate Change Mitigation

(CCM) have already been defined in the EU

Taxonomy Climate Delegated Act.

The EU Taxonomy Regulation was adopted by the

European Parliament in June 2020 and is now

binding throughout the EU. Over the past two years,

FY 2021 and FY 2022, Flow Traders has reported EU

Taxonomy eligibility of the total assets (% GAR

eligibility). With the change of the corporate legal

structure, in which the top holding company moved

from the Netherlands to Bermuda as of 13 January

2023, the reporting landscape changed as follows:

▪ Flow Traders Ltd. (Bermuda) is the top holding

▪ Flow Traders Ltd. is legal successor of Flow

Traders N.V. (Netherlands)

▪ substantial presence of Flow Traders B.V.

(operating trading subsidiary) remains in the

Netherlands

Consequently, Flow Traders Ltd is deemed non-

financial undertaking, reporting on % taxonomy

aligned turnover, CapEx and OpEx. Given that Flow

Traders Ltd. is listed on the regulated market in

Euronext Amsterdam, it is in scope of the corporate

reporting in accordance with the NFRD and

Accounting Directive, therefore EU Taxonomy

reporting is required.

However, Flow Traders B.V. does not fall within the

scope of the Accounting Directive. Therefore the

NFDR and EU Taxonomy requirements are not

applicable to Flow Traders B.V.

Reporting approach for FY 2023

The EU Taxonomy reporting for FY 2023 can be

considered as a bridging exercise, whereby for 2023

only the activities of Flow Traders Ltd. are in scope.

Unlike Flow Traders B.V., none of the activities of

Flow Traders Ltd. meet the definition of 'Financial

undertaking’ as mentioned in Article 1 of the

Delegated Act Article 8 Regulation. Therefore, in

2023 Flow Traders Ltd. should apply Annex II

reporting for non-financial undertakings.

For the financial year 2023, Flow Traders Ltd. is

required to report on the following EU Taxonomy

KPIs: % Taxonomy-aligned turnover, % Taxonomy-

aligned CapEx and % Taxonomy-aligned OpEx

Reporting approach as of FY 2024

In 2024, when the NFRD transforms into the CSRD,

the threshold criteria in the Accounting Directive will

also change to align with the CSRD thresholds. From

FY 2024 onwards Flow Traders B.V. will be

considered as a financial undertaking and

accordingly will be in scope for the EU Taxonomy .

This means that Flow Traders Ltd., applying

consolidated reporting, will report EU Taxonomy

KPIs %GAR from 2024 onwards.

EU Taxonomy report 2023

The European Parliament and the Council have

prioritized economic activities that can make the

most relevant contribution. The Climate Delegated

Act sets criteria for economic activities in the sectors

that are most relevant for achieving climate

neutrality. The Climate Delegated Act identified

more than 80 activities in 13 sectors. Currently not all

sectors and related economic activities are covered

by the Taxonomy Regulation and its delegated acts.

The EU Taxonomy uses the European industry

classification system (NACE) as orientation to

indicate eligible economic activities. The NACE code

for Flow Traders Ltd. is K64.2.0 - Activities of holding

companies.

We report a nil value for the EU Taxonomy KPIs

revenue, CapEx and OpEx alignment percentage for

2023. As of 31 December 2023, the economic

activities of Flow Traders Ltd. are not (yet) covered

by the sectors in the EU Taxonomy. Therefore, the

technical screening criteria for Taxonomy eligibility

for Flow Traders are not determined and available,

thus the percentage Taxonomy-aligned for financial

activities cannot be assessed. Flow Traders Ltd. is

therefore not able to determine Taxonomy aligned

activities and calculate the Taxonomy reporting KPIs

(% turnover, CapEx and OpEx) for 2023 reporting.

Hence the tables on pages 163 - 163 cannot be

completed.

FLOW TRADERS | ANNUAL REPORT 2023 162

Proportion of turnover from products or services associated with Taxonomy-aligned economic activities

Our total Turnover under the EU Taxonomy Regulation comprises of the following line items in the Consolidated Financial Statement:

▪ Net trading income (Note 10)

Financial year N

2023

Substantial contribution criteria

DNSH criteria (Does Not Significantly Harm)

Economic Activities (1)

Code (2)

Turnover

(3)

Proportion

Turnover,

year N (4)

Climate

Change

Mitigation

(5)

Climate

Change

Adaptatio

n (6)

Water (7)

Pollution

(8)

Circular

Economy

(9)

Biodiversit

y (10)

Climate

Change

Mitigation

(11)

Climate

Change

Adaptatio

n (12)

Water (13)

Pollution

(14)

Circular

Economy

(15)

Biodiversit

y (16)

Minimum

Safeguard

s (17)

Proportion

Taxonomy

-aligned

(A.1.) or -

eligible

(A.2.)

turnover,

year N-1

(18)

Category

enabling

activity

(19)

Category

transitiona

l activity

(20)

Currency

Y; N; N/EL

Y/N

A TAXONOMY - ELIGIBLE ACTIVITIES

A.1 Environmentally sustainable activities (Taxonomy -aligned)

Activity 1

n/a

—%

Activity 2

n/a

—%

Turnover of environmentally sustainable

activities (Taxonomy-aligned) (A.1)

—%

Of which enabling

—%

Of which transitional

—%

A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

EL; N/EL

Activity 1

n/a

—%

Turnover of Taxonomy-eligible but not

environmentally sustainable activities (not

Taxonomy-aligned activities) (A.2)

—%

A Turnover of Taxonomy-eligible

activities (A.1+A.2)

—%

B TAXONOMY - NON - ELIGIBLE ACTIVITIES

Turnover of Taxonomy-non-eligible

activities

n/a

€300.31

100%

TOTAL

n/a

€300.31

100%

FLOW TRADERS | ANNUAL REPORT 2023 163

Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities

Our total CapEx under the EU Taxonomy Regulation comprises of the following line items in the Consolidated Financial Statement:

▪ Additions in property and equipment (Note 23)

▪ Additions in intangible fixed assets (Note 24)

▪ Additions to right-of-use assets (Note 28)

Financial year N

2023

Substantial contribution criteria

DNSH criteria (Does Not Significantly Harm)

Economic Activities (1)

Code (2)

CapEx (3)

Proportion

of CapEx,

year N (4)

Climate

Change

Mitigation

(5)

Climate

Change

Adaptatio

n (6)

Water (7)

Pollution

(8)

Circular

Economy

(9)

Biodiversit

y (10)

Climate

Change

Mitigation

(11)

Climate

Change

Adaptatio

n (12)

Water (13)

Pollution

(14)

Circular

Economy

(15)

Biodiversit

y (16)

Minimum

Safeguard

s (17)

Proportion

Taxonomy

-aligned

(A.1.) or -

eligible

(A.2.)

CapEx,

year N-1

(18)

Category

enabling

activity

(19)

Category

transitiona

l activity

(20)

Currency

Y; N; N/EL

Y/N

A TAXONOMY - ELIGIBLE ACTIVITIES

A.1 Environmentally sustainable activities (Taxonomy -aligned)

Activity 1

n/a

—%

Activity 2

n/a

—%

CapEx of environmentally sustainable activities

(Taxonomy-aligned) (A.1)

—%

Of which enabling

—%

Of which transitional

—%

A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

EL; N/EL

Activity 1

n/a

—%

CapEx of Taxonomy-eligible but not

environmentally sustainable activities (not

Taxonomy-aligned activities) (A.2)

—%

A CapEx of Taxonomy-eligible

activities (A.1+A.2)

—%

B TAXONOMY - NON - ELIGIBLE ACTIVITIES

CapEx of Taxonomy-non-eligible

activities

n/a

17,617

100%

TOTAL

n/a

17,617

100%

FLOW TRADERS | ANNUAL REPORT 2023 164

Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities

The EU Taxonomy Regulation defines the denominator of

the OpEx KPI as direct non-capitalized costs that relate to

R&D, building renovation measures, short-term lease,

maintenance and repair, and any other direct expenditures

relating to the day-to-day servicing of assets of property,

plant and equipment by the undertaking or third party to

whom activities are outsourced that are necessary to

ensure the continued and effective functioning of such

assets.

Our total OpEx under the EU Taxonomy Regulation

comprises of the following line items in the Consolidated

Financial Statement:

▪ Technology expenses (Note 13)

▪ Housing expenses (Note 13)

▪ Fixed exchange expenses (Note 13)

▪ Other expenses (Note 13)

Financial year N

2023

Substantial contribution criteria

DNSH criteria (Does Not Significantly Harm)

Economic Activities (1)

Code (2)

OpEx (3)

Proportion

of OpEx,

year N (4)

Climate

Change

Mitigation

(5)

Climate

Change

Adaptatio

n (6)

Water (7)

Pollution

(8)

Circular

Economy

(9)

Biodiversit

y (10)

Climate

Change

Mitigation

(11)

Climate

Change

Adaptatio

n (12)

Water (13)

Pollution

(14)

Circular

Economy

(15)

Biodiversit

y (16)

Minimum

Safeguard

s (17)

Proportion

Taxonomy

-aligned

(A.1.) or -

eligible

(A.2.)

OpEx, year

N-1 (18)

Category

enabling

activity

(19)

Category

transitiona

l activity

(20)

Currency

Y; N; N/EL

Y/N

A TAXONOMY - ELIGIBLE ACTIVITIES

A.1 Environmentally sustainable activities (Taxonomy -aligned)

Activity 1

n/a

—%

Activity 2

n/a

—%

OpEx of environmentally sustainable activities

(Taxonomy-aligned) (A.1)

—%

Of which enabling

—%

Of which transitional

—%

A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

EL; N/EL

Activity 1

n/a

—%

OpEx of Taxonomy-eligible but not

environmentally sustainable activities (not

Taxonomy-aligned activities) (A.2)

—%

A OpEx of Taxonomy-eligible

activities (A.1+A.2)

—%

B TAXONOMY - NON - ELIGIBLE ACTIVITIES

OpEx of Taxonomy-non-eligible

activities

n/a

€87,682

100%

TOTAL

n/a

€87,682

100%

FLOW TRADERS | ANNUAL REPORT 2023 165

Independent auditor’s report

To: the shareholders and the board of Flow Traders Ltd.

Report on the audit of the financial statements 2023 included

in the annual report

Our opinion

We have audited the financial statements 2023 of Flow Traders Ltd (hereinafter

also referred to as the company or Flow Traders), registered in Bermuda. The

financial statements comprise the consolidated and parent company financial

statements.

In our opinion:

▪ The accompanying consolidated financial statements give a true and fair view

of the financial position of Flow Traders Ltd as at 31 December 2023 and of its

result and its cash flows for 2023 in accordance with International Financial

Reporting Standards as adopted in the European Union (EU-IFRSs) and with

Part 9 of Book 2 of the Dutch Civil Code

▪ The accompanying parent company financial statements give a true and fair

view of the financial position of Flow Traders Ltd as at 31 December 2023 and

of its result for 2023 in accordance with Part 9 of Book 2 of the Dutch Civil

Code

The consolidated financial statements comprise:

▪ The consolidated statement of financial position as at 31 December 2023

▪ The following statements for 2023: the consolidated statement of profit or

loss and other comprehensive income, the consolidated statements of

changes in equity and cash flows

▪ The notes comprising material accounting policy information and other

explanatory information

The parent company financial statements comprise:

▪ The parent company balance sheet as at 31 December 2023

▪ The parent company income statement for 2023

▪ The notes comprising a summary of the accounting policies and other

explanatory information

Basis for our opinion

We conducted our audit in accordance with Dutch law, including the Dutch

Standards on Auditing, and in accordance with the International Standards on

Auditing (ISAs). Our responsibilities under those standards are further described

in the Our responsibilities for the audit of the financial statements section of our

report.

We are independent of Flow Traders Ltd in accordance with the Wet toezicht

accountantsorganisaties (Wta, Audit firms supervision act), the Verordening

inzake de onafhankelijkheid van accountants bij assurance-opdrachten (ViO,

Code of Ethics for Professional Accountants, a regulation with respect to

independence) and other relevant independence regulations in the Netherlands.

Furthermore we have complied with the Verordening gedrags- en beroepsregels

accountants (VGBA, Dutch Code of Ethics).

The ViO and VGBA are at least as demanding as the International Code of Ethics

for Professional Accountants (including International Independence Standards) of

the International Ethics Standards Board for Accountants (the IESBA Code).

We believe the audit evidence we have obtained is sufficient and appropriate to

provide a basis for our opinion.

Information in support of our opinion

We designed our audit procedures in the context of our audit of the financial

statements as a whole and in forming our opinion thereon. The following

information in support of our opinion and any findings were addressed in this

context, and we do not provide a separate opinion or conclusion on these

matters.

FLOW TRADERS | ANNUAL REPORT 2023 166

Our understanding of the business

Flow Traders is a global financial technology-enabled multi-asset class liquidity

provider with its core business in Exchange Traded Products, which includes fixed

income, currencies, digital assets and commodities. Flow Traders is structured in

components and we tailored our group audit approach accordingly. In our audit,

we paid specific attention to a number of areas driven by the nature of the group

and our risk assessment.

We determined materiality and identified and assessed the risks of material

misstatement of the financial statements, whether due to fraud or error in order

to design audit procedures responsive to those risks and to obtain audit evidence

that is sufficient and appropriate to provide a basis for our opinion.


Materiality
Materiality	€ 2.2 million (2022: €8.0 million)
Benchmark applied	5% of profit before tax (rounded)
Explanation	Based on our professional judgement and our perception of the financial information needs of the users of the financial statements, a benchmark of 5% of profit before tax is an appropriate quantitative indicator of materiality as profit before tax best reflects the financial performance of Flow Traders. We determined materiality consistently with the previous financial year, as a result our materiality reflects the decrease in profit before tax as compared to previous financial year.

We have also taken into account misstatements and/or possible misstatements

that in our opinion are material for the users of the financial statements for

qualitative reasons.

We agreed with the Audit Committee of the board (hereinafter: the Audit

Committee) that misstatements in excess of € 0.1 million, which are identified

during the audit, would be reported to them, as well as smaller misstatements

that in our view must be reported on qualitative grounds.

Scope of the group audit

Flow Traders is at the head of a group of entities. The financial information of this

group is included in the consolidated financial statements.

Because we are ultimately responsible for the opinion, we are also responsible for

directing, supervising and performing the group audit. In this respect we have

determined the nature and extent of the audit procedures to be carried out for

group entities. Decisive were the size and/or the risk profile of the group entities

or operations. On this basis, we selected group entities for which an audit or

review had to be carried out on the complete set of financial information or

specific items.

Our group audit mainly focused on significant group entities, Flow Traders Ltd

(parent company), Flow Traders BV and Flow Traders U.S. LLC, and we issued

group audit instructions to all component teams in scope. We have:

▪ Performed audit procedures ourselves at group entities Flow Traders Ltd and

Flow Traders BV

▪ Used the work of another (non-EY) auditor when auditing the group entity

Flow Traders U.S. LLC

▪ Used the work of other EY Global member firms and the same non-EY auditor

to perform specific audit procedures at other group entities and account

balances.

On a regular basis, we interacted with the component teams during the various

stages of the audit. Based on our risk assessment, we visited the component

team for Flow Traders U.S. LLC and we reviewed the local working papers and

conclusions. Moreover we are also directly involved in parts of the audit

procedures by auditing certain accounts centrally for Flow Trader U.S. LLC and

communicate regularly with the component’s management.

By performing the procedures mentioned above at components of the group,

together with additional procedures at group level, we have been able to obtain

sufficient and appropriate audit evidence about the group’s financial information

to provide an opinion on the consolidated financial statements.

FLOW TRADERS | ANNUAL REPORT 2023 167

Teaming and use of specialists

We ensured that the audit teams both at group and at component levels included

the appropriate skills and competences which are needed for the audit of a listed

client in the business of providing liquidity to financial markets. We included

specialists in the areas of IT audit, forensics, sustainability, share based payments,

derivatives and investments valuation, tax and transfer pricing, and have made

use of our own experts in the area of auditing digital assets and certain

disclosures that include capital requirements.

Our focus on climate-related risks

The board summarized Flow Traders’ ESG (environmental, social and governance)

focus areas and reported in the section ESG at a glance of the management

report how the company is addressing climate-related and environmental risks

also taking into account related regulatory and supervisory guidance and

recommendations.

As part of our audit of the financial statements, we evaluated the extent to which

climate-related risks are taken into account in estimates and significant

assumptions. Furthermore, we read the management report and considered

whether there is any material inconsistency between the non-financial

information in the annual report and the financial statements.

Based on the audit procedures performed, we do not deem climate-related risks

to have a material impact on the financial reporting judgements, estimates or

significant assumptions as at 31 December 2023.

Our focus on fraud and non-compliance with laws and regulations

Our responsibility

Although we are not responsible for preventing fraud or non-compliance and we

cannot be expected to detect non-compliance with all laws and regulations, it is

our responsibility to obtain reasonable assurance that the financial statements,

taken as a whole, are free from material misstatement, whether caused by fraud

or error. The risk of not detecting a material misstatement resulting from fraud is

higher than for one resulting from error, as fraud may involve collusion, forgery,

intentional omissions, misrepresentations, or the override of internal control.

Our audit response related to fraud risks

We identified and assessed the risks of material misstatements of the financial

statements due to fraud. During our audit we obtained an understanding of the

company and its environment and the components of the system of internal

control, including the risk assessment process and the board’s process for

responding to the risks of fraud and monitoring the system of internal control and

how the Risk Committee exercises oversight, as well as the outcomes. We refer

to Section Our risk management of the board report for the board’s (fraud) risk

assessment.

We evaluated the design and relevant aspects of the system of internal control

and in particular the fraud risk assessment, as well as the code of conduct, the

global whistleblower policy and incident registration. We evaluated the design

and the implementation of internal controls designed to mitigate fraud risks. As

part of our process of identifying fraud risks, we evaluated fraud risk factors with

respect to financial reporting fraud, misappropriation of assets and bribery and

corruption in close co-operation with our forensic specialists. We evaluated

whether these factors indicate that a risk of material misstatement due to fraud is

present.

We incorporated elements of unpredictability in our audit. We also considered

the outcome of our other audit procedures and evaluated whether any findings

were indicative of fraud or non-compliance.

We addressed the risks related to management override of controls, as this risk is

present in all companies. For these risks we have performed procedures among

other things to evaluate key accounting estimates for management bias that may

represent a risk of material misstatement due to fraud, in particular relating to

important judgment areas and significant accounting estimates as disclosed in

Note 7 to the financial statements. We have also used data analytics to identify

and address high-risk journal entries and evaluated the business rationale (or the

lack thereof) of significant extraordinary transactions. We evaluated that there

are risks of fraud in the gross trading income recognized on financial assets and

liabilities held for trading, as management may override controls around fair value

measurement. We describe the audit procedures responsive to this risk in our key

audit matter “Fair value measurement of financial assets and liabilities held for

trading”.

Furthermore, we identified a risk related to the private keys of digital asset

wallets being misappropriated or compromised. We describe the audit

procedures responsive to this risk in our key audit matter “Existence and

valuation of digital assets”.

FLOW TRADERS | ANNUAL REPORT 2023 168

We considered available information and made enquiries of relevant executives,

directors, internal audit, legal, compliance, human resources, risk management

and regional directors and the Audit Committee.

The fraud risks we identified, enquiries and other available information did not

lead to specific indications for fraud or suspected fraud potentially materially

impacting the view of the financial statements.

Our audit response related to risks of non-compliance with laws and

regulations

Flow Traders is subject to many laws and regulations from market regulators and

for its trading activities on exchanges worldwide where the consequences of

non-compliance could have a material effect on amounts or disclosures in the

financial statements, for instance through the imposition of fines or instructions.

We refer to section ‘Our risk management’ section of the management report for

the areas identified by the board with a risk of non-compliance with regulations

and Note 31 ‘Provisions and contingent liabilities’ to the financial statements.

We performed appropriate audit procedures regarding compliance with the

provisions of those laws and regulations that have a direct effect on the

determination of material amounts and disclosures in the financial statements.

Furthermore, we assessed factors related to the risks of non-compliance with

laws and regulations that could reasonably be expected to have a material effect

on the financial statements from our general industry experience, through

discussions with the board and the Audit Committee, reading minutes, inspection

of internal audit and compliance reports, and performing substantive tests of

details of classes of transactions, account balances or disclosures.

We inspected lawyers’ letters and correspondence with regulatory authorities

and remained alert to any indication of (suspected) non-compliance throughout

the audit. Finally we obtained written representations that all known instances of

non-compliance with laws and regulations have been disclosed to us.

Our audit response related to going concern

As disclosed in Note 3 ‘Basis of preparation’ section b) ‘Going concern basis of

accounting’ to the financial statements, the financial statements have been

prepared on a going concern basis. When preparing the financial statements, the

board made a specific assessment of the company’s ability to continue as a going

concern and to continue its operations for the foreseeable future.

We discussed and evaluated the specific assessment with the board, exercising

professional judgment and maintaining professional skepticism. We considered

whether the board’s going concern assessment, based on our knowledge and

understanding obtained through our audit of the financial statements or

otherwise, contains all relevant events or conditions that may cast significant

doubt on the company’s ability to continue as a going concern. If we conclude

that a material uncertainty exists, we are required to draw attention in our

auditor’s report to the related disclosures in the financial statements or, if such

disclosures are inadequate, to modify our opinion.

Based on our procedures performed, we did not identify material uncertainties

about going concern. Our conclusions are based on the audit evidence obtained

up to the date of our auditor’s report. However, future events or conditions may

cause a company to cease to continue as a going concern.

Our key audit matters

Key audit matters are those matters that, in our professional judgment, were of

most significance in our audit of the financial statements. We have

communicated the key audit matters to the Audit Committee. The key audit

matters are not a comprehensive reflection of all matters discussed.

The update in the corporate structure of Flow Traders on 13 January 2023 was a

(one-time) key audit matter in our 2022 auditor’s report. Taking into account the

company’s growing portfolio of (long-term) investments and the changed

composition of this portfolio, a new key audit matter has been defined in relation

to the valuation of (long-term) investments. Also, we have defined the reliability

and continuity of the IT environment to be a key audit matter

FLOW TRADERS | ANNUAL REPORT 2023 169


Fair value measurement of financial assets and liabilities held for trading
Risk	At 31 December 2023 the Financial assets held for trading amount to € 5.5 billion (2022: € 4.9 billion) and the Financial liabilities held for trading amount to € 3.1 billion (2022: € 3.0 billion), as disclosed in Note 16 and Note 25 to the financial statements, respectively. Flow Traders’ fair value measurement of financial assets and liabilities held for trading is based on internally determined theoretical prices as disclosed in Note 7 to the financial statements. These prices can differ from closing prices at various stock exchanges or prices from clearers, due to market illiquidity, variety in opening hours of the stock exchanges and the prices used for identical or near-identical positions. The fair values recorded require judgment which represents an increased risk of improper adjustments in fair valuation, directly impact the gross trading income. Therefore, we considered the valuation of financial assets and liabilities held for trading a key audit matter.
Our audit approach	Our audit procedures included, amongst others, assessing the appropriateness of Flow Traders’ accounting policies related to valuation of financial assets and liabilities according to IFRS 9 “Financial Instruments” and IFRS 13 “Fair Value Measurement”. In addition, we obtained an understanding of the valuation process, including verifications done by the company. We evaluated the design and implementation of internal controls relevant to fair value measurement. We performed risk-based sample testing on the valuation of individual positions by evaluating the internally determined prices against market prices from independent sources. Furthermore, we evaluated the presentation and disclosure in the financial statements for compliance and consistency with IFRS 7 “Financial Instruments: Disclosure” and IFRS 13 on disclosure requirements for financial assets and liabilities held for trading, including the fair value hierarchy.
Key observation s	Based on our procedures performed, we consider the fair value of the financial assets and liabilities held for trading to be reasonable as at 31 December 2023


Existence and valuation of digital assets
Risk	At 31 December 2023, the cryptocurrencies portfolio (digital assets) amounts to € 169.8 million (2022: € 58.3 million) as disclosed in Note 18 Other assets held for trading. Digital assets are exchangeable directly between two parties through decentralized networks that record transaction and position data, which is publicly observable on the blockchain. These are digital assets kept in private wallets, which are each safeguarded by a private key. As these private keys grant access to the digital assets, the safeguarding of these keys are of high importance and there is an increased risk of misappropriation of these digital assets. Contradictory to digital assets kept in private wallets, direct trades on centralized exchanges and related positions in digital assets cannot be observed on the blockchain, as the digital assets on these centralized exchanges are stored in commingled wallets. Ownership has to be established based on legal terms. These exchanges are unregulated and due to the lack of transparency of transactions and positions there is an increased risk to existence and valuation of indicated positions. Reference is made to the information on digital assets in Note 34 Financial risk management. Due to the risks involved for both digital assets kept in private wallets and in commingled wallets, we considered the existence and valuation of digital assets held a key audit matter.

FLOW TRADERS | ANNUAL REPORT 2023 170


Our audit approach	Our audit procedures included, amongst others, assessing the appropriateness of Flow Traders’ accounting policies related to the classification and measurement of the digital assets under EU- IFRSs. We evaluated the design and implementation of controls related to digital assets, including reviews performed by the Risk and Operations and the Compliance departments in onboarding exchanges as well as trading in certain digital assets, involving our own experts in the area of digital assets. Furthermore, we evaluated the design and implementation of the daily trades reconciliation controls and procedures for deposits and withdrawals with cryptocurrency exchanges. We also evaluated the design and implementation of controls around the safeguarding of the private keys. For assets in private wallets, we tested Flow Traders’ reconciliation of digital asset ending balances from its books to the blockchain and investigated any unusual and other reconciling items. We further verified that Flow Traders has access to its wallets, and therefore its digital assets, before and after the reporting date. For digital assets held on centralized exchanges, we observed the positions at the majority of the exchanges at year-end to verify the existence thereof. We further tested the valuation of individual positions by comparing the internally determined prices to independent sources as at 31 December 2023.
Key observation s	Based on the procedures performed, we did not identify any material audit findings in relation to the existence and valuation of digital assets as at 31 December 2023.


Valuation of (long-term) investments accounted for at fair value
Risk	Flow Traders invests in private companies across all geographies, with an emphasis on three key themes: platform, data, and connectivity. These investments include warrants, tokens and equity stakes in the companies of which most are in the start-up and scale-up phase. At 31 December 2023, the investments measured at fair value through OCI and Profit or Loss totaled to € 26.6 million (2022: € 21.8 million), as disclosed in Note 20 and Note 21 to the financial statements, respectively. As described in Note 7 to the financial statements, management estimates the fair value of (long-term) investments accounted for at fair value, by applying reference to their quoted closing bid price at the reporting date or if unquoted, determined using a valuation technique using market observable and unobservable inputs and assumptions. Management judgment is required for these assumptions, which includes performance adjustments and discounts for liquidity. Determining the fair value of investments using unobservable inputs and assumptions is a complex process and requires judgment from the board as these investments exhibit higher estimation uncertainty. Due to the matters described, we considered the valuation of investments accounted for at fair value a key audit matter.

FLOW TRADERS | ANNUAL REPORT 2023 171


Our audit approach	With involvement of our specialists, we obtained an understanding and evaluated the design and implementation of controls over the estimation of the valuation of the (long-term) investments and the appropriateness of the valuation methodologies applied, including the review of Flow Traders policies in line with The International Private Equity and Venture Capital Valuation (IPEV) Guidelines and IFRS 13 “Fair Value Measurement”. Next to this, we verified the existence of these investments as of 31 December 2023 through external confirmations. We evaluated the reasonableness of inputs used in the valuation models and assumptions made by the board as part of their valuation process, by performing validation procedures using external data where relevant and underlying source documentation. For a sample of investment valuations, we obtained the valuation models and compared objective inputs used in the models to agreements or underlying source documents as provided by the Company. Furthermore, we tested the mathematical accuracy of the valuation models. In addition, we evaluated subsequent events and transactions and considered whether they corroborated or contradicted the year-end estimates. Finally, we evaluated the completeness and accuracy of the disclosures related to the fair value measurement of these investments in conformity with EU-IFRSs.
Key observation s	Based on our procedures performed we consider the valuation of investments accounted for at fair value as at 31 December 2023 to be reasonable.


Reliability and continuity of the IT environment
Risk	Flow Traders’ activities and financial reporting are highly dependent on the reliability and continuity of the IT environment. Effective general IT controls with respect to change management, logical access, infrastructure and operations, support the integrity and continuity of the IT systems as well as the operating effectiveness of the automated controls. As described in the Operational risk section in Note 34 in the financial statements for Flow Traders, the level of investment in technology is important to mitigate technology risks as well as having resilient and robust internal systems and controls. There is a risk that the general IT control measures may not always operate as intended. The dependency on the IT environment could lead to undetected misstatements in financial reporting. Therefore we considered the reliability and continuity of the IT environment a key audit matter.

FLOW TRADERS | ANNUAL REPORT 2023 172


Our audit approach	With the help of IT audit professionals, who are an integral part of the audit team, we assessed the reliability and continuity of the IT environment to the scope necessary for the audit of the financial statements. In this context, we obtained an understanding of the main IT processes and evaluated the design and existence of general IT controls. We performed these procedures for the IT applications relevant to the scope of our audit as well the IT tools in support of the IT processes. We also performed specific procedures in response to findings on the documentation of the existence of general IT controls related to manage change for entity programmed changes regarding user acceptance testing. We also obtained an understanding and evaluated the design of Flow Traders’ IT operations measures in place. For the applications that are supplied by third parties, we evaluated the monitoring process of Flow Traders for these service providers. Furthermore, we gained insight into the procedures, internal controls and reports that Flow Traders carries out with regard to cybersecurity.
Key observation s	Based on our procedures performed, we did not identify any risks materializing from design and existence of general IT controls impacting the reliability and continuity of the IT environment in the context of our audit of the financial statements.

FLOW TRADERS | ANNUAL REPORT 2023 173

Report on other information included in the annual report

The annual report contains other information in addition to the financial

statements and our auditor’s report thereon.

Based on the following procedures performed, we conclude that the other

information:

▪ Is consistent with the financial statements and does not contain material

misstatements

▪ Contains the information as required by Part 9 of Book 2 of the Dutch Civil

Code for the management report and the other information as required by

Part 9 of Book 2 of the Dutch Civil Code and as required by Sections 2:135b and

2:145 sub‑section 2 of the Dutch Civil Code for the remuneration report.

We have read the other information. Based on our knowledge and understanding

obtained through our audit of the financial statements or otherwise, we have

considered whether the other information contains material misstatements. By

performing these procedures, we comply with the requirements of Part 9 of Book

2 and Section 2:135b sub-Section 7 of the Dutch Civil Code, the Dutch Standard

720 and ISA 720. The scope of the procedures performed is substantially less than

the scope of those performed in our audit of the financial statements.

The board is responsible for the preparation of the other information, including

the management report in accordance with Part 9 of Book 2 of the Dutch Civil

Code and other information required by Part 9 of Book 2 of the Dutch Civil Code.

The board is responsible for ensuring that the remuneration report is drawn up

and published in accordance with Sections 2:135b and 2:145 sub‑section 2 of the

Dutch Civil Code.

Report on other legal and regulatory requirements and ESEF

Engagement

We were engaged by the Supervisory Board as auditor of Flow Traders N.V., as

predecessor of Flow Traders Ltd on 19 May 2016, as of the audit for the year 2016

and have operated as statutory auditor ever since that date.

European Single Electronic Reporting Format (ESEF)

Flow Traders Ltd has prepared the annual report in ESEF. The requirements for

this are set out in the Delegated Regulation (EU) 2019/815 with regard to

regulatory technical standards on the specification of a single electronic reporting

format (hereinafter: the RTS on ESEF).

In our opinion the annual report prepared in the XHTML format, including the

(partially) marked-up consolidated financial statements as included in the

reporting package by the company, complies in all material respects with the RTS

on ESEF.

The board is responsible for preparing the annual report, including the financial

statements, in accordance with the RTS on ESEF, whereby the board combines

the various components into a single reporting package.

Our responsibility is to obtain reasonable assurance for our opinion whether the

annual report in this reporting package complies with the RTS on ESEF.

We performed our examination in accordance with Dutch law, including Dutch

Standard 3950N, ”Assurance-opdrachten inzake het voldoen aan de criteria voor

het opstellen van een digitaal verantwoordingsdocument” (assurance

engagements relating to compliance with criteria for digital reporting). Our

examination included amongst others:

▪ Obtaining an understanding of the company’s financial reporting process,

including the preparation of the reporting package

▪ Identifying and assessing the risks that the annual report does not comply in

all material respects with the RTS on ESEF and designing and performing

further assurance procedures responsive to those risks to provide a basis for

our opinion, including:

▪ Obtaining the reporting package and performing validations to determine

whether the reporting package containing the Inline XBRL instance document

and the XBRL extension taxonomy files, has been prepared in accordance with

the technical specifications as included in the RTS on ESEF

▪ Examining the information related to the consolidated financial statements in

the reporting package to determine whether all required mark-ups have been

applied and whether these are in accordance with the RTS on ESEF.

FLOW TRADERS | ANNUAL REPORT 2023 174

Description of responsibilities regarding the financial

statements

Responsibilities of the board for the financial statements

The board is responsible for the preparation and fair presentation of the financial

statements in accordance with EU-IFRSs and Part 9 of Book 2 of the Dutch Civil

Code. Furthermore, the board is responsible for such internal control as the board

determines is necessary to enable the preparation of the financial statements

that are free from material misstatement, whether due to fraud or error.

As part of the preparation of the financial statements, the board is responsible for

assessing the company’s ability to continue as a going concern. Based on the

financial reporting framework mentioned, the board should prepare the financial

statements using the going concern basis of accounting unless the board either

intends to liquidate the company or to cease operations, or has no realistic

alternative but to do so. The board should disclose events and circumstances that

may cast significant doubt on the company’s ability to continue as a going

concern in the financial statements.

The Audit Committee undertakes preparatory work for the board’s decision-

making regarding the supervision of the integrity and quality of the company’s

financial reporting. Working within the board, the Audit Committee is charged in

particular with the supervision with respect to the provision of financial

information by the company.

Our responsibilities for the audit of the financial statements

Our objective is to plan and perform the audit engagement in a manner that

allows us to obtain sufficient and appropriate audit evidence for our opinion.

Our audit has been performed with a high, but not absolute, level of assurance,

which means we may not detect all material errors and fraud during our audit.

Misstatements can arise from fraud or error and are considered material if,

individually or in the aggregate, they could reasonably be expected to influence

the economic decisions of users taken on the basis of these financial statements.

The materiality affects the nature, timing and extent of our audit procedures and

the evaluation of the effect of identified misstatements on our opinion.

We have exercised professional judgment and have maintained professional

skepticism throughout the audit, in accordance with Dutch Standards on Auditing

and ISAs, ethical requirements and independence requirements. The Information

in support of our opinion section above includes an informative summary of our

responsibilities and the work performed as the basis for our opinion.

Our audit further included among others:

▪ Performing audit procedures responsive to the risks identified, and obtaining

audit evidence that is sufficient and appropriate to provide a basis for our

opinion

▪ Obtaining an understanding of internal control relevant to the audit in order to

design audit procedures that are appropriate in the circumstances, but not for

the purpose of expressing an opinion on the effectiveness of the company’s

internal control

▪ Evaluating the appropriateness of accounting policies used and the

reasonableness of accounting estimates and related disclosures made by the

board

▪ Evaluating the overall presentation, structure and content of the financial

statements, including the disclosures

▪ Evaluating whether the financial statements represent the underlying

transactions and events in a manner that achieves fair presentation

Communication

We communicate with the Audit Committee regarding, among other matters, the

planned scope and timing of the audit and significant audit findings, including

any significant findings in internal control that we identify during our audit.

We provide the Audit Committee with a statement that we have complied with

relevant ethical requirements regarding independence, and to communicate with

them all relationships and other matters that may reasonably be thought to bear

on our independence, and where applicable, related safeguards.

From the matters communicated with the Audit Committee, we determine the

key audit matters: those matters that were of most significance in the audit of

the financial statements. We describe these matters in our auditor’s report unless

law or regulation precludes public disclosure about the matter or when, in

FLOW TRADERS | ANNUAL REPORT 2023 175

extremely rare circumstances, not communicating the matter is in the public

interest.

Amsterdam, 29 February 2024

Ernst & Young Accountants LLP

Signed by A. Snaak

FLOW TRADERS | ANNUAL REPORT 2023 176

Provisions in the Bylaws governing the

appropriation of profit:

The provisions in the Bylaws governing the

appropriation of profit read as follows:

Dividends and other payments

1. Dividends and Distributions. Subject to these

Bye-laws, the Board may from time to time

declare dividends or distributions out of

contributed surplus to be paid to the

Shareholders according to their rights and

interests, including such interim dividends as

appear to the Board to be justified by the

position of the Company. The Board, in its

discretion, may determine that any dividend shall

be paid in cash or shall be satisfied, subject to

Bye -Laws 5.2, 35.1 and 35.2, in paying up in full

shares in the Company to be issued to the

Shareholders credited as fully paid or partly paid

or partly in one way and partly the other. The

Board may also pay any fixed cash dividend

which is payable on any shares of the Company

half yearly or on such other dates, whenever the

position of the Company, in the opinion of the

Board, justifies such payment. In making any

determination regarding the declaration of a

dividend or distribution out of contributed

surplus, the Board must, in addition to any other

obligations or duties under the Companies Acts

or these Bye-Laws, consider the Stakeholder

Interests.

2. Implementation. Except insofar as the rights

attaching to, or the terms of issue of, any share

otherwise provide: (a) all dividends or

distributions out of contributed surplus may be

declared and paid according to the amounts paid

up on the shares in respect of which the dividend

or distribution is paid, and an amount paid up on

a share in advance of calls may be treated for the

purpose of this Bye-Law as paid-up on the share;

(b) dividends or distributions out of contributed

surplus may be apportioned and paid pro rata

according to the amounts paid-up on the shares

during any portion or portions of the period in

respect of which the dividend or distribution is

paid.

3. Deductions. The Board may deduct from any

dividend, distribution or other monies payable to

a Shareholder by the Company on or in respect of

any shares all sums of money (if any) presently

payable by him to the Company on account of

calls or otherwise in respect of shares of the

Company.

4. No Interest. No dividend, distribution or other

monies payable by the Company on or in respect

of any share shall bear interest against the

Company.

5. Method of Payment. (a) Subject to Bye-Law

33.5(b), any dividend, distribution or interest, or

part thereof payable in cash, or any other sum

payable in cash to the holder of shares may be

paid by cheque or warrant sent through the post

or by courier addressed to the holder at their

address in the Register or, in the case of joint

holders, addressed to the holder whose name

stands first in the Register in respect of the

shares at their registered address as appearing in

the Register or addressed to such person at such

address as the holder or joint holders may in

writing direct. Every such cheque or warrant

shall, unless the holder or joint holders otherwise

direct, be made payable to the order of the

holder or, in the case of joint holders, to the order

of the holder whose name stands first in the

sent at their or their risk and payment of the

cheque or warrant by the bank on which it is

drawn shall constitute a good discharge to the

Company. Any one of two (2) or more joint

holders may give effectual receipts for any

dividends, distributions or other monies payable

or property distributable in respect of the shares

held by such joint holders. (b) All dividends,

distributions or interests in respect of shares held

by a securities depository, including Euroclear

Nederland, shall be paid by placing those

dividends, distributions or interest at the disposal

of such securities depository, subject to and in

accordance with the regulations of such

securities depository.

6. Unclaimed Amounts. Any dividend or distribution

out of contributed surplus unclaimed for a period

of five (5) years from the date of declaration of

such dividend or distribution shall be forfeited

and shall revert to the Company and the

payment by the Board of any unclaimed

dividend, distribution, interest or other sum

payable on or in respect of the share into a

FLOW TRADERS | ANNUAL REPORT 2023 177

separate account shall not constitute the

Company a trustee in respect thereof.

7. In-Kind Satisfaction. The Board may also, in

addition to its other powers, direct payment or

satisfaction of any dividend or distribution out of

contributed surplus wholly or in part by the

distribution of specific assets, and in particular of

paid-up shares or debentures of any other

company, and where any difficulty arises in

regard to such distribution or dividend, the Board

may settle it as it thinks expedient, and in

particular, may authorize any person to sell and

transfer any fractions or may ignore fractions

altogether, and may fix the value for distribution

or dividend purposes of any such specific assets

and may determine that cash payments shall be

made to any Shareholders upon the footing of

the values so fixed in order to secure equality of

distribution and may vest any such specific

assets in trustees as may seem expedient to the

Board, provided that such dividend or

distribution may not be satisfied by the

distribution of any partly paid shares or

debentures of any company without the sanction

of a Resolution.

Reserves

8. Reserves. The Board may before declaring any

dividend or distribution out of contributed

surplus, set aside such sums as it thinks proper as

reserves which shall, at the discretion of the

Board, be applicable for any purpose of the

Company and pending such application may, also

at such discretion, either be employed in the

business of the Company or be invested in such

investments as the Board may from time to time

think fit. The Board may also without placing the

same to reserve carry forward any sums which it

may think it prudent not to distribute.

Capitalization of profits

9. Capitalization. The Board may from time to time

resolve to capitalize all or any part of any amount

for the time being standing to the credit of any

reserve or fund which is available for distribution

or to the credit of any share premium account

and accordingly that such amount be set free for

distribution amongst the Shareholders or any

class of Shareholders who would be entitled

thereto if distributed by way of dividend and in

the same proportions, on the footing that the

same be not paid in cash but be applied either in

or towards paying up amounts for the time being

unpaid on any shares in the Company held by

such Shareholders respectively or in payment up

in full of unissued shares, debentures or other

obligations of the Company, to be allotted and

distributed credited as fully paid amongst such

Shareholders, or partly in one way and partly in

the other, provided that for the purpose of this

Bylaw, a share premium account may be applied

only in paying up of unissued shares to be issued

to such Shareholders credited as fully paid.

FLOW TRADERS | ANNUAL REPORT 2023 178

Report on other information included in the annual report

The annual report contains other information in addition to the financial

statements and our auditor’s report thereon.

Based on the following procedures performed, we conclude that the other

information:

▪ is consistent with the financial statements and does not contain material

misstatements

▪ contains the information as required by Part 9 of Book 2 of the Dutch Civil

Code for the management report and the other information as required by

Part 9 of Book 2 of the Dutch Civil Code and as required by Sections 2:135b and

2:145 subsection 2 of the Dutch Civil Code for the remuneration report.

We have read the other information. Based on our knowledge and understanding

obtained through our audit of the financial statements or otherwise, we have

considered whether the other information contains material misstatements. By

performing these procedures, we comply with the requirements of Part 9 of Book

2 and Section 2:135b sub-Section 7 of the Dutch Civil Code and the Dutch

Standard 720. The scope of the procedures performed is substantially less than

the scope of those performed in our audit of the financial statements.

The Board is responsible for the preparation of the other information, including

the management report in accordance with Part 9 of Book 2 of the Dutch Civil

Code and other information required by Part 9 of Book 2 of the Dutch Civil Code.

The Board is responsible for ensuring that the remuneration report is drawn up

and published in accordance with Sections 2:135b and 2:145 subsection 2 of the

Dutch Civil Code.

FLOW TRADERS | ANNUAL REPORT 2023 179

Glossary


AGM	Annual General Meeting of shareholders
AML	Anti-Money Laundering
AMX	Amsterdam Midcap Index
AP	Authorized Participant
APM	Alternative Performance Metrics
APT	Dutch Association of Proprietary Traders
AuM	Asset Under Management
AuM CAGR	Asset Under Management Compound Annual Growth Rate
CEO	Chief Executive Officer
CFO	Chief Finance Officer
CID procedure	Counterparty Identification Procedures
CRD IV	EU Capital Requirements Directive (2013/36/EU)
CRR	EU Capital Requirements Regulation (575/2013)
CSDR	Regulation (EU) No 909/2014 on improving securities settlement in the European Union and on central securities depositories
CTO	Chief Technology Officer
CTrO	Chief Trading Officer
DNB	Dutch Central Bank
EBITDA	Earnings before interest tax deprecation & amortization
EPS	Earnings per share
ERM	Enterprise Risk Management
ESG	Environmental, social and governance
ETC	Exchange-Traded Commodities
ETF	Exchange-Traded Funds
ETN	Exchange-Traded Notes
ETP	Exchange traded product
EY	Ernst & Young Accountants LLP, the Company’s external auditor
General Meeting	Annual General Meeting of Shareholders
FCIP	Flow Cash Incentive Plan


FIA EPTA	FIA European Principal Traders Association
FIA PTG	FIA Principal Traders Group
FICC	Fixed income, currency and commodities
FLIP	Flow Loyalty Incentive Plan
FSI Schemes	Fast Semi-Iterative schemes
FWD	Forward
FX	Forex (Currency trading)
IA	Internal audit function
IFD	Directive (EU) 2019/2034 on the prudential supervision of investment firms
IFR	Regulation (EU) 2019/2033 on the prudential requirements of investment firms
IR	Investor Relations
KPI	Key Performance Index
MiFID II	Markets in Financial Instruments Directive (Directive 2014/65/ EU; as amended)
NDF	Non-Deliverable Forward
NTI	Net Trading Income
NTI CAGR	Net Trading Income Compound Annual Growth Rate
OECD	Organization for Economic Cooperation and Development
OTC	Over the counter
QFII	Qualified Foreign Institutional Investor China
RMF	Risk Management Framework
ROE	Return on Equity, net normalized profit divided by average equity
RSA	Risk (self-) assessments
SDG	Sustainable Development Goals
UN	United Nations
VWAP	Volume weighted average price

FLOW TRADERS | ANNUAL REPORT 2023 180

Colophon

Flow Traders B.V.

Jacob Bontiusplaats 9

1018 LL Amsterdam

The Netherlands

www.flowtraders.com

Flow Traders Ltd

Canon's Court

22 Victoria Street

PO Box HM 179

Hamilton HM EX

Bermuda

www.flowtraders.com

FLOW TRADERS | ANNUAL REPORT 2023 181




	This document contains “forward-looking statements” which relate to, without limitation, our plans, objectives, strategies, future operational performance, and anticipated developments in the industry in which we operate. These forward-looking statements are characterized by words such as “anticipate”, “estimate”, “believe”, “intend”, “plan”, “predict”, “may”, “will”, “would”, “should”, “continue”, “expect” and similar expressions, but these expressions are not the exclusive means of identifying such statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause circumstances or our actual results, performance or achievements to be materially different from any future circumstances, results, performance or achievements expressed or implied by such statements. Such factors include, among other things, reduced levels of overall trading volume and lower margins; dependence upon prime brokers, ETP issuers, trading counterparties, CCPs and custodians; losing access to an important exchange or other trading venue; occurrence of a systemic market event; incurrence of trading losses; failures or disruption of our trading platform or our or third-party technical infrastructure; risks associated with operational elements of our business and trading generally; ineffective risk management systems, processes and strategies; intense competition in our business; dependence on continued access to sources of liquidity; capacity constraints of computer and communications systems; dependence on third-party software, infrastructure or availability of certain software systems; damage to our reputation and the reputation of our industry; loss of key staff or failure to attract and retain other highly skilled professionals; changes to applicable regulatory requirements; compliance with applicable laws and regulatory requirements, including those specific to our industry; enhanced media and regulatory attention and its impact upon public perception of us or of companies in our industry; and other risks. The forward-looking statements contained in this document are based on assumptions, beliefs and expectations that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Although we believe that the expectations reflected in such forward-looking statements are reasonable at this time, we cannot assure you that such expectations will prove to be correct. Given the risks and uncertainties associated with forward-looking statements, you are cautioned not to place undue reliance on such forward-looking statements. Such forward- looking statements speak only as of the date on which they are made. Accordingly, other than as required by applicable law or the rules of the stock exchange on which our securities are listed, we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. Any forward-looking statements should not be regarded as a representation or warranty by us or any other person with respect to the achievement of the results set out in such statements or that the underlying assumptions used will in fact be the case. If any of these risks and uncertainties materialize, or if any of our underlying assumptions prove to be incorrect, our actual results of operations or financial condition could differ materially from that described herein as anticipated, believed, estimated or expected. Statements regarding the market, industry and trends, including the FX market and development in ETP Assets under Management in certain markets, ETP value traded in certain markets and Flow Traders’ competitive position are based on outside data and sources.		This document contains “forward-looking statements” which relate to, without limitation, our plans, objectives, strategies, future operational performance, and anticipated developments in the industry in which we operate. These forward-looking statements are characterized by words such as “anticipate”, “estimate”, “believe”, “intend”, “plan”, “predict”, “may”, “will”, “would”, “should”, “continue”, “expect” and similar expressions, but these expressions are not the exclusive means of identifying such statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause circumstances or our actual results, performance or achievements to be materially different from any future circumstances, results, performance or achievements expressed or implied by such statements. Such factors include, among other things, reduced levels of overall trading volume and lower margins; dependence upon prime brokers, ETP issuers, trading counterparties, CCPs and custodians; losing access to an important exchange or other trading venue; occurrence of a systemic market event; incurrence of trading losses; failures or disruption of our trading platform or our or third-party technical infrastructure; risks associated with operational elements of our business and trading generally; ineffective risk management systems, processes and strategies; intense competition in our business; dependence on continued access to sources of liquidity; capacity constraints of computer and communications systems; dependence on third-party software, infrastructure or availability of certain software systems; damage to our reputation and the reputation of our industry; loss of key staff or failure to attract and retain other highly skilled professionals; changes to applicable regulatory requirements; compliance with applicable laws and regulatory requirements, including those specific to our industry; enhanced media and regulatory attention and its impact upon public perception of us or of companies in our industry; and other risks. The forward-looking statements contained in this document are based on assumptions, beliefs and expectations that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Although we believe that the expectations reflected in such forward-looking statements are reasonable at this time, we cannot assure you that such expectations will prove to be correct. Given the risks and uncertainties associated with forward-looking statements, you are cautioned not to place undue reliance on such forward-looking statements. Such forward- looking statements speak only as of the date on which they are made. Accordingly, other than as required by applicable law or the rules of the stock exchange on which our securities are listed, we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. Any forward-looking statements should not be regarded as a representation or warranty by us or any other person with respect to the achievement of the results set out in such statements or that the underlying assumptions used will in fact be the case. If any of these risks and uncertainties materialize, or if any of our underlying assumptions prove to be incorrect, our actual results of operations or financial condition could differ materially from that described herein as anticipated, believed, estimated or expected. Statements regarding the market, industry and trends, including the FX market and development in ETP Assets under Management in certain markets, ETP value traded in certain markets and Flow Traders’ competitive position are based on outside data and sources.

FLOW TRADERS | ANNUAL REPORT 2023 182