The Ultimate Guide to
Best Online Brokers for the Netherlands
The primary stock market in The Netherlands is Euronext Amsterdam. It was previously known as the Amsterdam Stock Exchange (AEX) before merging with the Paris Bourse and the Brussels Stock Exchange to create Euronext in September of 2000 that remains based in Amsterdam.
Euronext later acquired the London International Financial Futures and Options Exchange (LIFFE) in 2001, and in 2002, Euronext also took over Portugal’s Bolsa de Valores de Lisboa e Porto (BVLP). Euronext is now the largest financial exchange in Europe. It then acquired the Irish Stock Exchange (ISE) in 2018.
In addition to equities and equity derivatives, Euronext also provides a listing service for fixed income products, funds, exchange traded funds (ETFs), warrants, forex derivatives, commodities and indices. The Euronext now ranks as the 6th largest stock exchange group worldwide by market capitalisation based on information compiled by the World Federation of Exchanges.
Historically, the Amsterdam Stock Exchange was one of the original securities markets to start operating in a relatively modern way. It was formed after the Dutch East India Company (VOC) was established in 1602, so that its stocks could begin trading regularly in a secondary market.
The primary stock index for Euronext Amsterdam is the Amsterdam Exchange or AEX index that consists of the 25 most actively traded stocks on that exchange. The AMX index is for mid-cap stocks, while the AScX index is the exchange’s small cap stock index.
Forex traders will be very familiar with the European Union’s euro (EUR), which is also the Dutch national currency. The euro is divided into 100 smaller units called cents.
The Bank for International Settlements (BIS) ranks the euro as the 2nd most actively traded currency in 2016 that comprised about 31.4% of overall forex turnover that year. The euro was also ranked 2nd among the most popular currencies kept by central banks as reserves, making up about 19% of their total reserves in Q3 of 2018, according to data compiled by the International Monetary Fund (IMF).
The primary Dutch financial sector regulator is the Netherlands Authority for the Financial Markets (AFM). This regulator looks to help traders and investors and promote confidence in Dutch financial markets by making sure they are accessible and operate smoothly. Any forex broker or other financial institution must be authorised by AFM before operating in Holland.
There are several reputable online forex brokers situated in the EU to choose from, although traders living in the Netherlands can deposit money to trade online using accounts opened with non-EU brokers that will accept them as a client.
How to Trade in the Netherlands
When looking for an online broker to trade forex or CFDs with, most will accept clients from Holland, including foreign brokers. Still, having a broker with an EU office is typically preferable because they have a reputation to uphold with your local regulatory agency, and you can probably litigate locally in case an issue arises.
Remember also that any non-EU broker should be regulated in a strict jurisdiction and segregate client funds from its own to assure the safety of deposited money. They should also have a good overall reputation with their clients and a satisfactory set of services.
Most online brokers offer demo accounts funded with virtual money for practice trading and strategy testing. More details about opening up a demo accounts appears here. Brokers will also generally offer funded accounts where you need to make a minimum deposit in order to start trading. Some brokers also provide Sharia law compliant Islamic accounts that have no swaps on rollovers for Muslim traders.
Another important consideration might be the language of the broker’s website and customer support services. Just about all brokers will support communications in English, but some may also provide support for Dutch, so be sure to inquire about that ahead of time if required.
When it comes to asset classes you can trade online, this can differ considerably between brokers. Most online brokers will offer some form of forex trading. Contract for difference (CFD) trading is also relatively common and typically allows for a wider set of tradeable assets.
Regarding stock trading, Euronext Amsterdam provides a fair and transparent market in a variety of asset classes, in addition to Dutch stocks. Euronext exchange trades are generally executed in euros.
The consolidated Euronext stock and derivatives exchanges formerly used the trading software called UTP, but that is currently being replaced with the Optiq multi-market trading platform that will be fully phased in by late November 2019. Euronext also features a Single Order Book that allows traders to trade, clear and settle uniformly over all Euronext markets.
Biggest Opportunities of Trading in the Netherlands
Holland has a long history behind its financial services sector. Although geographically small, The Netherlands are densely populated with 17 million people and the country has a highly strategic commercial location for businesses.
Furthermore, since Holland also boasts Europe’s largest port of Rotterdam, it is often considered the “Gateway to Europe”, according to export.gov. The country provides additional opportunities for businesses as follows:
- More than 170 million consumers live within 300-miles of the Dutch city of Rotterdam, giving nearby access to about one third of the European Union’s population.
- Over 60% of Holland’s GDP comes from foreign trade in services and goods.
- The Netherlands has advanced transportation and electronic infrastructure.
- Holland is a key hub for the global business network and is one of the top trading countries worldwide.
When it comes to trading across borders, Holland achieved the top ranking among countries surveyed by the World Bank. The Netherlands also ranked very favourably at 7th when it comes to resolving insolvencies and at 22nd for starting a business in the country.
Biggest Challenges of Trading in the Netherlands
EU countries, like Germany, Belgium, the UK and France in that order as of 2017, remain The Netherlands top and closest trading partners, according to the World Bank Group. The strain in that close trading relationship with the UK due to Brexit can result in some uncertainty for the Dutch economy.
As a consistent net exporter with positive balance of trade numbers since the 1990’s, Holland’s economy can also suffer from trade tariffs or wars and the failure of key trade accords. According to The World Bank, The Netherlands also had a very high 86.5% ratio of its trade to GDP numbers in 2017, which increases its economy’s vulnerability to trade disruptions.
Thanks to the currency stability provided by Holland’s membership in the Eurozone within the European Union, the country enjoys a fairly stable currency environment. Nevertheless, once consummated, the Brexit will remove that benefit with the UK that has been one of its major trading partners, so that could present a future challenge for the country.
The World Bank only ranked The Netherlands 36th for the general ease of doing business there, and the country had an even worse rank of 112th for getting credit. The business environment was also rather unfavourable for dealing with construction permits, enforcing contracts and protecting minority investors, with The Netherlands ranking 84th, 74th and 72nd respectively in those areas.
Summary
In summary, traders and businesses should find The Netherlands a relatively secure place to operate in since it is part of the European Union and the Eurozone. It also has a top ranking for trading across borders, according to the World Bank. Furthermore, Dutch financial institutions receive competent oversight by the AFM and need to comply with the EU’s Markets in Financial Instruments Directive (MiFID) regulations.
When looking over the options for an online broker to trade via in Holland, traders should make sure that they offer a sufficient range of asset classes, a good reputation, a trading platform with the right features and competent regulation. An acceptable broker should also offer a safe place to make a margin deposit and should segregate clients’ funds from their own money.
