Flow Traders Ltd

F:O3I

Earnings Call Transcript 2020-Q4

[Operator]

[Audio Gap] I will now hand you over to your host, Jonathan Berger, to begin today's conference. Thank you.

[Jonathan Berger, Investor Relations Officer]

Thank you. Good morning, everybody, and thank you for joining Flow Traders' Fourth Quarter and Full Year 2020 Results Call. As we no doubt already seen, we released our results firstly this morning. I'm joined here on the call by Flow Traders' CEO, Dennis Dijkstra; as well as Chief Trading Officer, Folkert Joling, who will run through the results presentation. Afterwards, happy to take any questions you may have.Before we begin, let me draw your attention to disclaimer on Page 2. Please be advised that if you continue to listen to this presentation, you are bound by this disclaimer. Also, please note that the results we will disclose in this presentation are unaudited.With the formalities out of the way, I would now like to hand over to Dennis for his opening remarks.

[Dennis Désiré Matthijs Dijkstra, CEO & Member of the Management Board]

Thanks, Jonathan. Good morning, and thank you all for joining this call, where we will provide additional color on our fourth quarter and full year 2020 results. As perhaps was not immediately visible from the monthly market data published on our website, Q4 saw heightened levels of market activity on the back of the U.S. elections and COVID developments. Crucially, this saw strategic reallocations by investors and corresponding true in and outflows. ETP market value traded for 2020 as a whole was 48% higher than in 2019 as the markets and investors reacted to economic, political and social events throughout the year. Indeed, the entire ETP ecosystem demonstrated considerable resilience throughout 2020.Talking about 2020, I would like, on behalf of the management board, also like to take the opportunity to pay a big tribute to the professionalism, resilience and loyalty of all our colleagues globally this past year during exceptional and challenging circumstances. Everyone, and I really mean everyone, has contributed to the considerable operational and strategic achievements and successes over the past year.2020 saw record ETP value traded versus last year, which in itself was a record for our business. The growth in our ETP value traded outperformed the broader market, both in Q4 and in 2020 as we gain market share. This, once again, is a statement of our market presence and leading global footprint.Consequently, the market environment, along with Flow Traders' pricing knowledge, hedging and risk management capabilities translated into a net trading income of EUR 130.3 million in the fourth quarter of 2020 compared to EUR 78.3 million in the third quarter of 2020 and EUR 46.1 million in the fourth quarter of 2019. This contributed to a record year for Flow Traders by some distance with a net trading income of EUR 933.4 million. And we saw clear outperformance in all regions and across all our asset classes.We demonstrated strong operational leverage with an EBITDA margin of 69% in the fourth quarter, with an EBITDA of EUR 90.5 million. It is worth noting that this does reflect the positive impact of the accounting treatment for the variable remuneration treatment. I will cover this in greater detail later. Overall for 2020, EBITDA was EUR 586.6 million with a margin of 63%.The fourth quarter 2020 net profit amounted to EUR 66.2 million with an earnings per share of EUR 1.48. Ultimately, we reported a net profit for 2020 of EUR 464.5 million with an earnings per share of EUR 10.26.Taking all of this into account, Flow Traders would process a final dividend for 2020 of EUR 2.5, implying a EUR 6.5 total dividend for the full year 2020 and a 63% payout ratio. This will be paid shortly after our 2021 AGM.It is also worth highlighting once again that our business and operations functioned as normal during the fourth quarter, following the continuant -- continued activation of our business continuity plan, and we were able to continuously provide liquidity and pricing to the financial markets on a global basis. Despite the strong operational focus required through much of 2020, we also have continued to execute our growth strategy in terms of broadening our ETP footprint as well as enhancing coverage of fixed income crypto and currency trading. The investments we have made in growing our non-ETP activities are starting to pay off and are positively contributing to the top line.Now let's take a closer look at the market developments as well as a deeper dive into Flow Traders' performance and accomplishments. Firstly, we will review recent ETP market dynamics on the next slide. As shown on the top left-hand side of this slide, ETP market value traded was essentially flat in the fourth quarter of 2020 compared to the third quarter. Clearly, Q1 and Q2 were both hugely more active from an ETP market value traded standpoint. Implied volatility also remained broadly flat quarter-on-quarter. However, this quarter trend [ masks ] the evidence spikes seen in November. Moreover, realized volatility across multiple asset class increased throughout. Accordingly, we saw market velocity increasing in EMEA and APAC with U.S. remaining flat. From an ETP assets under management perspective, we again saw significant increases in fixed income, ESG and commodity ETFs. As a key part of the ETP ecosystem, Flow Traders facilitated trading in these ETP asset classes.In summary, it is fair to say that the outlook for ETPs remains very strong. Now I will hand over to Folkert, who will review our Flow Traders regional performance in greater detail on the next slide.

[Folkert Joling]

Thank you, Dennis, and good morning all. On this slide, we present an overview of some of the key performance indicators for the fourth quarter and for the full year 2020 on a regional basis. As Dennis mentioned earlier, we have seen strong performance in Q4. Heightened market activity and the disciplined execution of Flow Traders' growth strategy resulted in meaningful growth in ETP value traded and in the NTI of Q4. In Europe, we reinforced our position as the leading liquidity provider in ETPs, both on and off-exchange, by gaining market share in EMEA year-on-year.We also took the #1 position off-exchange in fixed income ETFs and now hold top position in equity, fixed income and commodity ETPs as well. There was strong trading performance not only in the core ETP business but also positive NTI contributions from non-ETP trading as recent investments are paying off. Moreover, much of the activity in the quarter occurred during European trading hours, which [ dated ] outperformance in the region.Positive proof points around trading other asset classes include our continued presence as a top 3 market maker on major FX ECNs in spot metals. We are also the #1 market maker in cryptocurrency ETPs in Europe, active on 15 exchanges globally, providing 24/7 liquidity as well as being a leading spot OTC liquidity provider.Moving to the Americas. There was an improved trading performance with continued market share gains with Flow Traders ETP value traded materially outperforming market ETP value traded in Q4. We also gained market share overall in the Americas in 2020. There was also a further expansion of the counterparty base, which we successfully onboarded -- where we successfully onboarded 2 large institutional counterparties in Q4. Lastly, we supported the global growth of the ETP ecosystem by expanding our footprint in Latin America. Lastly with respect to APAC, this region saw the largest regional percentage increase in ETP value traded in 2020 with record volumes across numerous exchanges. There was also strong growth in off-exchange, both in terms of number of counterparties and value traded through the trading of global products in the APAC time zone.Flow Traders also strengthened its partnerships in the region with key stakeholders. This includes the partnership with the Hong Kong Exchange to be the lead market maker in their MCI (sic) [ MSCI ] futures and a number of new successful ETF listings across the region.I will now hand over to Dennis for the next slide, where we'll cover the cost base in greater detail.

[Dennis Désiré Matthijs Dijkstra, CEO & Member of the Management Board]

Thanks, Folkert. The main drivers of the 8% year-on-year increase and indeed, 7% quarter-on-quarter increase in fixed operational expenses relate to technology investments to support diversification initiatives and efficiency improvements as well as the impact of new hires.We have incurred EUR 3.4 million of additional one-off expenses in the fourth quarter, which relates to the ongoing activation of the business continuity plan and a further donation to our foundation.In total, we incurred EUR 11.4 million of one-off expenses for the full year. Our headcount increased by 8% versus the end of 2019 with a focus on technology and development hires to support growth and product coverage, asset classes and the trading platforms we are active on.We have also seen a positive impact of the accounting treatment of the new share plan on the fourth quarter 2020 and full year 2020 EBITDA margins. It is evident that the business has demonstrated a high degree of operational leverage.In order to accelerate diversification and support the ever-increasing growth in product coverage, asset classes and trading platforms, we have revised guidance to a maximum growth of fixed operating expenses of about 15% for 2021.On the next slide, I will explain the new updated variable remuneration share plan. We have updated our remuneration policy for all staff to further align with current and also future regulatory requirements as well as to create additional alignment of employees with other stakeholders. It is important to note that the variable remuneration pool remains at 35% of our operational profit. As you can see on the left-hand side of the page, we have introduced share-based compensation along with deferral periods. This plan replaces the FCIP, which has been in operation previously. There is a different accounting treatment under IFRS for this plan given a greater proportion of variable remuneration is awarded in shares and the fact that share award expenses are deferred to future years, along with the service condition.On the right-hand side of the page, you can see how the off-balance sheet share commitments reduced the theoretical variable remuneration pool based on 35% of the operational profit. Accordingly, the post expenses line items, including EBITDA, net profit and EPS have been flatter in the full year 2020.Now I will take a closer look at Flow traders' capital position on the next slide, which show our required core Tier 1 capital levels on the top left-hand part of the slide. After accounting for the final dividends, Flow Traders' capital buffers have remained strong and remain comfortably above our requirements under CRR. Our own fund requirement increased EUR 218 million at the end of December from EUR 181 million at the end of September. This reflects higher level of trading. We had a CET1 of EUR 438 million at the end of December 2020, which is net of the proposed final dividend and announced share repurchase plan.On the top right-hand side of the slide, you can see that our solvency ratio with the prime brokers at December 31 decreased compared to the end of the third quarter, reflecting a EUR 772 million of accumulated trading capital as well as overall trading activity levels. Again, we are comfortably above our prime broker requirements.Looking forward, IFR/IFD comes into force in June this year. Our IFD/IFR impact expectations remain unchanged. There should be some capital relief given that incoming requirements should be more tailored to Flow Traders' specific risk profile. This relief is anticipated to be partially offset by new business activities. Considering all these developments, Flow Traders has set the 2020 final dividend at EUR 2.5 per share, implying a EUR 6.5 total dividend for the full year 2020 and a 63% dividend payout ratio. The cash return to shareholder since IPO now amounts to EUR 13.58, including the 2020 final dividend and the share buyback.Now I will hand over to Folkert again to discuss our strategy and medium-term growth focus areas.

[Folkert Joling]

Thank you, Dennis. Our growth focus areas remain very much as we outlined at the time of our Q2 results. Developments during the past year have further confirmed our growth strategy and the pace of change with respect to electronification of trading has only intensified.Seeking to enlarge our global ETP footprint means that we can align ourselves with the continuing structural growth in passive investments. This has been particularly evidenced in fixed income and ESG, which have seen strong growth over recent quarters and has translated into increased trading activity in those areas. Moreover, the attractiveness of ETPs for investors, both retail and institutional, remains as strong as ever. Our goal is to remain market leader in Europe and seek to be top 3 in the U.S. and APAC. In terms of enhancing our coverage of fixed income, we want to build on the fact that fixed income is the fastest-growing ETP asset class by becoming the global top 3 liquidity provider in fixed income ETPs. This will be done through promoting and driving market electronification, which will create a more level playing field.From a currency training perspective, we are leveraging our global infrastructure to provide liquidity to currency pools and counterparties. Our aim is to be a top 15 FX liquidity provider on Euromoney. We want to grow commodities by leveraging our top 5 rank on ECNs for spot metals.Lastly, we will further develop our crypto business by unlocking additional liquidity pools and maintaining our #1 market maker position in crypto ETPs. These growth focus areas have the ultimate goal of driving structural NTI growth.Now I will turn to the final slide of the presentation and review our strategic progress in 2020 and focus items for 2021. As Dennis mentioned earlier in the presentation, despite the strong operational focus, which was necessary in 2020, we have nonetheless made good progress in all 3 focus areas. Non-ETP trading activities made a positive NTI contribution in Q4 and will deliver additional progress during 2021.In 2020, Flow Traders built a leading global ETP liquidity provider position and grew our presence in all regions. We also increased the value traded in all regions, and we traded with more counterparties on a large array of venues. In 2021, we will focus on further expansion of our counterparty base as well as increasing and deepening product coverage and connecting additional countries and venues. We have enhanced coverage of fixed income in the past year. We're expanding our infrastructure, broadening our prime broker setup as well as increasing our market share in fixed income ETFs Focus for 2021 is on further enhancing our pricing capabilities as well as accessing more liquidity and increasing volumes.From a currency, commodities and crypto perspective, we are now consistently trading more than EUR 5 billion a day. We have also upgraded the technology suite, and we have expanded our time zone coverages as well as our spot metals trading, where we are now among the top 3 market makers on major FX ECNs. Work will continue in 2021 on building bilateral connectivity, expanding trading hours, increasing product coverage and broadening our prime broker base.I will now hand back the call to Jonathan.

[Jonathan Berger, Investor Relations Officer]

Thanks, Folkert. This now concludes the formal part of our presentation. We would now like to open up the floor for any questions you may have. Operator?

[Operator]

[Operator Instructions] We have a first question coming from the line of Albert from ING Bank.

[Albert Ploegh, Research Analyst]

I hope you can hear me well as Albert Ploegh from ING. First of all, of course, congratulations on, what I believe, a record Q4 and clearly a record year. My first question is basically, maybe not surprisingly, on current trading. Can you say anything on, let's say, what you've experienced so far in January? And is it somewhat similar to probably November, December because I guess October in the quarter was still pretty much similar to the third quarter? And yes, how much of the positive drivers, let's say, in the later part of Q4 do you think could be even recurring going into 2021 in general?And my second question is related to, let's say, the capital return decision. You proposed a nice round EUR 2.5 final dividend, which is a nice number and a nice yield. But yes, if I'm a little bit critical, yes, you could say the overall payout ratio is 63% lower than you did in the past. So to understand a bit your thinking around this and should I read into that decision also that you want to keep the capital inside the firm as you actually see good trading momentum continuing? So a bit related to the first question.

[Folkert Joling]

Thank you for the question. So I can answer on the current trading. We're not going to do a lot of comments on our activities there. Obviously, you can look at the statistics in the market where, in Q4 of last year, the market volumes in November were slightly higher than in December and October. And if you compare those to January, it's a short part of the quarter, but it is slightly more constant over the days than maybe you could see in Q4. But yes, that -- so on the trading activities, I'm not going to comment.

[Dennis Désiré Matthijs Dijkstra, CEO & Member of the Management Board]

Yes. Kind of adding to Folkert's comment, we did see kind of the first payoff of the non-ETP trading in the Q quarter -- in the fourth quarter last year as well. So -- and also they're starting to yield on all the investments we've done in the past. So yes, almost naturally, we expect that to continue.On your second question about the capital and the dividend, 2020 has kind of shown and confirmed that a strong kind of capital base, both from a regulatory and a trading capital perspective does yield. The 63% payout ratio is well above the dividend policy of 50%. So our thinking is, and confirming kind of our philosophy, is that any excess capital will be returned. Part of it is via dividends. Part of it is via share buybacks. We've seen that a strong capital base is important, so we want to retain part to facilitate growth.And also with IFD/IFR, our new capital requirements coming into force later this year, which are almost finalized, so there's still some uncertainties, although we do expect it to be slightly -- or markedly favorable, it's not set in stone. So it might feel a bit -- as a bit conservative, but again, it is there to support our trading and to make sure we do not get in problem with any kind of uncertainties or kind of surprises.

[Albert Ploegh, Research Analyst]

Okay. Maybe I understand you do not want to comment on current trading, but maybe a bit more general, let's say, what we're seeing basically in Q4, the sector rotation with in and outflows and I think a lot of creation redemption activity that clearly has been helpful. But understand a little bit what happened with the whole kind of social-media-driven short squeezes, the Robinhood and the Reddit platforms.How would that help Flow Traders? Is that really something that you can benefit exceptionally from? Or is this the kind of flow, which I believe is not necessarily clearly the retail flow that's you're handling, but in general, I guess should have had a positive impact? So maybe a bit more general comment on that to be -- without being very specific, of course, on then on January itself.

[Folkert Joling]

So one thing that there are always strange things happening in the market, which impacts the products that can be in any asset class as well, whereas with every year, we see a couple of extraordinary movements happening in there a lot. We're covering every different underlying asset class, so we are used to trading in exceptional situations. In the case of these small caps, if you look at the total ETP space, for instance, the way that these small caps is not huge, they were -- obviously that these products were part of a couple of ETPs with a small percental weight, so they moved as well. So it does -- if there is movement in any financial product, it leads to more volatility, which is a good thing for our business model. But we are not fully, we call it -- our focus is not small caps in the U.S. to a very high extent.So they're a part of the product we trade, indeed, but we don't have a huge retail operation on the single stocks. So if you're looking for that, then -- well, I don't think that there is a lot to tell.

[Operator]

We have a next question coming from the line of Lotte Timmermans from ABN AMRO.

[Lotte Timmermans, Analyst]

First, a question on Europe results. We saw that Europe NTI was very strong. In the press release, it was stated -- partly it was explained by non-ETP products. Could you give some color or even a ballpark number on what the share of ETP products and other asset classes was? And what -- and can we conclude that this partly drove the higher implied revenue capture? And which assets classes were specifically strong in Q4?

[Operator]

Jonathan, is the line unmuted?

[Folkert Joling]

Sorry, we had the mute button on. So the European outperformance, obviously, the -- some of the events during the last half year, so the U.S. elections, for instance, they had a very long effect. So already starting early in the year, we saw people positioning themselves based on what the expected of -- the election outcomes would have impact on the set of policies there that build up during the year and that intensified during October and the move towards November.So that impacted those activities. And what we saw in the -- in the last 2 months, actually, there was a lot of activity going on in European hours. So that makes the outperformance of the European office explain to some extent. On the other hand, it's not only about equity movements. So we have diversification projects going, which are centralized usually or often in Europe as well. The volatility in other asset classes as, for instance, crypto and a bit of FX, that also impacts, obviously, the difference between the fixed type of models and the NTI we have.So if you look at the revenue capture and just link it to the implied volatility, yes, that model -- and the more we diversify, it becomes more difficult to maintain. Does that answer your question?

[Lotte Timmermans, Analyst]

Yes. Yes, a bit. But could you also say like what kind of share of the NTI has roughly been? Is it significant? Or is it below 5%? Or could you share anything about that?

[Folkert Joling]

I'm not going to comment on the exact numbers. It is growing as we wanted to grow, so it's -- so I'm not going to give an exact percentage. I don't think that's helpful piece.

[Operator]

We have a next question coming from the line of Michael Werner from UBS.

[Michael Joseph Werner, Executive Director and Equity Research Analyst]

Congrats on the results. Just a couple of quick questions if you don't mind. Just looking back on Q4, I was just wondering if you can provide a little bit more color as to how important the month of November was in terms of your NTI generation during Q4, particularly as we had the U.S. presidential election as well as the vaccine-related news coming out in a very short time frame at the beginning of that month.And then second, you noted that your goal is to be a top 3 player in the U.S. and APAC. What does that mean from a market share perspective? What would it require in terms of market share for Flow Traders to be a top 3 player either in the U.S. or in APAC?And then finally, we saw a bit of a higher tax rate in Q4. Is this kind of related to kind of change in the accounting treatment of your share plan? Or can you provide a little bit of guidance for '21?

[Folkert Joling]

On the distribution of the NTI out of the quarter. So we're focusing on the long-term growth, and we're looking at KPIs on our activities, and they're increasing on a steady basis. And then based on the volatility, there is more opportunity in a lot of the strategies.So the growth has been consistent over the year if you look at the KPIs, which we correct for market performance as well. So it's relative performance, and they've seen steady growth. So obviously, with more volumes and more volatility, our market model that also meets an increased NTI as well, but the growth has been consistent.And on the market share part, obviously, the market share figure on itself is not per se saying everything. So what we -- we have some more detailed constraints to, for instance, the market share. It also is broken down per segment internally on which products cover us so that there is some deeper breakdown.What top 3 means is the full coverage of the whole range. It's an off-exchange-specific coverage. So if you look at RFQ platforms, we want to be top 2 ranked, top 1 hopefully [ but ] some segments top 2.So if you look at different ways on the performance and we've identified a couple of sub KPIs and then sort of the rough top 3 means actually top 2 OTC and in some products top 1 on exchange, some products more difficult or not really our core strength. So that's broken down. So top 3 is the whole range.

[Dennis Désiré Matthijs Dijkstra, CEO & Member of the Management Board]

Kind of a weighted average [ price ].

[Folkert Joling]

And then on the tax question?

[Dennis Désiré Matthijs Dijkstra, CEO & Member of the Management Board]

Yes. So the tax rate, indeed, has gone up a bit. That has to do with the tax deductibility of share plans, especially here in Europe, in the Netherlands. So -- and also there is a cumulative impact on the Q4 numbers, but we don't see any necessity to kind of change guidance of an effective tax rate change going forward. So it remains at 20%.

[Michael Joseph Werner, Executive Director and Equity Research Analyst]

And can I just ask a quick follow-up on the market share in the top 3 question. Absolutely noted, understand kind of the weighted average approach. Do you have a bit of a range as to where you currently sit in the U.S. and in Asia Pac? Are you a top 5, are you top 10 player right now in those regions?

[Folkert Joling]

So for instance, on the OTC part, we are top 3, and we are slightly better ranked on fixed income side and on the equity side, it's mostly because of all those one-to-one products where the competition is different.So on the equity side, market share, probably -- on exchange, probably around 2%, and that's -- there's still some growth there. So both in the coverage of the -- we don't have 100% coverage yet, so we're building that out to all the products as well. But also in the products we already cover, we can still increase a bit. But the main KPI there is not the market share percentage, but we have some more specific ones, which will lead to a higher market share. And in APAC, it's a skeptic market there. So it's also different type of metrics per market. We want to cover all markets. So it's a bit depending on the local -- on the local countries, what exactly our spot is. Some of them, we're #1 -- already are #1, but to cover -- to be good in the whole range, that's why we said more or less top 3 but that means, for a lot of countries, #1 as well.

[Operator]

We have a next question coming from the line of Martin Price from Jefferies.

[Martin Gerald Price, Equity Analyst]

I've got 2 actually. The first, just a follow-up question on APAC. I think, historically, quite a lot of flow in the market has been dominated by local banks. So I'm just wondering if you could comment on the extent to which you're now seeing flow migrating to sort of more pre-trade transparent venues, such as RFQ facilities.And then the second question is on regulation. Clearly, in the U.S. at the moment, there's growing focus on the practice of payment for order flow. Whilst I appreciate this doesn't affect you guys directly as it's not something you do. But I'd just be interested in your views on how you see regulation of that practice evolving and how this could potentially impact your competitive position in the U.S. over the longer term.

[Dennis Désiré Matthijs Dijkstra, CEO & Member of the Management Board]

Coming back on your APAC question, I think we always have been in our strong vocal kind of proponents of kind of transparent, open and fair markets. So also for the OTC markets in Europe, we've seen RFQ or kind of electronified OTC trading even transform into a regulated trading on MTFs. And I think the whole ecosystem benefited significantly from it, so both the issuers, investors and also the platform. So -- and that's also something we see being adopted both in APAC and in the U.S.So as you can imagine, that's favorable for us. And we are a very dominant independent liquidity provider in these index products covering all underlying asset classes, issuers, global listings. So that's something that's favorable, but it needs time for a kind of region or country to kind of adopt to this kind of new way of executing their training. So it is growing. It's becoming more electronified. We also see some exchanges kind of adopting and embracing these developments, so that's positive.Coming back to the second question, the payment for order flow. Again, we are in favor of open, transparent, kind of equal access level playing fields. We do not engage in payment for order flow in the U.S. markets at the moment. Well, I don't have a specific or we don't have a specific view or comment on it until it damages or hurts kind of the whole ecosystem. Yes, I think that's where we're at.

[Operator]

We have last question in the queue. [Operator Instructions] Our next question comes from the line of Gregory Simpson from Exane BNP Paribas.

[Gregory Simpson, Financial Analyst]

Congrats on the results. A few from my end. The first one was, I guess, the change in remuneration policy accounting maybe means your reported earnings could become more volatile. So I was wondering if you were thinking about changing the current dividend policy and then maybe setting a floor level of dividend, for example. Just any thoughts there.The second question was in the U.S. You mentioned an aspiration of being top 2, I think, in OTC and onboarding 2 of the top 20 institutional counterparties in the quarter. Just wondering how many of the kind of top 20 do you have connected now. Is there kind of more to go for or are most on -- are most kind of connected as things stand?And then just lastly, the -- it looks like there's been quite significant growth in fixed income ETPs and you have big aspirations to grow your market share there. Does the kind of -- does it have a very different kind of hedging process that kind of asset class? Because I would guess that a lot of the kind of underlyings are potentially a lot less liquid than, say, in equity ETP. So any thoughts around the kind of hedging process and market to talk on the market risks? That would be great.

[Dennis Désiré Matthijs Dijkstra, CEO & Member of the Management Board]

Thanks, Gregory. So the first question on kind of the change in remuneration policy and kind of related reporting of earnings, it's not per se a big change in the remuneration policy itself because we always incentivized [ IFPs ] to be a shareholder but it's more about the mechanics. So now as opposed to incentivizing people significantly to buy shares that we are -- part of the remuneration is in actual shares or share-like instruments, and the accounting treatment is different.So going forward, we will take this into account in how we present our earnings to kind of also take into account the impact from previous years or future years like we kind of tried in the presentation as well. And that's kind of, yes, not correlated with the dividend policy, right?So there, the dividend policy remains the same, taking into account kind of a fully loaded 35% income statement. And they're at least 50%. And there again, also we kind of historically have paid out more about the U.S. and kind of the OTC counterparty we've onboarded.As said, we've added another 2. We have a very significant part of the 20%, but there's -- or the top 20, but there's still a few out there who don't use our liquidity yet, which I think they should. Then again, these are not kind of overnight processes. So there are also the onboarding, kind of the fine-tuning, the kind of the pricing and liquidity takes a bit. So onboarding and kind of actually having the benefit, there's kind of a period between the 2, so we added another 2.And hopefully -- and I know I'm confident that we will add more, so we have a good coverage, but there's still, I would say, more than half of the OTC trading we need to onboard. So I think that's kind of a lot of growth there.And your last question about the hedging of the fixed income ETPs is probably yours.

[Folkert Joling]

Yes, you actually explained the reasoning behind our strategy in your question because the quality of your fixed income ETF pricing is very dependent on the price discovery and the liquidity of the bonds underneath. So the -- you need to know where these trade. You need to have the possibility to hedge yourself. So by adding more liquidity pools and better understanding of where these products trade, it becomes, importantly, maybe even essential to be a top market player in the ETPs. But that's exactly what we're doing, so we're trying to connect to as much liquidity as we can to improve these processes.So it will indeed affect the hedging to add better. And also we create new opportunities in these products because that leads to a higher-quality pricing and execution as well. So that's indeed what we're doing.

[Operator]

We have one last question coming from the line of Fernand De Boer from Degroof Petercam.

[Fernand de Boer, Research Analyst]

And Fernand De Boer following in for Michael Roeg. Just one question on this change in remuneration accounting. Is 58 million, is that -- does that mean also that actually the first 3 quarters have to be corrected, this kind of accrual during the year that you have made the correction in Q4?

[Dennis Désiré Matthijs Dijkstra, CEO & Member of the Management Board]

Not per se because also there, part of the old FCIP was off balance already. So I think it was, in the first 3 quarters, kind of 32%, but there was kind of a catch-up in Q4 with the impact of the change from FCIP towards kind of current remuneration policy. But I think we can come back to -- with kind of the exact kind of change in impact.

[Fernand de Boer, Research Analyst]

Okay. We got to ask, let's say, plus 58 million and then the FCIP's correction was minus 3 million if I read your presentation correctly.

[Dennis Désiré Matthijs Dijkstra, CEO & Member of the Management Board]

No, that's previous years.

[Fernand de Boer, Research Analyst]

Okay. Sorry for that. Yes. Not my main company. And then I had a question...

[Dennis Désiré Matthijs Dijkstra, CEO & Member of the Management Board]

Michael should have prepared you better than this.

[Fernand de Boer, Research Analyst]

Yes. [indiscernible] we were quite busy this morning. And then the other part was his question also on these cryptocurrencies in Europe. I believe you were not willing to give an exact number or a ballpark range on volumes, et cetera. But do you believe this is sustainable? And what does it miss for -- mean for risk going forward on this kind of asset trading?

[Dennis Désiré Matthijs Dijkstra, CEO & Member of the Management Board]

So what we've seen in the Q4 is there has been an increased interest from institutional investors in these products. And also from regulators who are starting to be more open to creating regulation around it. So there was a lot of inflow in the ETPs in some of the funds as well. And this also drove prices up.So this trend, hopefully, it will continue, right, because the more regulated this gets, the better as well. It gets more transparent and fair as well. So these prices -- so Bitcoin went up from -- is it 15 to 30 and now 40. So that shows the momentum that this asset class has. We are market maker in all the listings on the regulated exchanges. So in Europe, there are a lot of listings already and new ones coming up. So we are supporting those on-exchange and off-exchange as well for the professional counterparties that want to trade those. So the whole -- there's good vibe around it.So that's a good thing to see. We are very adaptive to new developments around these kind of things. So we're supporting that. So we hope that this will continue.

[Operator]

Thank you. There are no further questions in the queue. So I will hand it back to the host for closing. Thank you.

[Jonathan Berger, Investor Relations Officer]

Thank you. I'd like to thank all the analysts participating in today's call. Please note, we'll host our next call with you guys when we release our second quarter and H1 2021 results in July. Further details will follow in due course. And as a reminder, our first quarter trading update is scheduled to be released on the 21st of April 2021.This now ends the call. Thanks again. Have a good day, and of course, stay safe.

[Operator]

Thank you for joining today's call. [Audio Gap]