The last couple of weeks, the Dutch Financieele Dagblad reported on the fact that our Minister of Finance, Jeroen Dijsselbloem, had actively intervened in the workings, nominations and appointments of the Members of the Supervisory Board for the Authority Financial Markets. The dynamics of the case have a historic relevance that I would like to highlight in this post.
Incrowds at the Amsterdam exchange
The Amsterdam exchange, which has a long history going back to the early 17th century, has since its start been an open exchange. All who wished could enter the exchange and do business. But specialisation happened over time. Brokers existed, that were licensed intermediaries that could help out the incidental exchange visitor to find the proper counterparty.
As centuries went by, the specialist incrowd of traders on the exchange favoured an exchange were not just anyone could come and do business, but only licensed or vetted members. The city council of Amsterdam opposed this principle, but had to give in once the Berlage exchange building was in place. The building allowed for a physical separation and access control which provided the traders their own space, with their own rules. Papers report that even police men were pushed out of this space as the traders considered it their own land/country/turf/territory with its own rules.
The cherry on the cake, for traders, was -in 1914- the move to the Amsterdam Exchange building at Beursplein 5. They had their own rules, their own building and -of course- their own governance rules. A self appointed group of professionals was assigned to supervise trading and the trading rules. Eventually this was organised in the so-called Foundation Supervison Securities Trading (Stichting Toezicht Effectenverkeer). Of course, only in-crowders were appointed to be board members.
From self-assessment to a formal supervisor
As of March the 1st, 2002, the actual supervision of the stock exchange is in the hands of the Authority Financial Markets. This is an independent government body that has since grown into the so-called conducht-supervisor. It supervises conduct of players in the financial markets, and has expanded its reach to also supervise accountants, intermediairies, investment funds and so on.
The composition of its board of supervisors has varied over the years since 2002, but there was one remarkable choice in 2010. Minister Bos chose to appoint George Muller, formerly executive with the Amsterdam Exchange (which became Euronext) as the chair of the board. This was remarkable as the stature of Möller, in my view, was disputed. Möller had previously agreed on becoming the boss of Euronext at some stage and when he didn't land that job, he quit at Euronext to work for Robeco instead.
Although anyone is free of course to make such a career move, it does tell the observer that this person attaches quite some value to prestige and may be someone with a bigger need of attention. Also, one could argue that it is good to have a former insider in the Board of Supervisors of the Authority Financial Markets. On the other hand, it is once again a choice for the senior white male, rather than a competent female professional. It also doesn't take on board the fact that the role of the AFM grew bigger than a mere markets-supervisor.
An end to the era of old-school-male incrowders
Internal discussions within the Supervisory Board of the AFM gradually hit the news and revealed that the male Board Members were more flexible as to rules with respect to side-jobs and obligations than the female Board members. One of the female directors that missed out on a re-appointment had a regular exit-interview at the Ministry of Finance. This lead to further investigations into the workings of the board, side-jobs and so on.
The Minister of Finance decided to reshuffle the board of supervisors, some of them left and the Ministry motivated the board to appoint Merel van Vroonhoven as the new director of the Authority itself. This is quite an intervention indeed. When seen from a historical perspective however it is a measure that was long overdue. It is an appropriate end of the era of old-white-male stock exchange traders-incrowd that make up and play by their own rules, regardless of the interests of society.
