Bodies of the stock exchange

Committees that are directly responsible for performing the functions of the stock exchange

As stipulated in the 1994 amendment to the German Stock Exchange Act, the bodies of the stock exchange comprise the Exchange Council, the Exchange Operating Board, Market Surveillance, the Sanctions Committee and the Arbitration Panel of the stock exchange.

The Stock Exchange Act and the Stock Exchange Rules and Regulations require that the admission of securities to trading be handled by two separate exchange bodies: the Admissions Office the Official Market and the Admissions Committee for securities not listed in the Official Market.

The relevant provisions can be found in sections 1, 3, 9, 28, 30, 37, 72 of the Stock Exchange Act.

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Bear market

Market trend characterized by sustained price declines, usually in all market segments

Investors in a bear market tend to have a pessimistic outlook. Their strategy is to acquire so-called short positions, for example, by selling securities in the hope that they will be able to buy them back at a much lower price, or by selling short (see also short sale).

As a consequence, prices and indices continue to fall over the long term.

Antonym: bull market

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Balance-sheet analysis

Analysis of individual items on the balance sheet with the goal of evaluating a company’s economic situation

Balance-sheet analysis can be subdivided into internal and external analysis. Internal balance-sheet analysis generates information on the company for the management staff, and is part of corporate controlling operations. In external balance-sheet analysis, outside persons or institutions examine key ratios, as well as the published financial statements and accounts prepared for tax purposes, in order to ascertain the company’s earning power, creditworthiness, and profitability. However, the findings of external balance-sheet analysis cannot be regarded as completely valid, because information on unused credit lines, outstanding contracts or undisclosed reserves can be concealed in the balance sheet by calculating higher depreciation expenses.

Balance-sheet analysis is the most important component of fundamental analysis.

In order to list on the Frankfurt Stock Exchange your companies balance sheet needs to be prepared and your documentations in order for listing. To hire  a professional team to assist in taking you public on the Frankfurt Stock Exchange, contact info@fselistings.com

American depositary receipt (ADR)

A receipt issued by an American bank for foreign shares

On NYSE and NASDAQ, investors trade ADRs instead of the shares they represent.

American depositary share (ADS)

Depositary shares by means of which the registered shares of foreign companies can be traded on the US exchanges NYSE and NASDAQ

Admissions Office

Stock exchange body in charge of admitting securities to the Official Market (Amtlicher Markt)

Before a security is admitted to the Official Market, the Admissions Office examines the listing prospectus to determine whether the issuer and the sponsoring bank have met admission and disclosure requirements.

The Admissions Office comprises at least 20, but no more than 24, members who are elected by the Exchange Council. Of these, not more than half may be professionally involved in exchange trading. Members are elected for three years, and can be re-elected. The Admissions Office appoints one chairman and up to two deputy chairmen.

The Admissions Office has a quorum when at least five voting members have cast their vote, either verbally or in writing. A simple majority is required to pass a resolution. In case of a tie, the chairman or the member in charge of the session casts the deciding vote. Any member who owns shares in the company seeking admission is not eligible to vote.

Important regulations on the Admissions Office are contained in the Stock Exchange Act (Börsengesetz), section 4 para. 3 and section 37, as well as in the Stock Exchange Rules and Regulations.

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Admission to the exchange

Prerequisite for a listing on the stock exchange

At FWB® Frankfurter Wertpapierbörse (Frankfurt Stock Exchange) the Admissions Office is responsible for deciding whether to admit securities to the Official Market; the admission of securities to the Regulated Market is determined by the Admissions Committee. Each market segment has its own admissions requirements. However, all issuers must publish an offering prospectus containing the fundamental data required for an evaluation of the security.

Admission to General Standard does not require any further action on the issuers’ part. However, issuers have to apply for admission to Prime Standard; a listing in this segment is subject to the fulfillment of high international transparency requirements.

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Admission of securities to the Regulated Market

Decision of the Admissions Office of an exchange to admit a security to the Regulated Market

In order to have a security admitted to the Regulated Market, the issuer, together with an underwriting bank (a bank or investment company), must first submit an application and a listing prospectus to the Admissions Office. These documents provide information on the type and volume of the security to be admitted. The issuer and the bank are responsible for the accuracy of the contents.

The admissions application is to be posted in the stock exchange building and published in the list of quotations (Kursblatt), in the journal for statutory stock market announcements (Börsenpflichtblatt) and in the Federal Official Gazette (Bundesanzeiger). The listing prospectus is published by the issuer in the journal for statutory stock market announcements. As soon as the company is admitted to the Regulated Market, the prospectus is to be made available free of charge at the underwriting banks and the Admissions Office named therein.

Pursuant to the Stock Exchange Listing Act (Börsenzulassungsverordnung) the most important conditions for admissions and follow-up requirements are:

• The issuing company must have existed for at least three years.
• The expected issuing value must be at least €1.25 million.
• For shares, the total par value must be at least €250,000.
• At least one interim report on the financial situation and general business developments must be published during the financial year.
• Information that is relevant to the company must be published forthwith.

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Acquisition currency

Means of payment used in the takeover of a company

This term is used primarily in connection with a merger that takes place between two listed companies via the exchange of their registered shares.

If you are interested in performing a reverse merger on the Frankfurt Stock Exchange or listing a company on the Frankfurt Stock Exchange, contact info@fselistings.com

Liquidity and transaction costs: Two important criteria of market quality

In the discussion about the relative advantages of securities markets, two factors are regularly the focus of attention: liquidity and transaction costs. In the framework of portfolio restructuring, liquidity is by far the most important decision-making criterion for investors (Schiereck [1995]) and is regarded as the central quality characteristic in securities markets.

At the macro-level, liquid capital markets are essential for the efficiency of capital allocation in modern economies and lead to low cost of capital for issuers. At the micro-level, a liquid market enables access to a large number of trading interests and thus ensures that investors can carry out their transactions at any time.

In order to maximize the net return on an investment in securities, it is especially important for investors to be able to execute their buy and sell transactions at the lowest possible transaction costs. Therefore, the anticipated transaction costs should ideally be included as a decision-making criterion when deciding on a specific investment, i.e. stock picking, so that securities can be compared and/or benchmarked in terms of the anticipated net return.

Although the importance of liquid markets and low transaction costs is undisputed, there is neither a uniform understanding of the term liquidity, nor an operational model for the integrative analysis of liquidity and transaction costs.

With this motivation in mind, Deutsche Börse AG has set out to structure the discussion of liquidity and put it on a more objective footing. The goal is to identify a measure of liquidity based on transaction-cost analysis that quantifies liquidity in a single figure. To do this, the so-called Market Impact is being introduced as the Xetra Liquidity Measure. This figure rates the liquidity of the traded instruments on the basis of a uniform methodology and provides investors with a tool for the objective assessment of the trading costs. On this basis, the liquidity of individual securities as well as whole marketplaces can be analyzed in a comparable and transparent manner.

To read further on this topic go to:

http://deutsche-boerse.com/dbag/dispatch/en/binary/gdb_content_pool/imported_files/public_files/10_downloads/31_trading_member/10_Products_and_Functionalities/40_Xetra_Funds/30_Xetra_Liquidity_Measure/liq_wph.pdf

List on the Frankfurt Stock Exchange today contact info@fselistings.com or go to www.fselistings.com

FRANKFURT STOCK EXCHANGE LISTING and IR/PR – Vital to the Success of Your Public Company

More buying than selling makes stocks go up, and more selling than buying makes a stock go down. This is a very simplistic explanation, but it’s also true. The magic question is, what causes more buying than selling? The answer is very complex, and depends on many factors, but again, in very simple terms, the factors that cause more buying than selling are 1) positive company developments 2) the dissemination of news describing such positive development to the public. This is often achieved by issuing news releases and, more importantly, making sure they are seen by many potential investors through quality IR/PR.  IR/PR is not cheap, but is vital to the success of your public company. Even if your public company is experiencing extremely positive developments, without a good IR/PR program, it is unlikely that your stock will achieve a desirable level of liquidity. The reason for this is simple…the positive developments will not have any effect on the stock’s liquidity or stock price if no potential investors see the news and thus, do not buy the stock.

If you are looking to get listed on the Frankfurt Stock Exchange or hire an IR/PR professional for a listed frankfurt stock exchange company contact info@fselistings.com www.fselistings.com