Frankfurt Stock Exchange Xetra Trading Platform
Technology revolution that burst out into blossom in 20th century changing the face of the whole world didn’t skirt the stock exchanges. The introduction of Xetra® impacted greatly the way the stocks are traded today in Germany and across the globe. While there are still buildings and noble edifices worldwide where stock exchanges supposedly allocate their trading floors actually major part of the trading today, at least this is the case with the Frankfurter Wertpapierbörse, is performed not within the area of the stock exchange physical floor. At present the building of the Frankfurt Stock Exchange serves just as a tangible expression of the historically formed institution that plays one of the main roles in the economy life of the nation. No need in brokers? Boisterous share trading and brokers shouting and gesticulating, this is the typical picture of how we imagine a stock exchange which is in addition maintained by the movie makers. Besides, visitors that have the opportunity to view the trading floor of the Frankfurt Stock Exchange from the Visitors Gallery see lead brokers’ desks in front of the DAX board backdrop and relate this environment directly to the stock exchange itself. And only expert players know that the actual trading takes place somewhere else. Yet, no matter how symbolical the building becomes access to the trading floor is not available to the general public but to authorized trading participants, who buy and sell securities on behalf of their customers. But you can surely take a look at it under special tour program provided by the Visitors Center. So, the electronic trading system Xetra® came to replace broker supported floor trading. Today domestic shares along with ETFs are traded mainly via Xetra while less liquid securities as well as smaller cap shares, foreign shares, investment funds and almost all bonds are still traded on the Frankfurter floor. Besides, after the trade closes on Xetra at 5.30 p.m. late trading in all securities occurs exclusively on the floor. Still, it is not just about the volumes of trading shifted to Xetra when we talk about the changes experienced by the Frankfurt Stock Exchange within the last decade, it is also about the trading on the floor which is now as well supported by a computer system known as Xontro. With the computerized platform market participants no longer need to come to the trading floor, but they make their deals from special trading rooms from within their banks. Thus, when trading occurs with Xetra it means that the electronic trading system collects buy and sell orders of licensed traders in a central computer. When the number of securities and their price correspond the orders are automatically matched. In such a way 90% of the entire share trading is performed in Germany today with 1/5 of these orders placed by private investors. The introduction of a new market model in 2008 allowed trading of certificates and warrants to run through Xetra. In this environment specialists that are, as we know, peculiar feature of the NYSE, perform the function of market makers executing orders based on quotes set by the issuer. Among the main advantages available with Xetra trading there are the following mentioned on the Deutsche Börse web site: • Fair pricing: the high trading volume ensures that the orders are executed rapidly, fully and at fair prices. • Low costs: there is no brokerage fee. • High speed: the fully electronic matching of orders guarantees fastest execution times, regardless of whether a share or a whole block of shares is traded. During long trading hours: Xetra trading takes place on each trading day between 9am and 5.30pm. • A broad selection: on Xetra almost all of the shares listed at FWB® Frankfurter Wertpapierbörse (Frankfurt Stock Exchange) can be traded. There are currently almost 6,000 securities. • Room for wishes: order addenda define in Xetra trading how an order is to be executed. Market structure and no spread trading The trading that takes place at Frankfurt Stock Exchange is regulated in accordance with the rules introduced either by the public legislator or the stock exchange itself. The capital market in Europe divides into EU-regulated markets and markets that are regulated by the stock exchanges themselves (regulated unofficial markets). At Frankfurter Wertpapierbörse companies have an option to list either in the EU-regulated market segments such as Official Market or Regulated Market, or they may choose to include their shares in trading on the Open Market (Regulated Unoffical Market),which is regulated by the Frankfurt Stock Exchange itself. Within the frames of the three market segments Official Market, Regulated Market and Regulated Unofficial Market, there are three levels of transparency: Prime Standard, General Standard and Entry Standard. The Official and Regulated Markets are segments based upon public law, namely the German Securities Trading Act (WpHG). The admission criteria and ongoing transparency requirements are prescribed by the European legislator. Companies in the Official or Regulated Market fulfill the highest European-wide transparency requirements and enjoy all advantages of a full exchange listing. The Regulated Unofficial Market, which was repositioned as Open Market in October 2005, with its sub-segment Entry Standard, is a segment based on private law. Companies are included in trading at fewer formal requirements. Entry Standard affords young small and medium-sized companies cost-efficient access to the capital market. For this reason, it is particularly aimed at qualified and experienced investors. Besides these market segments that are regulated by law, there are two smaller market segments for foreign shares from stock exchanges outside of Germany. International blue chips from Europe and the US can be traded in a special quality segment, Xetra Stars. Newex is the trading segment for central and eastern European securities on the Regulated Unofficial Market of the Frankfurt Stock Exchange. Even though the trading runs in the electronic format it doesn’t mean absolute absence of live persons in the market. There are three groups participating in the trading: investors (the ‘end consumers’), issuers (‘the
FSE – Frankfurt Stock Exchange – FSE Listings
FSE – Frankfurt Stock Exchange – FSE Listings The city of Frankfurt has the unique distinction of being host to one of the first stock exchanges in the world. Owned and operated by Deutsche Borse, the Frankfurt Stock Exchange is the third largest trade-place for stocks in the world and the second largest in terms of market capitalization. There are currently about 6823 companies quoted on the Frankfurt Stock Exchange and the exchange enjoys an annual turnover of roughly 5.2 trillion euros. Most of the FSE’s trading takes place via a fully electronic trading system known as Xetra. This electronic system makes it possible for 15 different countries to trade on a single platform. Because this allows for countries to trade on the exchange without actually being in the country for floor trading, some 47% of those companies trading on the FSE are located in other countries. Those companies wishing to enter the Frankfurt stock market can choose from three different categories: Prime, General and Entry Standard. Entry Standard is of course, the easiest ways since Prime and General are regulated by the EU rules. Some examples of companies listed on the Frankfurt Stock Exchange are Nokia, Opel, Porsche, Daimler Chrysler and Hugo Boss Ag. Germany enjoys one of the most highly developed market economies in the world and it is the largest economy in Europe. It also ranks fifth in the world in terms of purchasing power parity and GDP. The country’s economy is largely export-orientated and exports account for more than one-third of the country’s annual output. However, despite the fact that Germany enjoys such a high export rate, it suffers from low consumer confidence on a local scale. This has weakened the local economy somewhat, but he government is making strides towards alleviating the problem. Currently the services sector contributes the most towards Germany’s GDP with roughly 70.3% of profits coming from this sector. Agriculture in Germany is incredibly small with only 1.1% of the country’s revenue being generated by this sector and the remaining 28.6% coming from the industry sector. About 13% of the country’s population live below the poverty line and some 9.6% are unemployed. While these number are not all that good for a developed country, they are not that bad when compared to other countries. Germany’s main industries are iron, steel, cement, coal, chemicals, machinery, motor vehicles, machine tools, electronics, food, beverages, shipbuilding and textiles. In 2005 $1.016 trillion was generated from exports while only $801 billion came from imports. This further shows how much more is generated from exports each year. The country’s main trade partners are France, the US and UK, Italy, the Netherlands, Austria, Belgium, Spain, Switzerland and China. FSE Listings Inc guarantees the success of your listing! www.fselistings.com Contact us with your information! Please include: Company Name Contact Name Contact Number Contact Email Amount of Capital invested to date Amount of Capital required Reasons for wanting to list Description of Business Website if available Contact Robert Russell or Mark Bragg today! Robert Russell Russell@fselistings.com Mark Bragg Info@fselistings.com New York: +1-914-613-3889 UK: +44(0)2081235719 Hong Kong: 81753591 South Africa: +27110836116 www.fselistings.com