Frankfurt Stock Exchange
Encyclopedia
Stock exchange
A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...
by market capitalization
Market capitalization
Market capitalization is a measurement of the value of the ownership interest that shareholders hold in a business enterprise. It is equal to the share price times the number of shares outstanding of a publicly traded company...
. Located in Frankfurt am Main, Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
, the Frankfurt Stock Exchange is owned and operated by Deutsche Börse
Deutsche Börse
Deutsche Börse AG is a marketplace organizer for the trading of shares and other securities. It also is a transaction services provider. It gives companies and investors access to global capital markets. It is a joint stock company and was founded in 1993. The headquarters are in Frankfurt,...
, which also owns the European futures exchange
Futures exchange
A futures exchange or futures market is a central financial exchange where people can trade standardized futures contracts; that is, a contract to buy specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future. These types of...
Eurex
Eurex
Eurex is one of the world's leading derivatives exchanges, providing European benchmark derivatives featuring open and low-cost electronic access globally...
and the clearing company Clearstream
Clearstream
Clearstream Banking S.A. is the clearing and settlement division of Deutsche Börse, based in Luxembourg and Frankfurt. Clearstream was created in January 2000 through the merger of Cedel International and Deutsche Börse Clearing...
.
The Frankfurt Stock Exchange accounts for over 90 percent of the turnover in the German market and a very large share of the European market. In 2010, the Frankfurt Stock Exchange agreed to move to abolish floor trading and completed this transition in May 2011. Today, trading takes place exclusively via the Xetra system, with redundant floor brokers taking on the role of market-makers on the new platform.
More than 14 international exchanges have adopted Xetra (including the Vienna Stock Exchange in 1999, the Irish Stock Exchange
Irish Stock Exchange
-History:The Irish Stock Exchange is Ireland's only stock exchange and has been in existence since 1793. It is an Irish private company limited by guarantee. It was first recognised by legislation in 1799 when the Irish Parliament passed the Stock Exchange Act...
in 2000 and the Budapest Stock Exchange
Budapest Stock Exchange
The Budapest Stock Exchange was re-opened in 1990 with headquarters in Budapest, Hungary.BSE is the key institution of the Hungarian Financial market and the official trading venue for publicly offered securities....
in 2003). Approximately 47% of the 300 market participants in Frankfurt come from abroad. As of November, 2010, companies from more than 80 countries list on the Frankfurt Stock Exchange with 49% from North and South America. 31% from Europe (including Russia), 14% from Asia and 6% from Australia and Africa.
The Frankfurt Stock Exchange has more than 250 international trading institutions and more than 4,500 traders. Investors directly connected to the Frankfurt Stock Exchange represent 35% of the world's investment capital.
The trading indices in Frankfurt are DAX
DAX
The DAX is a blue chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. Prices are taken from the electronic Xetra trading system...
, DAXplus, CDAX
CDAX
The CDAX is a German stock market index calculated by Deutsche Borse. It is a composite index of all stocks traded on the Frankfurt Stock Exchange that are listed in the General Standard or Prime Standard market segments....
, DivDAX, LDAX, MDAX
MDAX
The MDAX is a stock index which lists German companies. The index is calculated by Deutsche Börse.It includes the 50 Prime Standard shares from sectors excluding technology that rank immediately below the companies included in the DAX index...
, SDAX
SDAX
The SDAX is a stock market index composed of 50 small and medium-sized companies in Germany. These so-called small caps rank directly below the MDAX shares in terms of order book volume and market capitalization...
, TecDAX
TecDAX
The TecDAX stock index tracks the performance of the 30 largest German companies from the technology sector. In terms of order book turnover and market capitalization the companies rank below those included in the DAX.The TecDax was introduced on 24 March 2003...
, VDAX
VDAX
The VDAX-NEW Index expresses the variation margin – the implied volatility – of the DAX anticipated on the derivatives market. The VDAX indicates in percentage points the volatility to be expected in the next 30 days for the DAX...
and EuroStoxx 50.
Automatic Xetra trading runs from 09:00 to 17:30 with closing auction from 17:30-17:35, floor brokers' trading times are from 8:00 to 20:00. In November 2003, Late DAX was introduced running from 17:45 to 20:00 and in 2006 X-DAX was introduced running from 17:45-22:00 (in line with US trading hours).
History
The origins of the Frankfurt Stock Exchange go back to the 9th century and a free letter by EmperorEmperor
An emperor is a monarch, usually the sovereign ruler of an empire or another type of imperial realm. Empress, the female equivalent, may indicate an emperor's wife or a woman who rules in her own right...
Louis the German
Louis the German
Louis the German , also known as Louis II or Louis the Bavarian, was a grandson of Charlemagne and the third son of the succeeding Frankish Emperor Louis the Pious and his first wife, Ermengarde of Hesbaye.He received the appellation 'Germanicus' shortly after his death in recognition of the fact...
to hold free trade fairs. By the 16th century Frankfurt developed into a wealthy and busy city with an economy based on trade and financial services.
In 1585 a bourse was established to set up fixed currency
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
exchange rates. During the following centuries Frankfurt developed into one of the world's first stock exchanges - next to London
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...
and Paris. Bankers like Mayer Amschel Rothschild
Mayer Amschel Rothschild
Mayer Amschel Rothschild was the founder of the Rothschild family international banking dynasty that became the most successful business family in history. In 2005, he was ranked 7th on the Forbes magazine list of "The Twenty Most Influential Businessmen Of All Time"...
and Max Warburg
Max Warburg
Max M. Warburg was a German-born Jewish banker and from 1910 until 1938, director of M.M.Warburg & CO in Hamburg, Germany. Prior to his directing of the Warburg banking company, he developed apprenticeships in Frankfurt, Amsterdam, Paris, and London...
had substantial influence on Frankfurt's financial trade.
In 1874 Frankfurt Stock Exchange moved into its new building at Börsenplatz.
It was only in 1949 after World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
that the Frankfurt Stock Exchange finally established as the leading stock exchange
Stock exchange
A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...
in Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
with consequently incoming national and international investments.
During the 1990s the Frankfurt Stock Exchange was also bourse for the Neuer Markt (German
German language
German is a West Germanic language, related to and classified alongside English and Dutch. With an estimated 90 – 98 million native speakers, German is one of the world's major languages and is the most widely-spoken first language in the European Union....
for New Market) as part of the world wide dot-com boom.
In 1993 the Frankfurter Wertpapierbörse (Frankfurt Stock Exchange) became Deutsche Börse AG, operating businesses for the exchange.
From the early 1960s onwards the Frankfurt Stock Exchange took advantage of the close by Bundesbank which effectively decided on financial policies in Europe until the introduction of the euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
in 2002. Since then the exchange profits from the presence of the European Central Bank
European Central Bank
The European Central Bank is the institution of the European Union that administers the monetary policy of the 17 EU Eurozone member states. It is thus one of the world's most important central banks. The bank was established by the Treaty of Amsterdam in 1998, and is headquartered in Frankfurt,...
in Frankfurt am Main.
In 2002 and 2004 Deutsche Börse
Deutsche Börse
Deutsche Börse AG is a marketplace organizer for the trading of shares and other securities. It also is a transaction services provider. It gives companies and investors access to global capital markets. It is a joint stock company and was founded in 1993. The headquarters are in Frankfurt,...
was in advanced negotiations to take over London Stock Exchange
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...
, which were broken off in 2005.
Further reading
- Financial Market Integration in a Wider European Union
- International financial centres: rivals or partner?
- Assessment on Frankfurt's failed take-over of LSE