Introduction
The Frankfurt Stock Exchange is the 12th largest stock exchange in the world by market capitalization. It operates from 8:00 am to 10:00 pm, following the German time zone. This exchange plays a crucial role in the German economy, with 90 percent of its turnover generated within the country.
Organization
Ownership and Location
The Frankfurt Stock Exchange is owned and operated by Deutsche Borse AG and Borse Frankfurt Zertifikate AG. It is situated in Frankfurt, Germany, specifically in the district of Innenstadt, within the central business district known as Bankenviertel.
Regional Securities Exchanges
The Frankfurt Stock Exchange holds a significant position among the seven regional securities exchanges in Germany. With its two trading venues, Xetra and Borse Frankfurt, it attracts a vast majority of trading activities, accounting for 90 percent of turnover in Germany.
Trading Indices
The trading indices at the Frankfurt Stock Exchange are diverse and cater to various market segments. Some of the notable indices include DAX, DAXplus, CDAX, DivDAX, LDAX, MDAX, SDAX, TecDAX, VDAX, and EuroStoxx 50. These indices serve as benchmarks for evaluating the performance of specific sectors and the overall market.
Trading Venues: Xetra and Borse Frankfurt
Xetra: The Premier Exchange for Equities
Xetra, the primary trading venue at the Frankfurt Stock Exchange, specializes in exchange trading for German equities and exchange-traded funds (ETFs). It holds a dominant market share in Europe, especially for DAX listings. Xetra operates from 9:00 am to 5:30 pm on trading days and serves as the basis for calculating the DAX, which is Germany’s most well-known share index. With over 200 trading participants from 16 European countries, Hong Kong, and the United Arab Emirates, Xetra ensures a global reach for market participants.
Borse Frankfurt: A Haven for Private Investors
Borse Frankfurt, the other trading venue at the Frankfurt Stock Exchange, caters mainly to private investors. It provides a platform for trading more than one million securities from German and international issuers. On the trading floor, specialists oversee the trading of these securities, ensuring efficient transactions and market liquidity.
Market Surveillance and Protective Mechanisms
The Frankfurt Stock Exchange operates under clear rules that govern trading activities for all participants. To maintain market integrity and prevent mistrades, several protective mechanisms are in place. These include volatility interruption, market order interruption, and liquidity interruption measures. These mechanisms help maintain price continuity and protect investors from sudden market fluctuations.
History: From Medieval Trade Fairs to Global Exchange
The origins of the Frankfurt Stock Exchange can be traced back to medieval trade fairs in the 11th century. As Frankfurt developed into a prosperous city in the 16th century, a bourse was established to set fixed currency exchange rates. This marked the birth of the stock exchange, making Frankfurt one of the world’s earliest financial centers alongside Amsterdam, London, and Paris.
Throughout its history, Frankfurt’s financial trade was influenced by prominent bankers like Mayer Amschel Rothschild and Max Warburg. In 1879, the Frankfurt Stock Exchange moved to its current building at Borsenplatz, solidifying its position as a major financial center in the Atlantic world during the late 19th century.
It was after World War II, in 1949, that the Frankfurt Stock Exchange emerged as the leading stock exchange in Germany, attracting significant national and international investments. In the 1990s, it also played a pivotal role in the dot-com boom, hosting the Neuer Markt (New Market) and witnessing exponential growth in technology-related stocks.
The Frankfurt in the Dot-com Boom
During the dot-com boom, the Frankfurt experienced a surge in trading activities, particularly in the technology sector. The Neuer Markt, established in 1997, provided a platform for high-growth companies in the new economy.Yet, the euphoria’s brevity became apparent as the dot-com bubble burst in the early 2000s, causing a substantial reduction in market valuations.
Deutsche Borse AG and Merger Attempts
In 1993, the Frankfurt transformed into Deutsche Borse AG, taking on a broader role in operating businesses for the exchange. Over the years, Deutsche Borse AG made several attempts to merge with other stock exchanges, including the London Stock Exchange. However, these merger attempts faced various challenges and were eventually unsuccessful.
Conclusion
The Frankfurt Stock Exchange is a global financial hub, vital to Germany’s economy and playing a key role in the European market. With its trading venues, Xetra and Borse Frankfurt, and its rich history dating back centuries. This exchange has demonstrated resilience and adaptability in the face of changing market dynamics. As investors continue to seek opportunities in the international market.The Frankfurt Stock Exchange remains a pivotal destination for trading and investment.
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