One of the oldest and most original exchanges on the planet, continues to fight for leading positions in both the European and global markets.

History of the Frankfurt Stock Exchange

The year 1585 was a landmark year for the regularly held Frankfurt Fair: in order to avoid the depreciation of money from many different trading countries, merchants agreed to exchange currencies. The appearance of such a regulator had a very effective impact on the future fate of the fair, which already began to resemble the prototype of a modern one. The transactions with bills and goods carried out on it were initially carried out in the open air, near the city administration building, but soon the traders moved indoors. For this reason, to collect fees from visitors, an exchange administrative body appeared, consisting of merchant deputies, and, consequently, stock exchange in Frankfurt acquired its own organized structure.

Frankfurt stock exchange by the beginning of the twentieth century it was considered one of the most advanced exchanges in Europe. It carried out trading in bills, bonds and government loans, and also created an official exchange rate, uniting scattered individual brokers. However, insufficient attention to the new stock instrument - shares, together with the outbreak of the First World War, dealt a strong blow to the recently successful institution, sending it into significant oblivion. The revival of Phoenix from the financial ashes took place already in the 50s. XX century.

DAX Index

At the end of the 1980s, a new player on stock market, Deutsche Borse, united several German exchanges under its wing, including Frankfurt (FWB). In 1988 it was presented to the general public DAX index, which was a list of Germany's top 30 blue chip companies listed on Frankfurt stock exchange. This list includes such world leaders in their industries as Siemens (IT technologies), Adidas (sportswear and footwear), BMW, Volkswagen Group (automotive industry), Bayer (pharmaceuticals), Metro (retail), Henkel (household chemicals) ). Due to the leading positions of these companies in the international market DAX index is one of the most significant in the global market.

Frankfurt in race with London

At the moment, it ranks second in Europe in terms of the turnover of transactions in shares, behind its main hated competitor, the London Stock Exchange. To reach the first position, the German leadership took many steps, such as negotiations on a possible merger with Euronext or the Russian MICEX exchanges, and directly tried to buy the main enemy, but the deal with the Londoners failed. One of the significant advantages Frankfurt stock exchange are: high transparency of trading rules in the market and a large number of financial instruments.

It would not be superfluous to mention that exactly on Frankfurt Stock Exchange In the 18th century, Mayer Amschel Rothschild began his first steps in trade, who soon became a powerful banker and passed on his influence to his sons, the activities of whose descendants still have a wide public resonance.

(Frankfurt Stock Exchange, or FSE) is one of the oldest exchanges in Germany and the largest platform for trading securities in the world. The FSE is included in the German group Deutsche Borse Group– an influential exchange company that provides various financial services related to trading activities.

The content of the article:

Transactions on the Deutsche Borse Group trading exchange account for about 70% of all German securities trading activities.

Opening hours: daily from 09-00 to 17-30 (Moscow time), except weekends and holidays.

Features and advantages of the FSE stock exchange

The following assets are traded on the Frankfurt Stock Exchange:

• currency;
• goods;
• bonds;
• funds;
• securities;
• guarantees and certificates.

Independent experts highlight several main advantages of the exchange. The integration takes place according to a vertical structure, that is, the entire necessary list of services and systems on the exchange is easily accessible to any investor. It is on the German Stock Exchange that one of the highest indicators in terms of profit, revenue and capitalization in Europe. All operations on the stock exchange take place in the electronic trading system Xetra More than 650 exchange clients work there, including about 5 thousand traders and 270 banks from all over the world.

History of the development and formation of FSE

According to German sources, the history of the Frankfurt Stock Exchange dates back to 1150. That year, in the fall, the very first goods fair was held on the Rhine. Since then, similar goods fairs have been held annually once a year.

In 1330, Ludwig of Bavaria, noticing the great popularity of the fairs, introduced another fair - the spring one. This was great news for both agricultural producers and buyers. Soon fish began to be brought to the fair, thereby further increasing the profitability of the site.

The popularity of the fair-venue grew, attracting more and more sellers. Then problems arose with making payments - each region in Europe had its own currency and when transferring currencies there was a lot of confusion, and scammers began to appear. To make it easier to work with currency exchange, an exchange exchange is created.

And so, in 1585, a meeting of merchants from all regions of Europe took place in Frankfurt. At this meeting, in order to curb fraud during trade and facilitate exchange transactions, a single exchange rate was established. Almost immediately bill traders and speculators appear with this.

History year by year or the most important dates for the stock exchange

• The official sheet with exchange rate differences between currencies was first published in 1625 and consisted of 12 currencies.
• In the 18th century, the exchange began to carry out transactions in government bonds.
• The periods after the First and Second World Wars did not have the best effect on the stock exchange - the price of shares fell, and there was a huge outflow of capital.
• In the history of the exchange, 1953 marks the beginning of an era of restoration and dawn. The exchange is actively starting to trade in monetary units of Switzerland, the USA, Canada and the currencies of other countries.
• In 1957, work to restore the trading floor was completed, and the exchange began its full-scale operation.
• In 1969, the BOGA automated computer system was installed in the stock exchange building, intended for conducting trading operations.
• In 1993, the Frankfurt Stock Exchange became part of the largest holding company, Deutche Borse AG.
• In 2002...2004, negotiations were actively underway on the merger of the Frankfurt and London stock exchanges. The merger of Europe's two major trading floors would create the most powerful stock market in the world. However, the deal was not destined to take place - the initiator of the idea, CEO of Deutche Borse AG, Werner Seifert, left his post.

Stock indices of the Frankfurt Stock Exchange

The main and most important index on the German stock exchange is - DAX(Deutscher Aktienindex). It is calculated based on the value of shares of the 30 most liquid and reliable companies in Germany trading on the stock exchange. The DAX calculation takes into account the price of the most popular and traded stocks over the past three years. Exchange specialists constantly check the companies whose shares are taken into account when calculating the DAX and periodically update this list.

Changes in the composition of the DAX clearly demonstrate any changes in the country's economy. For example, the first DAX composition included five German banks, but now there are only two left - Commerzbank And DeutscheBank.

The basis of the German index is now made up of representatives of the chemical and automotive industries, since these areas are the main ones for the German economy. The index includes the following companies:

• BMW;
• Bayer;
• Volkswagen;
• Henkel;
• Continental;
• Daimler;
• BASF;
• Merck;
• K+S;
• Beiersdorf;
• Siemens;
• Lufthansa.

In addition to the DAX index, there are many highly specialized, “related” indices in Germany, which receive less attention than the main one;

• HDAX;
• TecDAX;
• CDAX;
• SDAX.

The second most important index is EuroStoxx50- a certain indicator of the economic situation in the European Union. The index is simultaneously calculated in five currencies.

Brokers with access to the Frankfurt Stock Exchange

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About promotions and listing

Shares of leading companies on the Frankfurt Stock Exchange are popular all over the world. They fully comply with all the strict conditions that are necessary to participate in the listing.

The first requirement for listing is that the applicant company must be located in a market segment where issuers are located that are as transparent as possible in their work ( Prime Standard). The second condition is that at least 10% of the shares must be in free circulation. Third, the company's head office must be located in Germany.

The turnover of any company is constantly changing. This is due to the activity of demand for a particular stock. The most stable four in this regard are the following companies:

1. The first place belongs to the largest concern BASF Societas Europaea. It includes 160 subsidiaries and produces 7 thousand types of products, including chemical and heat-resistant food coatings, synthetic rubber, pharmaceuticals and chemicals, and solutions for reducing automobile emissions.
2. Next comes the German insurance company Allianz SE. Now it is a huge concern offering insurance protection services to clients around the world.
3. Deutsche Bank AG- Bank of Germany. The client base numbers more than 13 million clients. The bank provides asset management services and is engaged in investment and commercial activities.
4. Company Bayer A, engaged in pharmaceuticals and chemistry, develops medicines.

It should be noted that about half of the companies listed on the FSE are foreign. Therefore, the Frankfurt Stock Exchange can be considered international.

A foreign company wishing to be listed must demonstrate reporting of its financial position and meet all FSE requirements for listing.

The exchange listing includes more than 1,000 companies with a total capitalization exceeding 2 trillion. US dollars. To the corporation Borse AG includes not only trading platforms, but also clearing companies, trading centers, banking institutions and official brokers.

Unique trading system Xetra

In 1997, the FSE introduced an electronic trading system Xetra(Exchange Electronic Trading). Due to its simplicity coupled with high reliability, the system quickly gained respect among traders, since working in the system is very convenient, and any operation can be performed from anywhere in the world.

More than 20 sites in Europe are connected to Xetra, including the pan-German Deutsche Borse AG, Frankfurt, Swiss SIX Swiss Exchange, Shanghai Stock Exchange And Eurex.

Xetra contains a set of more than 2.5 thousand various types of convenient trading instruments: investment funds, ETFs, ETSc commodity indices, ETNc debt obligations and many others. The company's brokers, with the introduction of Xetra, began to perform the functions of market makers.

The electronic system allows participants to conduct trading in various securities. However, the functions of the unique platform are not limited to this - it also allows you to trade raw materials, goods, purchase or sell electricity contracts.

The system constantly generates a set of data on sales and purchases in the so-called general order book. When a suitable counter order is received, the system itself executes it. Thus, Xetra is able to bring turnover to the highest level. Even if transactions are carried out with securities with a low liquidity indicator, the transaction processes will be effective in any case.

Speaking about the software itself, it should be emphasized that it has a modular structure and can increase and expand its functionality when additional functions are included.

For the convenience of traders, there are various options for accessing the system. As a rule, leased lines and the Internet are used for these purposes.

Thanks to Xetra, the process of trading securities will be under constant control, and any transaction will be monitored in real time by trading participants. If there is a change or deviation from the established rules, the Xetra toolkit will notify you of this by giving an appropriate signal.

The term "Borse" is translated from German as " stock exchange" This word meant the periodic meetings of wealthy merchants from Italy in the Buerse town square in the Belgian city of Bruges, which was named after the Van der Burse family (from the Latin " Bursa" – wallet, bag), who once lived in the city.

An interesting fact about mutually beneficial cooperation

Telegraphen-BauanstaltSiemens&Halske Corporation, henceforth known as Siemens ( whose shares are still included in the DAX index today), was discovered by a German businessman and his companion Johann Halske in 1847. Its activities were based on electronic telegraphy and developments in the field of exact sciences - optics and mechanics. Siemens became the first company that was able to enter the Russian market with its offer in the field of telecommunications technologies. The first order for the Russian government was for 75 telegraphs from Siemens und Halske in 1851. This marked the beginning of a long and warm relationship between Siemens and Russia.

Unlucky investor

In 1998, Jochen Wermuth was appointed to the position of director for investment management of global markets in the Russian branch of DeutschBank Russia. After not even working for six months, Jochen was removed from his position. The reason for his dismissal was that he, without the consent of management, invested the bank’s funds in one of the Russian GKOs. As the bank's press service later reported, Deutsche Bank's profits dropped by 83% during Wermuth's tenure.

Final points

Today, the German stock exchange provides about 90% of financial transactions carried out in Germany, and also controls 30% of the European market. More than 51% of the total income of the LSE comes from trading alone. The volume of trade turnover is 1459 billion euros.

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Perhaps I’ll start with a small lyrical digression. The Frankfurt Stock Exchange (FSE) is one of the oldest in the world, its origins date back almost to the 11th century. Today it is the main German stock exchange, which provides 90% of stock trading volumes in Germany and more than 60% of turnover in the European Union.

History of the exchange

The roots of the Frankfurt Stock Exchange go back to medieval trade fairs of the 11th century, although some historians point to the 9th century as the beginning of organized trading. In the 16th century, Frankfurt developed into a wealthy and vibrant city with an economy based on trade and financial services.

In 1585, an exchange was created to establish fixed exchange rates for currencies, which is considered the "birth" of the stock exchange. Over the next centuries, Frankfurt developed into one of the world's first stock exchanges, along with London and Paris. Bankers such as Mayer Amschel Rothschild and Max Warburg had a significant influence on Frankfurt's financial trade.

It was not until 1949, after World War II, that the Frankfurt Stock Exchange finally established itself as the leading stock exchange in Germany.

During the 1990s, the FSE was also the base for the New Market as part of the worldwide "dot-com" boom.

In 1993, Frankfurter Wertpapierbörse became managed by Deutsche Börse AG.

In 2018, the trading platform continues to occupy a leading position in the ranking of world exchanges. Millions of transactions in stocks, bonds, derivatives and synthetic financial instruments, currencies and gold are made here every day.

What is Xetra

Xetra is the main trading system of the German exchange (program, software). Xetra trading technology replaced the IBIS platform on November 28, 1997.

Through its Deutsche Börse Cash Market division, Deutsche Börse AG (pronounced Deutsche Börse) in Frankfurt am Main now operates two trading platforms based on Xetra trading technology:

1. Xetra (XETR) is the main market for German stocks and exchange-traded funds. Exchange commodities and notes are also traded here.
2. Börse Frankfurt (XFRA) and derivatives exchange Börse Frankfurt Zertifikate AG (formerly Scoach) migrated to Xetra trading technology on May 20, 2011.

In addition, Xetra trading technology has also been used on the Vienna Stock Exchange since November 1999. In December 2010, the Vienna Stock Exchange similarly introduced Xetra on the Ljubljana Stock Exchange. Trading technology also operates on the Prague (since November 2012), Budapest (since December 2013), Irish (since 2000), Bulgarian (since 2008), Maltese (since 2012), Cayman Islands Stock Exchange (since 2013 year) and Zagreb (since 2017).

Eurex Bonds, Deutsche Börse's trading platform for government bonds, is powered by Xetra trading technology. The new generation trading system operating on the Shanghai Stock Exchange was also developed based on Xetra trading technology.

Features of the XETRA system

You can trade on Xetra from anywhere in the world. Here are the key features of the system:

• Automatic entry of all transactions into a single register.
• Analysis of each individual sale or purchase order.
• Selection of counter orders.
• Choosing the most favorable price to obtain the greatest benefit from the transaction.
• Modular principle of software construction.
• Built-in tool for monitoring market performance - XetraObserver. It records the trader’s actions, summarizes analytics and reports deviations from standard actions.

How to list on the stock exchange?

The conditions for listing on the Frankfurt Stock Exchange are quite simple, but depending on the size of the company, two listing options are possible.

The first is “Standard” and is regulated by Deutsche Börse AG. The second is called “Premium”, and the governing document here is the Directive of the European Parliament, known as MiFID, “On Markets in Financial Instruments”.

Premium listing participants, in addition to matching the size of the business, must regularly conduct various educational events, conventions and meetings.

To enter one of the markets, a company must:

• Exist for at least 3 years.
• Prepare a prospectus.
• Bring financial reporting into compliance with international standards; IFRS standards (IAS/IFRS).
• The minimum market capitalization of the issuer must be EUR 1.25 million.
• The minimum placement volume is 10 thousand shares.
• Free float (number of shares in free float) at the time of placement - at least 25%.
• Six months before the listing, the company must undergo an audit and publish its results in English or German on its own website.

Pros and cons of the exchange

On the Frankfurt stock exchange, Xetra has established itself as a reliable and secure trading system. Its users note such advantages as execution prices in accordance with the market, low transaction costs, equality of trading participants, geographical location and anonymity of trading partners.

The main problems that were identified during the trading process were to ensure the stability and accessibility of exchange trading, scalability and long-term growth of activity in the market.

Most famous traded stocks

Of course, the largest in terms of turnover are the shares of such world-famous giants as Adidas, Lufthansa, Henkel, SAP, Bayer, Daimler, Deutsche Bank, Deutsche Telekom, Porsche, BMW, Volkswagen Group. They are also among the 30 most liquid stocks in the DAX index (blue chips).

How to access stock trading

In Russia, access to trading on the German stock exchange can be obtained through almost any broker (Otkritie, Finam, Kit-Finance, BCS, etc.). The problem here is that, according to Russian legislation, this can only be done by a citizen of the Russian Federation who has the status of a qualified investor (with more than 6 million rubles in his account).

Access can also be obtained abroad: through a foreign “subsidiary” of Russian brokers Kit-Finance (Estonia), Finam (Cyprus and the USA) or a foreign broker: IB, Exante, Captrader. In any case, you will have to pay tax on the dividends. Moreover, both in Germany and in Russia.

Rick Keith Opening CapTrader Exante

A Caution About Binary Options and Forex

Please note that under the guise of trading stock exchange instruments in Germany, including company shares, scammers offer binary options. Be careful, they have nothing to do with the securities market. This is a regular casino. Just like stocks are not traded on Forex because it is an interbank foreign exchange market. In addition, it is poorly adjustable.

Shares can only be accessed through a licensed broker.

Exchange indices

The main indices at Börse Frankfurt are the well-known DAX and its derivatives DAXPlus, Cdax, DivDAX, LDAX, MDAX, SDAX, TecDAX and VDAX.

In addition, the exchange calculates the key indicator of the entire European economy, Euro Stoxx 50, in 5 currencies at once.

Derivative "DAXs" mainly include companies from one of the economic sectors.

TecDAX consists of 30 high-tech companies whose shares are the most liquid. In particular, firms such as ADVA Optical Networking and Quality Service Communications AG (QSC), as well as software developer Software AG, are included here.

MDAX represents companies that follow the top thirty in liquidity. When calculating this index, the indicators of 50 issuers are used. In particular, this includes such well-known brands as Hugo Boss AG, Metro AG, Puma SE.

The SDAX index is calculated based on the value of shares of companies of the first group, which occupy places from 81 to 130 in terms of turnover on the stock exchange. Here you can find such famous brands as Tom Tailor Holding AG, Bauer AG and so on.

HDAX is a broad index that includes companies regardless of their industry. This includes firms represented in the indices described above. Among the companies we can note, for example, BB Biotech AG (works in the field of biotechnology) or Q Cells GMBH (produces solar panels).

The CDAX index is also a composite index. It includes more than 300 companies that represent the first and second listing groups. Thanks to this, this index can be considered as an indicator of the “health” of the German economy. It brings together companies from various fields, including automakers (for example, Volkswagen AG), banks (Commerzbank AG) and others.

Prospects for investing in indexes

An index is essentially a virtual portfolio of stocks. However, for an investor to collect it in the same proportions that are used to calculate the index, significant capital will be required. Therefore, large investment companies create investment funds that copy the index. They form a portfolio of stocks included in the index. Investors can then buy shares in this fund (mutual fund, ETF). This is the only way to invest in an index for the long term.

You can’t just go out and buy an index; it’s virtual and not for sale. But, you can buy a derivative instrument that is based on it - for example, a futures or an option. Both are sold only on the stock exchange; no forex/binary options have anything to do with this.

These two instruments are time limited and typically expire in 3 months. Therefore, they are used only for buy-sell speculation or hedging. Theoretically, you can make money on speculation, but not for long. Therefore, I advise investing for 3 or more years in ETFs and diversifying your portfolio, including with different instruments.

Its importance increased after the Second World War in the late 40s, when the trading platform took a leading position in Germany. Since 1993, the Frankfurt Stock Exchange has been managed by the Deutsche Boerse Group.

The total capitalization of the companies, and there are more than a thousand of them on the stock exchange, is about two trillion dollars. The turnover of funds on the Frankfurt Stock Exchange accounts for almost 90% of the trading turnover of all European stock exchanges. In 2017, a decision of the European Commission blocked the merger of this trading platform with the London Stock Exchange, which prevented monopolization of the market.

Stock indices

The main stock index of the Frankfurt Stock Exchange is abbreviated DAX; its fluctuations largely characterize the state of the German economy. This indicator is calculated based on the current stock prices of the thirty largest German companies.

In addition to the main index, its derivatives are not used; they are calculated based on the value of shares of the following categories:

• TecDAX. 30 companies from high-tech industries whose assets are highly liquid;
• MDAX. 50 largest corporations that are not included in TecDAX. This group includes the world famous brands Puma SE, Metro AG and Hugo Boss AG.
• SDAX. Companies occupying positions in the ranking ranging from 81 to 130, Bauer AG Corporation is the most famous representative of this group.
• HDAX is a broad index calculated from data on stock prices of firms from a wide range of industries.

The CDAX Composite Index reflects the stability of the exchange; its calculation is based on data from more than three hundred issuers, including the largest automakers, financial and credit institutions, as well as many other companies.

Xetra trading system

The functioning of the exchange is ensured by a complex software and hardware complex. The trading system is called Xetra and it was first launched in 1997. More than two dozen European and Asian trading platforms are integrated with this system, including the all-German and Shanghai ones.

The Xetra system allows you to perform purchase and sale operations of derivatives, shares, and securities. The Cash Market subsystem is used in the cash market, and Xetra-Gold is used for the acquisition and sale of banking metals. In total, the complex includes more than 2,500 instruments, including traditional ETFs, investment funds and others, as well as rarely used ETNc (debt securities) and ETSc (commodity index).

Main players

On the described trading platform, the purchase and sale of securities of a large number of companies takes place. The main players of the Frankfurt Stock Exchange are divided into three categories:

• banks;
• official exchange brokers;
• registered traders.

Each of them performs its own functions. Banks form the primary price and provide the bulk of transactions. Brokers accept orders from their clients and execute them according to the instructions they receive. Free traders do not have significant speculative potential, although their total number is large and they cannot act in a consolidated manner.

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