Frankfurt Stock Exchange: Its brief overview
Xetra is a Frankfurt stock exchange launched in 1997 and managed by Deutsche Börse. Its services include trading in stocks, funds, bonds and commodity contracts.
As mentioned above, Deutsche Börse Group is managed by Xetra. Deutsche Börse Group is a diversified stock exchange organization. It offers a wide range of products and services that cover the value chain of the financial industry, including listing, trading, clearing and settlement, as well as custody services, liquidity management and much more.
The Deutsche Börse Group employs over 5,000 people, is headquartered in the financial centre of Frankfurt am Main and has branches in Luxembourg, Prague, London, Zurich and Moscow, New York, Chicago, Hong Kong, Singapore, Beijing and Tokyo.
Part of Xetra’s success is its relatively early launch. As such, it was one of the first great electronic and global trading systems. It accounts for more than 90 percent of all trading on the Frankfurt Stock Exchange or FRA. It has an average daily turnover of over 5 billion euros of approximately 2,500 liquid traded securities, which include German, international shares and exchange products such as ETFs. This makes Xetra one of the world’s leading markets for German equities and the leading trading platform for ETFs in Europe. The IT system on which Xetra trading was based was replaced in July 2017 by modern T7 technology. Since then, bidders have benefited from increasingly shorter delays and synergies as T7 is also used on the Eurex derivatives exchange.
There are several important stock indices based on the Frankfurt Stock Exchange and managed by Xetra. These include DAX, Eurostoxx 50 and VDAX. Xetra DAX is the German equivalent of the Dow Jones Industrial Index in America and the Financial Times 100 stock exchange in London. This index of blue chips of their exchange includes 30 most important German companies that are traded on the FRA.
Frankfurt Stock Exchange: pros and cons
For centuries of its work it is quite logical that the exchange has earned itself a reputation of a reliable trading system. According to Xetra users, its main advantages include execution prices in accordance with the market, low transaction costs, equality of trading participants and anonymity of trading partners.
But among the disadvantages are problems with stability and availability of exchange trading, scalability and long-term growth of activity in the market.
International giant companies naturally have the largest turnover on shares. This list includes Adidas, Lufthansa, Henkel, SAP, Bayer, Daimler and many others.
Investors from Russia can easily start trading on the world famous stock exchange using traditional brokerage methods. However, it should be noted that according to the legislation, an investor who has the status of a specialist is allowed to trade, i.e. has at least 6 million rubles at his disposal. In addition, it is possible to get the desired pass to the exchange through foreign brokers. However, it should be noted that in this case, the trader will still have to pay tax on dividends.
