FSE Listings

American depositary receipt (ADR)

A receipt issued by an American bank for foreign shares

On NYSE and NASDAQ, investors trade ADRs instead of the shares they represent.

American depositary share (ADS)

Depositary shares by means of which the registered shares of foreign companies can be traded on the US exchanges NYSE and NASDAQ

Admissions Office

Stock exchange body in charge of admitting securities to the Official Market (Amtlicher Markt)

Before a security is admitted to the Official Market, the Admissions Office examines the listing prospectus to determine whether the issuer and the sponsoring bank have met admission and disclosure requirements.

The Admissions Office comprises at least 20, but no more than 24, members who are elected by the Exchange Council. Of these, not more than half may be professionally involved in exchange trading. Members are elected for three years, and can be re-elected. The Admissions Office appoints one chairman and up to two deputy chairmen.

The Admissions Office has a quorum when at least five voting members have cast their vote, either verbally or in writing. A simple majority is required to pass a resolution. In case of a tie, the chairman or the member in charge of the session casts the deciding vote. Any member who owns shares in the company seeking admission is not eligible to vote.

Important regulations on the Admissions Office are contained in the Stock Exchange Act (Börsengesetz), section 4 para. 3 and section 37, as well as in the Stock Exchange Rules and Regulations.

If you are interested in listing on the Frankfurt Stock Exchange contact info@fselistings.com or www.fselistings.com

Admission to the exchange

Prerequisite for a listing on the stock exchange

At FWB® Frankfurter Wertpapierbörse (Frankfurt Stock Exchange) the Admissions Office is responsible for deciding whether to admit securities to the Official Market; the admission of securities to the Regulated Market is determined by the Admissions Committee. Each market segment has its own admissions requirements. However, all issuers must publish an offering prospectus containing the fundamental data required for an evaluation of the security.

Admission to General Standard does not require any further action on the issuers’ part. However, issuers have to apply for admission to Prime Standard; a listing in this segment is subject to the fulfillment of high international transparency requirements.

If you are interested in listing on the Frankfurt Stock Exchange, contact info@fselistings.com

Admission of securities to the Regulated Market

Decision of the Admissions Office of an exchange to admit a security to the Regulated Market

In order to have a security admitted to the Regulated Market, the issuer, together with an underwriting bank (a bank or investment company), must first submit an application and a listing prospectus to the Admissions Office. These documents provide information on the type and volume of the security to be admitted. The issuer and the bank are responsible for the accuracy of the contents.

The admissions application is to be posted in the stock exchange building and published in the list of quotations (Kursblatt), in the journal for statutory stock market announcements (Börsenpflichtblatt) and in the Federal Official Gazette (Bundesanzeiger). The listing prospectus is published by the issuer in the journal for statutory stock market announcements. As soon as the company is admitted to the Regulated Market, the prospectus is to be made available free of charge at the underwriting banks and the Admissions Office named therein.

Pursuant to the Stock Exchange Listing Act (Börsenzulassungsverordnung) the most important conditions for admissions and follow-up requirements are:

• The issuing company must have existed for at least three years.
• The expected issuing value must be at least €1.25 million.
• For shares, the total par value must be at least €250,000.
• At least one interim report on the financial situation and general business developments must be published during the financial year.
• Information that is relevant to the company must be published forthwith.

If you are looking to become listed on the Frankfurt Stock Exchange, contact info@fselistings.com

Acquisition currency

Means of payment used in the takeover of a company

This term is used primarily in connection with a merger that takes place between two listed companies via the exchange of their registered shares.

If you are interested in performing a reverse merger on the Frankfurt Stock Exchange or listing a company on the Frankfurt Stock Exchange, contact info@fselistings.com

Liquidity and transaction costs: Two important criteria of market quality

In the discussion about the relative advantages of securities markets, two factors are regularly the focus of attention: liquidity and transaction costs. In the framework of portfolio restructuring, liquidity is by far the most important decision-making criterion for investors (Schiereck [1995]) and is regarded as the central quality characteristic in securities markets.

At the macro-level, liquid capital markets are essential for the efficiency of capital allocation in modern economies and lead to low cost of capital for issuers. At the micro-level, a liquid market enables access to a large number of trading interests and thus ensures that investors can carry out their transactions at any time.

In order to maximize the net return on an investment in securities, it is especially important for investors to be able to execute their buy and sell transactions at the lowest possible transaction costs. Therefore, the anticipated transaction costs should ideally be included as a decision-making criterion when deciding on a specific investment, i.e. stock picking, so that securities can be compared and/or benchmarked in terms of the anticipated net return.

Although the importance of liquid markets and low transaction costs is undisputed, there is neither a uniform understanding of the term liquidity, nor an operational model for the integrative analysis of liquidity and transaction costs.

With this motivation in mind, Deutsche Börse AG has set out to structure the discussion of liquidity and put it on a more objective footing. The goal is to identify a measure of liquidity based on transaction-cost analysis that quantifies liquidity in a single figure. To do this, the so-called Market Impact is being introduced as the Xetra Liquidity Measure. This figure rates the liquidity of the traded instruments on the basis of a uniform methodology and provides investors with a tool for the objective assessment of the trading costs. On this basis, the liquidity of individual securities as well as whole marketplaces can be analyzed in a comparable and transparent manner.

To read further on this topic go to:

http://deutsche-boerse.com/dbag/dispatch/en/binary/gdb_content_pool/imported_files/public_files/10_downloads/31_trading_member/10_Products_and_Functionalities/40_Xetra_Funds/30_Xetra_Liquidity_Measure/liq_wph.pdf

List on the Frankfurt Stock Exchange today contact info@fselistings.com or go to www.fselistings.com

FRANKFURT STOCK EXCHANGE LISTING and IR/PR – Vital to the Success of Your Public Company

More buying than selling makes stocks go up, and more selling than buying makes a stock go down. This is a very simplistic explanation, but it’s also true. The magic question is, what causes more buying than selling? The answer is very complex, and depends on many factors, but again, in very simple terms, the factors that cause more buying than selling are 1) positive company developments 2) the dissemination of news describing such positive development to the public. This is often achieved by issuing news releases and, more importantly, making sure they are seen by many potential investors through quality IR/PR.  IR/PR is not cheap, but is vital to the success of your public company. Even if your public company is experiencing extremely positive developments, without a good IR/PR program, it is unlikely that your stock will achieve a desirable level of liquidity. The reason for this is simple…the positive developments will not have any effect on the stock’s liquidity or stock price if no potential investors see the news and thus, do not buy the stock.

If you are looking to get listed on the Frankfurt Stock Exchange or hire an IR/PR professional for a listed frankfurt stock exchange company contact info@fselistings.com www.fselistings.com

Designated Sponsor- Frankfurt Stock Exchange

Shares in one of the selection indices of Deutsche Börse must be continuously tradable. The underlying criterion is the liquidity of the security. Designated Sponsors secure higher liquidity by quoting binding prices for buying and selling the shares. The probability that placed orders are executed increases considerably. Based on the principle ”liquidity attracts liquidity“, actively supported shares are more popular with investors.

Designated Sponsor Definition: Banks or specialized traders who bridge temporary imbalances between supply and demand in Xetra electronic stock trading, thereby improving a stock’s liquidity. They do so by quoting bid and ask limits (market making), either on their own initiative, on request of a market participant (quote reuest) or in auctions. The fact that these quotes are shown in the order books gives investors greater security for limiting their orders. Depending on the market segment involved, a stock may have one or more designated sponsors, or none at all. On arrangement with issuers, designated sponsors with the necessary capabilities may also provide research or investor relations services.

The specialist trading platform of which the Frankfurt Stock Exchange Open Market utilizes makes it one of the most competitive exchanges in the world for listing upon.

If you are looking to list on the Frankfurt Stock Exchange, contact info@fselistings.com

Here is the designated sponsors guide: http://deutsche-boerse.com/dbag/dispatch/en/binary/gdb_content_pool/imported_files/public_files/10_downloads/31_trading_member/30_Market_Making/20_Stocks/10_Designated_Sponsors/DS_Formulare/Designated_Sponsor_Guide.pdf

These days, the majority of Frankfurt Stock Exchange buy and sell orders are executed via XETRA, the electronic trading platform. Even so, almost all shares listed on the Frankfurt Stock Exchange are also tradable on the floor of the exchange by specialists called lead brokers, and commonly referred to as market makers. Each Frankfurt Stock Exchange traded stock has its own lead broker/market maker that is responsible for the stocks quote as well as for calculating the actual execution prices. The quotes are non-binding and are to serve as an orientation for the market. There is only one lead broker/market maker per stock. The lead broker compiles all buy and sell orders in the ‘order book’. These orders in the order book serve as the basis for the quote.

If you are looking to go public on the Frankfurt Stock Exchange, contact info@fselistings.com today!

Are you looking to go public on the frankfurt stock exchange, look no further and contact info@fselistings.com

For a quotation in continuous trading, it may be necessary, depending on the liquidity of the share, to engage at least one Designated Sponsor as a liquidity provider – regardless of admission to Prime or General Standard. In order to increase the liquidity in trading, Deutsche Börse recommends engaging two Designated Sponsors. Quotation in continuous trading is one of the prerequisites for inclusion of the share in the selection indices.

The liquidity of a share is measured on the basis of the Xetra Liquidity Measure (XLM)* and the average daily order book turnover.

The share is deemed to have sufficient liquidity when

• 1. Xetra Liquidity Measure = 100 bp (1 basis point = 0.01%)
• 2. average order book turnover = €2.5 million

If one of the two criteria is not met, at least one Designated Sponsor is necessary for admission to continuous trading.

The list includes all securities in liquidity category A which do not need a Designated Sponsor because of sufficient liquidity. Corresponding shares** of these securities are continuously traded. Securities, which are not included in the list, require at least one Designated Sponsor for continuous trading.

*The Xetra Liquidity Measure measures liquidity in the dimensions width, depth and immediacy.
**i.e., all other shares of a company admitted to trading, e.g. new shares, ordinary shares or preferred shares.

Xetra Liquidity Measure Liquidity is the central quality criterion for the efficiency of marketplaces in electronic securities trading. Liquid markets are for the benefit of investors as they allow exchanging cash and equities at minimum trading costs. Generally speaking, liquid assets can be converted immediately and at minimal costs into cash and vice versa.

  So far, liquidity has often been approximated by figures of trading activity for the sake of simplicity, e.g. turnover volumes, number of trades or transaction frequency. But trading activity does not truly reflect liquidity on an instrument level. With the Xetra Liquidity Measure (XLM), Deutsche Börse now provides an innovative concept to assess liquidity in electronic order book trading on the basis of implicit transaction costs. XLM measures the committed liquidity of the Xetra open limit order book by the Market Impact costs, in other words the costs of a immediate demand for liquidity. Market Impact costs are paid by investors who demand liquidity and are collected by investors who supply liquidity via limit orders. The provision of liquidity is thus rewarded and every transaction on a securities market leads to a redistribution of the Market Impact costs from investors demanding liquidity to investors supplying liquidity.

XLM quantifies these Market Impact costs in a single figure. The measure is calculated since July 2002 over the whole trading day for every instrument in continuous trading on Xetra. The lower the XLM the less Market Impact costs arise trading an instrument, the higher is the instrument’s liquidity and efficiency in order book trading.

The Xetra Top Liquids are determined by means of the Xetra Liquidity Measure. The XLM is presented in basis points (100 basis point = 1 percent) in relation to the Market Impact costs of a certain order volume for the round trip (opening and closing a position in one point of time). For example, a XLM of 10 basis points and EUR 25,000 order volume means that the Market Impact costs of buying and selling a certain instrument are equal to EUR 25. Deutsche Börse provides the Xetra Top Liquids on daily figures for the last trading day.

Please find more detailed information in the article “The Market Impact – Liquidity Measure in Electronic Securities Trading“.

Exerpt from the Deutsche Borse Website.