Deutsche Brse says it wants to re-position and more strongly market the Regulated Unofficial Market of the FWB Frankfurt Stock Exchange.
The Regulated Unofficial Market in Frankfurt is already the largest market segment in Europe: around 4,200 bonds, and 52,000 warrants and certificates, as well as equities from more than 5,900 German and international companies are traded there. As part of the international positioning of the segment, Deutsche Brse is changing the name of the Regulated Unofficial Market to “Open Market” as of 25 October. The Regulated Unofficial Market of the FWB Frankfurt Stock Exchange is based on the minimum requirements for securities trading and is regulated by the Exchange. The segment is growing in importance as a listing platform for small and medium-sized companies seeking alternative means of flotation, involving reduced regulatory requirements and moderate expenses.
The international positioning of the Regulated Unofficial Market of the FWB is one in a series of measures aimed at increasing its attractiveness and internationalism. These include the steps taken to further improve execution quality and service for investors, which went into effect on 1 July, as well as the easing of access to trading on the FWB. Traders from international trading member firms will be able to participate in floor trading at the FWB using their Xetra credentials. To this end, the FWB harmonizes the trader assessment, subject to approval by the Exchange Council, which is due to meet on 19 October.
In order to make the Regulated Unofficial Market more attractive for bonds, Deutsche Brse cut the admission fee for bonds on the Open Market from €750 to €150 on 10 October, and introduced an upper limit of €15,000 per member firm and calendar year.
Deutsche Brse will also launch the Entry Standard on 25 October as new part of the Open Market with added transparency requirements for companies. The aim of the Entry Standard is to enhance cost-efficient capital market access for companies included in the Open Market, combining low regulatory requirements with heightened investor visibility. The Entry Standard is designed to appeal to small and medium-sized companies from all sectors, which aim to utilize the FWB’s core functions as regulated trading platform and to raise capital. In addition, an index will track the performance of all companies in the Entry Standard.
“With the introduction of the Entry Standard as part of the Open Market, Deutsche Brse is extending its primary market offering with a focus on small and medium-sized companies,” said Rudolf Ferscha, Chairman of the Management Board of the Frankfurt Stock Exchange (Frankfurter Wertpapierbrse, FWB), and member of the Executive Board of Deutsche Brse AG. “With the international positioning we are enhancing the attractiveness of the Open Market for international investors and are providing an even easier access to our market”, adds Rainer Riess, Deputy Chairman of the Management Board of the Frankfurt Stock Exchange (Frankfurter Wertpapierbrse, FWB) and Managing Director Stock Market Business Development.
In the Open Market, other than in the Prime Standard and General Standard regulated by EU Directives, less formal listing criteria are met. Equities are admitted to exchange trading at the request of a trading member registered at the FWB. For public offerings, a prospectus that has been examined and approved by the Supervisory Authority, is required, where for private placements, a non-public expos prepared by the company is sufficient.
Companies whose stocks are included in the Entry Standard agree to comply with additional publication requirements that offer increased transparency for investors. Companies are required to publish their audited consolidated annual financial statements and interim reports, as well as up-to-date company profiles and corporate calendars on their websites. Furthermore, companies in the Entry Standard must publish all significant company news or information that may influence equity prices without delay on their website. FWB trading member firms, who apply for admission of their stocks to trading, are required to observe and guarantee the compliance with these additional publication requirements. In addition, companies in the Entry Standard must nominate a so-called Deutsche Brse Listing Partner who provides ongoing guidance and support services before, during, and after admission.
Significant transparency requirements and rules of conduct for investor protection that must be upheld on organized markets like the Prime Standard and General Standard do not apply to the Open Market and Entry Standard. The Open Market and Entry Standard are primarily designed for investors capable of assessing opportunities and risks within a less regulated market segment.