Frankfurt Stock Exchange by Luc Verville

Frankfurt Stock Exchange

The importance of the German economy to the Euro zone, European Economic Area and European Union more generally, is of key significance. One website that covers EU affairs particularly well is EUObserver . In many instances, how Germany is faring has a wide impact. This is because interest rates for the Euro are set - in part - on the impact any change will have on member economies. Responsibility for setting these interest rates lies with the European Central Bank . Since Germany has the largest economy with the Euro currency, any interest rate changes must be able to assist - or at least not harm - the German economy. The ultimate impact of this is that smaller Euro zone economies - perhaps in the Baltic countries or Ireland, for example - have interest rates set for them with very little significance paid to the impacts on their smaller nation. This was very evident through the early years of this century when Ireland was growing at an incredible pace, and almost certainly needed higher interest rates to slow the economy and ensure that growth was sustainable.

Within the corporate world, the daily movements of the Frankfurt stock market are reported worldwide. Such important news channels as CNN will provide daily and mid-session updates - which demonstrates the importance of the exchange. Frankfurt is the most important of Germany's eight regional stock exchanges. Trading is via a traditional floor based auction system. Trading in German equities also happens via a order driven and matching system which is known as Xetra. It is this for which the exchange is best known - Xetra Dax 100 is the name of the most important Frankfurt Stock Exchange Index. On the trading floors, specialists trade the larger stocks. The Xetra system is available for every listed company. Orders are input by brokers in a pre-trading phase which is then followed by a call phase. This is known as the price discovery period. After this time, continuous trading occurs and is then completed with a closing call phase. The official settlement period is T+2, though many overseas investors will settle at T+3. Clearstream acts as a clearing house for all German trades in equities. Since the creation of the euro currency, all German listings are quoted in euros.


By Luc Verville Thank you to our Sources