What is the Deutsche Börse Group?
Deutsche Börse Group is a German-based financial services company and one of the largest exchange organizations in the world.
Deutsche Börse operates an integrated business model.
Its activities cover every phase of the market life cycle from capital formation, trading, clearing and settlement through to the custody of securities:
|Pre-IPO and Listing||Deutsche Börse assists companies at all stages of development with capital formation:|
|Exchange-Traded Markets||Operates exchange trading for a variety of different asset classes through nine unique marketplaces (see below for more details):|
|Clearing||Deutsche Börse’s two clearing houses act as central counterparties (* central counterparties act as a buyer to the seller and a seller to the buyer):|
|Collateral and Liquidity Management|
|Market Data and Regulatory Services|
|Indexes||Deutsche Börse licenses several proprietary indexes|
|Technology||The exchange offers a wide range of technology services including:|
Deutsche Börse operates several exchange brands for trading its products:
|Cash Market||Xetra||Xetra transacts:|
|BörseFrankfurt||More than one million German and international securities trade on this exchange.|
|Tradegate Exchange||An exchange geared for private investors trading:||Regulated market under MiFID|
|Warrants Exchange||Runs on Börse Frankfurt trading infrastructure|
|EEX Group||Spot markets:||Europe’s leading energy exchanges|
|Derivatives Market||Eurex Exchange||Derivatives markets:||Offers trading on international benchmark products|
|Eurex Repo||International financing in secured money markets:||Offers trading in international fixed income and equity securities in a variety of different currencies|
|EEX Group||Derivatives markets:||Europe’s leading energy exchanges|
|Foreign Exchange||360T®||Web-based trading technology|
History of the Deutsche Börse Group
The following timeline lists some key events in the history of Deutsche Börse Group:
|1585||Birth of Frankfurt Stock Exchange||Merchants from all across Europe meet in Frankfurt to establish uniform exchange rates for currencies|
|1854||Introduction of the trading floor||Frankfurt Stock Exchange creates an enclosed area accessible only to officially approved traders|
|1896||Integration of after-hours trading into official exchange organization|
|1949||Founding of Frankfurt central securities depository|
|1958||Foreign shares listed for first time since end of war|
|1968||Free floating of gold||Leads to resumption of gold trading|
|1970||Founding of new data center||Data center becomes one of the precursors of Deutsche Börse Systems AG|
|1983||Standardization of equity options||Secondary trading commences|
|1987||ntroduction of KISS price information system||Replaces display boards on the exchange floor|
|Creation of DAX index|
|1990||Founding of Deutsche Terminbörse exchange||Futures trading begins for the first time in Germany|
|1998||Founding of Eurex||Merger of the Soffex and DTB futures market produces first cross-border derivatives exchange|
|2000||Founding of Clearstream International|
|European Energy Exchange||Begins trading in spot electricity|
|2005||Establishment of Entry Standard||Allows listing of more small and medium sized companies|
|2010||Acquisition of major interest in Tradegate Exchange||Expands presence in retail market for trading equities, bonds, funds and exchange-traded funds (ETFs)|
|2011||Floor trading migrates to Xetra technology-based trading|
|2014||Launch of first renminbi bond|
|2015||Acquisition of 360T® trading platform|
|2016||Launch of Venture Network||Facilitates financing rounds between investors and growth companies|
Who Are the Deutsche Börse Group Executives?
The Executive Board of Deutsche Börse Group consists of five individuals who oversee the management of the daily operations of the exchange group.
Executive Board of Deutsche Börse Group
|Theodor Weimer ||Chief Executive Officer||Weimer has served as CEO of Deutsche Börse Group since January 2018. |
Some of his previous roles include: HypoVereinsbank / UniCredit Bank AG, Munich - Spokesman of the Management Board
Bayerische Hypo-und Vereinsbank AG / UniCredit Group, München
Goldman, Sachs & Co. oHG, Frankfurt/Main
|Andreas Preuss||Deputy Chief Executive Officer||Preuss is responsible for IT, operations, the data business and the subsidiaries EEX and 360T. |
Some of his previous roles include:
|Gregor Pottmeyer ||Chief Financial Officer||Pottmeyer has served as CFO and a member of the Executive board since 2009.|
Some of his previous roles include:
|Hauke Stars||Executive Board Member|
|Jeffrey Tessler||Executive Board Member|
How is the Deutsche Börse Group Regulated?
Deutsche Börse Group touts as its objective the operation of “efficient, secure and transparent markets.” As one of the largest exchange organizations in the world, Deutsche Börse Group operates in a highly regulated environment. Its activities fall under the jurisdiction of many regulatory agencies and laws throughout Germany and Europe.
Deutsche Börse Group monitors and actively participates in discussions on national and European market regulation and closely follows global regulatory trends.
The exchange group also produces statements, white papers and studies outlining the challenges regarding market regulation and offering possible regulatory solutions. You can find links to these publications at the regulation section of the Deutsche Börse website.
Regulation of Deutsche Börse Group exchanges takes place at three levels:
Organizations at each of these levels complement each other in carrying out the rules of the exchanges and enforcing market regulations.
The Trading Surveillance Office (TSO) is an independent supervisory body in Deutsche Börse Group.
Its responsibilities include monitoring the proper conduct of exchange trading as well as the pricing process.
TSO oversees price fixing on the exchange as well as electronic trading on Xetra® and Eurex®. If TSO notices irregularities in trading, it notifies supervisory bodies and management boards of the exchange. In some cases, TSO notifies BaFIn (see below).
The state level agency responsible for regulation of Deutsche Börse exchanges is the Exchange Supervisory Authority.
This organization has similar responsibilities as TSO, but at the state level:
- Pricing processes
- Supervision of the proper conduct of trading
- Investigation of violations of the Exchange Act
The Exchange Supervisory Authority examines irregularities reported to it by TSO. In addition, it may conduct its own supervision of markets.
Along with the Disciplinary Committee and the management boards of the exchanges, the Exchange Supervisory Authority may also impose sanctions on market participants. It also approves the rules and regulations of the Frankfurt Stock Exchange and Eurex.
The Federal Financial Supervisory Authority (BaFin) is responsible for investigating cases of suspected insider trading and market manipulation at the federal level.
BaFiN is an independent federal institution and the financial regulatory authority in Germany. Legislation in 2002 merged three predecessor agencies and empowered BaFin as the principal financial regulator.
What Products Does Deutsche Börse Group Trade?
Deutsche Börse Group traders can transact business in three categories of asset classes/products:
- Cash / Spot market: Transactions in which delivery and payment take place shortly after the transaction is concluded
- Derivatives: Securities that derive their value from the performance of another instrument such as an asset, index or interest rate. Futures and options are the most commonly traded derivatives.
- Foreign Exchange: Currency markets
|Cash/Spot||Shares/Equities||Exchanges where shares trade:|
|Exchange traded funds / Exchange traded products|
|Structured products, certificates and warrants||A pre-packaged investment strategy based on derivatives including:|
|Commodity spot market||EEX offers:|
|Equity index||Futures and options on major global indexes|
|FX||Rolling spot futures and futures and options|
|Dividends||Dividend futures on single stocks or indexes|
|Market-on-close futures||Trade on Eurex|
|Total return futures||Implied equity repo trading - EURO STOXX 50® Index Total Return Futures|
|Volatility||Trade on Eurex|
|Corporate bond index futures||Cash settled index future with a quarterly expiry|
|Exchange-traded product||Financial instruments with ETFs as their underlying|
|Property||Derivatives that replace real property with the performance of a real estate return index|
|Eurex/KRX||Derivatives based on Korea Exchange (KRX) KOSPI 200 options|
|Power commodity||Derivatives that provide investment exposure to future power prices|
|Natural gas commodity||Derivatives markets for natural gas prices in various European and US markets|
|Energiewende products commodity||Renewable energy derivatives|
|Derivatives||Coal||Financially settled futures for different delivery points|
|Environmental markets commodity||Emissions auctions and secondary markets|
|Freight commodity||Dry Bulk Freight Futures|
|Metals commodity||Iron ore futures and options|
|Agricultural products commodity||Financially settled derivatives contracts:|
|Eurex Exchange commodity|
|Repo Market||Eurex Repo is a leading provider for international financing in the secured money market business (repo and securities lending)|
|Foreign Exchange||Foreign Exchange||Through 360T® traders can trade:|
How Does the Deutsche Börse Group Conduct Trading?
Trading models on Deutsche Börse Group exchanges vary by the asset class. However, all venues employ transparent trading models that define for customers the following factors:
- Order types
- Price determination rules
- Matching principles
- Order handling (or auction types)
- Frankfurt Exchange
Continuous Trading with Auctions
Xetra offers the “continuous trading with auctions” service for trading liquid securities. This service combines auctions, which occur three times a day, with continuous trading at other times.
Traders can enter market or limit orders and specify additional execution conditions and validity constraints (e.g., conditional orders). Traders can consult the Market Model for the Trading Venue Xetra manual for additional details on how Xetra conducts trading.
Liquidity through Designated Sponsors
Designated sponsors are banks and broker dealers that are exchange members and provide liquidity in less liquid issues. Designated sponsors must adhere to minimum criteria for posting bids and offers and providing liquidity.
The trading instruments on the Frankfurt Börse necessitate different models for trading than those offered on Xetra:
Continuous Auction with Specialist
Since less liquid shares, funds and bonds trade on the Frankfurt Börse, the exchange employs specialists to provide liquidity.
Continuous Auction with Market Maker
Market makers make structured products more appealing to trade by adding additional liquidity
Tradegate allows order types with intelligent control. This market model is described in the Terms and Conditions section of Tradegate.
- Eurex Exchange
- Eurex Repo
- EEX Group
The main feature of the Eurex market model is the central limit order book. Traders enter all orders and quotes into this book during the trading day.
Eurex traders can enter seven types of orders on the exchange:
- Limit Orders
- Market Orders
- Closing Auction Limit Orders
- Closing Auction Market Orders
- Book-or-Cancel Orders
- Stop Market Orders
- One-Cancels-The-Other Orders
Eurex also supports strategy trading including:
- Futures Combinations: time spreads, packs & bundles, strips, inter-product spreads
- Standard Options Strategies
- Non-Standard Options Strategies
- Option Volatility Strategies: Option legs against an underlying futures leg or, in the case of equity options, the exchange of shares
Traders can consult the Eurex website for additional details about how the exchange conducts trading.
What Types of Memberships Does the Group Offer?
Each Deutsche Börse Group exchange has its own individual policies and applications for membership. In addition, each exchange has its own classes of membership. Traders should consult the Deutsche Börse website for specific details.
Deutsche Börse notes the following about traders and trading companies on the vast majority of their trading venues:
- They have to meet strict requirements
- They have to be considered reliable
- They have to possess the required professional skills (relevant expertise and practical experience) to prove their suitability.
Some Deutsche Börse trading venues require examinations of traders as part of the admissions process. Deutsche Börse Group and its related companies offer training courses and examination materials for prospective traders. Information about these courses is available here.
What Are Deutsche Börse Group’s Margin Requirements?
Deutsche Börse Group operates two main clearinghouses – Eurex Clearing AG and European Commodity Clearing AG. These clearinghouses act as central counterparties (they are buyers to sellers and sellers to buyers) on all transactions on Deutsche Börse exchanges.
(* The acquisition of North American Nodal Exchange by Deutsche Börse Group subsidiary EEX Group has added a third exchange for Nodal Exchange customers.)
Each of these clearinghouses employs the necessary procedures to protect market integrity and safeguard market participants from systemic risk.
Each clearinghouse also tries to balance market safeguards with the optimization of capital efficiency. Specific margin requirements vary among the clearing houses.
Eurex Clearing Margin
Eurex employs two main methods for the calculation of traders’ margin requirements:
- Risk Based Margining (RBM)
- Eurex Clearing Prisma
Risk Based Margining
Eurex previously offered the RBM Calculator, which is a computer-based simulation program to calculate and simulate margin. The program allowed traders to calculate margin on both new and existing positions for listed derivatives, equities and bonds cleared by Eurex Clearing. (Note: Eurex Clearing decommissioned RBM at the end of 2015 and mandated that clients migrate to the newer Eurex Clearing Prisma risk margin system).
Eurex Clearing Prisma
Eurex Clearing Prisma is the newest method for calculating margin requirements for exchange participants. Eurex Clearing Prisma offers two different margin calculators for customers of the exchange.
The Prisma Online Margin Calculator is a browser-based calculator for Members running on Eurex Clearing’s production and simulation environments.
The Prisma Margin Estimator (PME) is a newer calculator that offers enhanced margin analysis capabilities.
European Commodity Clearing Margin
ECC is a Central Counterparty (CCP) licensed under European Markets Infrastructure Regulation (EMIR).
In the development of its margin system, ECC works closely with partner exchanges, clearing members and the financial supervisory authority.
ECC uses two main types of margin:
- Spot Margin: ECC measures credit exposure on a real-time basis 24/7 using Current Exposure Spot Margin (CESM). Spot traders must post Initial Margin Spot Market (IMSM), which serves as a buffer to cover exposure from movements in spot markets. Any margin shortfalls must be covered immediately with additional collateral.
- SPAN® Margin Model: ECC uses the SPAN® Margin Model to calculate futures and options margin on at least a daily basis. Traders generally have to post initial margin based on the riskiness of a position and any possible offsets ECC may apply. Sometimes ECC will require additional margin to account for factors such as illiquidity, concentration risk in an asset class or other factors.
Nodal Clear uses an expected shortfall methodology for its initial margin calculations. The calculation is designed to cover an expected two day loss to a 99.7% confidence level.
What Are the Fees and Charges for Traders?
Each Deutsche Börse Group exchange has its own exchange and clearing fees.
What Market Data is Available?
Deutsche Börse Group makes a variety of different types of market data available to its customers. The exchange group also makes regulatory services available to its customers.
Real-time market data: Market participants can obtain real-time data either directly though the exchange or through authorized vendor partners of the exchange. Deutsche Börse Group offers real-time data in the following products:
- Spot markets
- Derivatives markets
- Energy and Commodities
- European spot markets
- Fixed income
- FX markets
- Asian markets
- The exchange group also offers two MiFID services
Analytics: The exchanges offer real-time order book and trade analytics that cover market liquidity and trends:
- Eurex IOC Liquidity Indicator for Options
- Eurex Real-time Analytics
- Intraday Volatility Forecast
- Risk Alerts
- Xetra Real-time Analytics
Historical Data: The exchange provides historical data, which allows traders to back-test trading strategies.
Reference Data: The exchange’s reference data allows vendors to accurately disseminate data to other market participants.
What Educational Materials Are On Offer?
Deutsche Börse operates Capital Markets Academy, which offers training in a variety of capital markets subjects. The Academy offers several ways for market participants to learn:
Training for Exams
The Academy offers on-site training to prepare market participants for the exams administered by the exchanges. Both the Frankfurt Stock Exchange and Eurex Germany require the certification of traders through examinations.
The Academy offers on-site certification programs for both clearing and trading. Traders can be certified in two categories: Certified Financial Engineer and Certified Derivatives Trader. Clearing participants can receive a designation as a Certified Clearing Specialist.
The Academy offers seminars and systems training for trading, back office and capital markets professionals.
Traders can obtain basic stock exchange knowledge free of charge at the Frankfurt Exchange website. In addition, the Eurex website offers e-lectures for the Certified Derivatives Trader certificate program.
Does Deutsche Börse Group Have Vendor Partners?
Deutsche Börse Group works with many Independent Software Vendors (ISVs) to supply data to market participants. You can obtain a full list of these vendors along with their products and contact information at the Vendor List section of the website.
Traders can also use the services of outside vendors to connect to Deutsche Börse Group exchanges. Traders can obtain a full list of these vendors here.
How Can You Get Started Trading?
Many regulated brokerage firms offer contracts for difference (CFDs) based on products traded on Deutsche Börse Group exchanges.
CFDs are a derivative instrument that offers retail traders a different way to invest in financial markets. CFDs allow traders to use leverage to bet on the price of financial assets. The value of a CFD is the difference between the price of a financial instrument at the time of its purchase and its current price.
Many regulated brokers worldwide offer CFDs on shares, commodities, indexes, forex and other financial assets. Customers deposit funds with the broker, which serve as margin. The advantage of CFDs is that traders can have exposure to financial assets without having to purchase shares, ETFs, futures or options.
Traders can open an account at one of these regulated brokerage firms and begin trading CFDs based on products traded on Deutsche Börse Group exchanges.