New Listing Requirements on the Frankfurt Open Market
February 28, 2011
For the completion of the new conditions in the "First Quotation Board", it is now official announced by Deutsche Börse:
Every company currently listed on the Frankfurt Stock Exchange, and listed in the future, must verify that they have met the conditions of the new listing requirements by September 30, 2011. This includes companies listed prior to February 14, 2011.
Companies that do not comply with the conditions of the new listing requirements (including notification to the exchange that the requirements have been met) will be delisted effective November 15, 2011.
If you decide to meet the new requirements by prospectus or other means, we can help. Companies should immediately begin the process, as the time to complete is limited.
Changeover to the Xetra Specialist Model
Effective 23 May 2011
The Open Market segment of the Frankfurt Stock Exchange will be changing its trading model on 23 May 2011. The future trading model will be implemented on the Xetra-based trading platform, whereby the lead brokers/market makers shall now be designated as "Xetra Specialists". The start of trading will be 8:00 am. The changes being implemented are designed to make trading at the Frankfurt Stock Exchange both faster and more globally efficient. Trading in the old Xetra model (“Xetra 1”) which was limited to only one auction per day, will terminate on the 27 May 2011.
Your current lead broker/market maker will continue on as your specialist under the new trading model. The primary difference is that, in their new role as Xetra Specialist, they are required to meet stringent performance requirements regarding the trading of your securities. In particular:
The Xetra Specialist will be required to keep a binding minimum listing volume of minimum €2,000 on both the bid and ask/offer. The new Xetra system for the Open Market will match trades every 2 minutes. Thus, the potential for an offer (sale order) of stock would basically force the Xetra Specialist to purchase €2,000 of stock at his required bid. Of course, the effect would be that the Xetra Specialist would likely drop his bid drastically each time he purchases another €2,000 of stock, until the stock is at a bid price where he is more content with purchasing the shares;
Maximum spread (the Deutsche Börse will specify the standards soon). This means that the market maker will be required to have a maximum percentage between the bid price and the ask/offer price. Thus, if the Xetra Specialist is forced to drop the bid price, he will be forced to drop the ask/offer price as well.
Maximum execution periods (pursuant to execution period classes).
If we were unable to meet these Frankfurt Stock Exchange minimum bid and offer performance requirements, the Xetra Specialists would be faced with lower fee income and potentially a warning issued by the Frankfurt Stock Exchange. In the case of repeated breaches, specialists may also lose all or part of their securities’ mandate.