Frankfurt Stock Exchange (FRA) Overview
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Frankfurt Stock Exchange (FRA) Overview

3 Min.

The Frankfurt Stock Exchange (FRA), located in Frankfurt, Germany, is one of the world's largest and most efficient trading facilities. Owned by Deutsche Borse, it hosts significant indices like the DAX and operates two primary trading venues, Xetra and Borse Frankfurt. The FRA has a substantial share of European turnover, driven by Germany's economic prominence.

Basics

The Frankfurt Stock Exchange has a rich history dating back to medieval trade fairs in the 11th century. However, its formal establishment came in 1585 when Frankfurt's merchants inaugurated a stock market to regulate currency exchange rates for trade. Today, the FRA is the largest among Germany's seven stock exchanges and ranks twelfth globally by market capitalization. Its owner, Deutsche Borse, also controls other key German exchanges.

Economic Significance

Germany, as the largest economy in Europe and the fourth-largest worldwide, holds immense economic clout with a Gross Domestic Product (GDP) of $3.9 trillion in 2019. The FRA mirrors this economic prowess with a market capitalization of approximately $1.7 trillion as of May 2020, making it a vital hub for investors and traders.

Frankfurt Stock Exchange Trading Venues

Xetra: Global Electronic Trading

Xetra, one of the FRA's trading venues, plays a pivotal role in the exchange's success. This global electronic trading system has opened doors for foreign investors, contributing significantly to the FRA's popularity. Xetra offers trading in German stocks and Exchange-Traded Funds (ETFs) while providing enhanced order depth visibility.

Key Xetra statistics:

  • Trades around 1,000 shares, 1,800 ETFs, Exchange-Traded Commodities (ETCs), and Exchange-Traded Notes (ETNs).
  • Features participation from 170 entities spanning 16 countries.
  • Trading hours from 9 a.m. to 5:30 p.m.

Borse Frankfurt: Comprehensive Offerings

Borse Frankfurt, the FRA's other trading venue, specializes in both German and international securities. It relies on specialists on the trading floor to facilitate these transactions, offering an extensive range of securities, including:

  • 11,500 shares
  • 29,500 bonds
  • 1,500 ETFs
  • 2,800 funds
  • 1.37 million securities and warrants

Borse Frankfurt's trading hours extend from 8 a.m. to 8 p.m.

The DAX: A Market Benchmark

The DAX (Deutscher Aktien Index), an index within the Frankfurt Stock Exchange (FRA), features 30 leading German companies selected from Xetra. It stands as one of the most closely monitored indices globally, boasting a market capitalization of approximately $1.4 trillion. Often likened to the Dow Jones Industrial Average (DJIA), the DAX significantly influences the FRA's overall market performance.

DAX Index Weightings

The DAX calculates its index weightings using a free float methodology based on market capitalization and trading volume. Consequently, larger companies have a more substantial impact on the index's performance. To qualify for inclusion, companies must meet several criteria, including:

  • Public trading of at least 15% of their market capitalization.
  • Listing on the exchange for a minimum of three years.
  • Representation of the German economy.

DAX Constituent Companies

The DAX comprises some of the world's largest and most renowned companies, including:

  • Volkswagen
  • Adidas
  • Daimler (Mercedes)
  • Deutsche Bank
  • Siemens
  • Merck
  • BMW
  • Allianz
  • Bayer

These companies collectively drive the DAX's influence and offer investors insights into the health of the German economy.

Conclusion

The Frankfurt Stock Exchange, deeply rooted in history, has evolved into a global financial powerhouse. With its significant market capitalization, diverse trading venues, and influential DAX index, the FRA remains a pivotal player in the world of finance. Its prominence continues to attract investors and traders seeking opportunities within Germany's robust economy.

Frankfurt Stock Exchange (FRA)
DAX (Deutscher Aktien Index)
Exchange-Traded Fund (ETF)
Exchange-Traded Commodity (ETC)
Exchange-Traded Note (ETN)
Gross Domestic Product (GDP)
Germany
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