Deutsche Börse

Note on spelling: the German ö is equivalent to the English oe; both Börse and Boerse are correct.

Deutsche Boerse Group (German: Gruppe Deutsche Börse) is a holding company whose subsidiaries operate the Frankfurt Stock Exchange (German: Frankfurter Wertpapierbörse, FWB) and Eurex Derivatives Exchange, as well as the Clearstream post-execution clearing and settlement house and other exchange service providers. Deutsche Boerse AG is the group's marketplace organizer for the trading of shares and other securities.

Deutsche Börse's product and services portfolio includes securities and derivatives trading, transaction settlement, the provision of market information, and the development and operation of electronic trading systems.^[1]

The company serves customers in Europe, America and Asia and has locations in Germany, Luxembourg, Switzerland, Spain, Czech Republic and the USA, as well as representative offices in Chicago, Dubai, Hong Kong, Lisbon, London, Moscow, New York, Paris, Singapore and Tokyo.

Contents 1 History 2 Latest News 3 Products and Services 4 Key People 5 References

History

Deutsche Boerse was founded in 1993, as part of an ongoing effort to consolidate Germany's fragmented securities industry. Ten percent of the shares were distributed among the seven regional German stock exchanges outside of Frankfurt, but Frankfurt-based banks retained the bulk of the shares.

The exchange went public in February 2001, with a market capitalization of €4. Its market cap has risen steadily and stands at €24 billion in early 2008, placing it near the middle of the DAX stock index. The vast majority of its shareholders are now outside Germany.

Just before the IPO, management of Deutsche Börse and the London Stock Exchange agreed in principle to merge, but failed to convince their shareholders – primarily in London – to sign off on the plan.

The exchange focused on organic growth until 2004, when it attempted mergers with both the SWX Swiss Exchange and, once again, with the London Stock Exchange (LSE).

The latter led to the departure of the exchange's well-known Chief Executive Werner Seifert, and Chairman Rolf E. Breuer, after a previously unknown hedge fund called The Children's Investment Fund (TCI) led a shareholder revolt in early 2005. Seifert submitted his resignation, effective immediately, on May 9, 2005, and Breuer left a few months later. Seifert is credited with transforming the Frankfurt Exchange from a provincial market to a major player on the European stage.^[2]

In 2006 Reto Francioni followed Seifert as CEO, and one of his first acts was to suggest a “Merger of Equals” with pan-European exchange Euronext, whereupon a bidding war with the New York Stock Exchange (NYSE) ensued. Deutsche Börse eventually withdrew its proposal, and NYSE acquired Euronext in 2006. Deutsche Borse officials said at the time that the companies had too little in common to integrate and that the stronger rise in Euronext’s share price compared to DB's had made the acquisition too expensive.^[3]

Latest News

In July 2010, a company document said the exchange parent will target fund management firms, pension funds and insurers as new clients and will offer these customers direct services rather than through banks. As part of its efforts, the group will offer client asset protection services beginning in November 2010.

In October 2010, Deutsche Börse Group announced their third quarter results with a slightly higher year on year rise. Revenues were up 1 percent compared to third quarter 2009. ^[4]

On Jan. 25, 2011, Scila Surveillance, a multi-asset solution marketed by Cinnober, was selected for Deutsche Börse Group's two largest exchanges; Eurex and Xetra.^[5]

In early February 2011, it was announced that Deutsche Boerse and NYSE Euronext were in "advanced talks" to merge. Many industry participants believed this global behemoth exchange would be a "game-changer" for the derivatives markets. ^[6] However, on April 1, 2011, NASDAQ OMX Group and IntercontinentalExchange proposed a transaction to acquire NYSE Euronext for $42.50 Per Share, a 19 percent premium over the offer from Deutsche Boerse.^[7]As part of the proposal, ICE would purchase NYSE Euronext’s derivatives businesses, and NASDAQ OMX would retain NYSE Euronext’s remaining businesses, including the NYSE Euronext stock exchanges in New York, Paris, Brussels, Amsterdam and Lisbon, as well as the U.S. options business. A combination of NASDAQ OMX and NYSE Euronext would merge the trading, listings, options and market technology businesses of the two companies to create a leading international exchange, headquartered in New York City, with a geographic footprint in sixteen countries and best-in-class technology expertise that is used in over 60 markets internationally. ICE and NASDAQ OMX will continue to operate as separate businesses throughout the proposed transaction, as well as after its completion.^[8] In September of 2011 it was announced that Germany’s Federal Financial Supervisory Authority (BaFin) had approved the merger of Deutsche Börse and NYSE Euronext. With BaFin’s decision, the merger had reached an important regulatory milestone in Germany. The BaFin examination is comparable to the shareholder control procedure by the stock exchange regulators.^[9]

In April 2011, Deutsche Borse Group introduced DAX Risk Control Indices, which measure a hypothetical portfolio that adjusts the risk of the underlying DAX Index. This portfolio includes an investment in the DAX Index and the money market rate, as measured by the Euro Overnight Index Average (EONIA).^[10]

On June 8, 2011, Deutsche Borse's Clearstream and CETIP announced a deal to launch a collateral management outsourcing service in July 2011. The new Brazilian-based service, allows CETIP customers to handle collateral exposure in their time zone and in real-time. The goal is to help those firms manage their risk across OTC derivatives markets, with an initial focus on collateralization of OTC derivative exposures managed by CETIP. Phase two will focus on assets eligible at Clearstream, thus allowing customers to meet collateral obligations from a larger collateral pool. CETIP and Clearstream began working on the partnership in March 2010, according to a Reuters report.^[11]

In January 2012, European antitrust examiners recommended against the deal that would create the world's largest exchange. Deutsche Boerse CEO Reto Francioni would become CEO of the global behemoth, if approved.^[12][13]

Products and Services

Deutsche Boerse has five operating segments:

• Xetra organizes the cash market.
• Eurex organizes the derivatives market.
• Clearstream is responsible for post-trade processes in the cash and securities markets.
• Market Data & Analytics calculates indices and distributes content related to Deutsche Boerse products.
• Information Technology builds and operates trading platforms.

Key People

• Reto Francioni, CEO

References

1. ↑ About Us. Deutsche Boerse Group.
2. ↑ Deutsche Borse Company Profile. Referenceforbusiness.com.
3. ↑ "Deutsche Borse Ends its Quest for Euronext". The New York Times.
4. ↑ Deutsche Börse AG: Q3/2010 Result, Cost guidance 2010, Development of ISE. website.
5. ↑ Deutsche Borse Taps Cinnober New Market Surveillance Technology. Cinnober.
6. ↑ Analysis: Boerse/NYSE deal markets global endgame. Reuters.
7. ↑ NASDAQ OMX & ICE Joint Proposal for NYSE Euronext. NASDAQ OMX Group.
8. ↑ Press Release. Nasdaq.
9. ↑ German financial authority approves Deutsche Börse / NYSE merger. FuturesMag.com.
10. ↑ Press Release. Deutsche Borse.
11. ↑ Brazil's Cetip in talks with Germany's Clearstream. Reuters.
12. ↑ NYSE, Deutsche Boerse Face Questions As Deal Nears Brink. Dow Jones.
13. ↑ Rethinking Roles as Merger Falters. WSJ.