Deutsche Börse Group

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Deutsche Börse
DBoerse blue.gif
Headquarters Frankfurt/Rhein-Main, Germany
Key People Carsten Kengeter, CEO
Employees 3,700
Products Diverse range of trade-matching, clearing, and support services for equities, derivatives, and interest rate products
Twitter @DeutscheBoerse
LinkedIn Profile
Website http://deutsche-boerse.com
Releases Company News

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), Clearstream, the post-execution clearing and settlement house for multiple asset classes, the Eurex Derivatives Exchange, and, via Eurex, the European Energy Exchange (EEX) and the International Securities Exchange (ISE).

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

The company serves customers in Europe, America and Asia and has a presence in Luxembourg, Prague, London, Zurich, Moscow, New York, Chicago, Hong Kong, Singapore, Beijing and Tokyo, among other cities.

History

Deutsche Börse AG was founded in 1992, when it changed its name from Frankfurter Wertpapierbörse AG. The change was 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.

In 1997, the electronic trading system for cash markets Xetra was launched and in 2009 started a pan-European equity market, the Xetra International Market. However, in September of 2013 the exchange announced it will close the Xetra exchange on Dec. 13 to “concentrate liquidity in European blue chips.”[2]

In 2000 Deutsche Börse launched a subsidiary, Clearstream, a provider of of settlement and posttrade services for shares and bonds in domestic and international markets.

The exchange went public in February 2001, with a market capitalization of €4 billion. Its market cap stood at €9 billion at the end of 2011.

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 little known hedge fund called The Children's Investment Fund (TCI) led a shareholder revolt in early 2005. Seifert resigned 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.[3]

In November 2005 Reto Francioni was appointed CEO. 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 Börse 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.[4]

In July 2010, a company document said the exchange parent would target fund management firms, pension funds and insurers as new clients and would offer these customers direct services rather than through banks.

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, reports surfaced that Deutsche Boerse and NYSE Euronext were in "advanced talks" to merge. Such a merger would have created the world's largest stock exchange operator.[6] The U.S. Department of Justice approved the merger in late 2011,[7] but the European Commission later blocked the deal, saying the merged company would have a near monopoly.[8] In December of 2012, the Intercontinental Exchange announced that it would acquire NYSE Euronext.[9]

In February of 2013 Deutsche Börse struck a deal with Taiwan’s Taifex futures exchange under which Eurex would list Taiwanese stock index futures. [10]

On October 24, 2013, the company announced that it had purchased a minority stake in Global Markets Exchange Group International LLP, paying a single digit million GBP sum for the stake. GMEX Group is a London-based exchange business that has launched original interest rate swap futures contracts, derivatives indices and emerging markets exchange business partnerships enabled by multi-asset trading technology.[11]

In January of 2015 the Monetary Authority of Singapore approved Deutsche Börse's plans for a clearing house to be launched there in 2016. It will be known as Eurex Clearing Asia.[12] Deutsche Boerse also said it plans to open a derivatives exchange alongside the planned clearing house in Singapore as part of its effort to expand business in Asia. The exchange is scheduled to begin operations in the second quarter of 2016.[13]

On January 1, 2016, Deutsche Börse reshuffled the structure of its executive board, culminating in the creation of a Clients, Products & Core Markets division, led by Jeffrey Tessler.[14] The new division combined derivatives trading businesses (including International Securities Exchange (ISE)), the clearing house, and Clearstream’s settlement and custody business. Clients, Products & Core Markets is also responsible for coordinating group-wide product development and global sales activities.[15]

In March of 2016, after failed attempts to take over the London Stock Exchange in 2000 and 2005, Deutsche Börse and LSE agreed to merge into what would be the world’s biggest exchange operator by revenue and second-largest by market value. In what the two entities are calling a merger of equals, Deutsche Boerse stockholders would get 54.4 percent of the enlarged group in an all-share agreement, and Chief Executive Officer Carsten Kengeter would run the new business. The board would be equally split between directors from LSE and Deutsche Boerse. [16]

Britains' vote to leave the EU ("Brexit") dealt a blow to the planned merger, as Felix Hufeld, the head of the BaFin regulator, said London could not host the headquarters of the merged exchange nor could it remain a center for trading in euros. In addition, an EU official said the European Central Bank would push for the clearing of euro transactions to move to the common currency area within two years.

In spite of Brexit, LSE's shareholders voted in July 2016 to approve the merger; DB's shareholders voted in favor of the merger later that month. [17] [18]

Products and Services

Deutsche Boerse has multiple business areas:

  • Xetra organizes the cash market.
  • Eurex organizes the derivatives market. It also includes:
European Energy Exchange for energy derivatives and CO2 certificates
Eurex bonds offers a platform for inter-dealer off-exchange trading in fixed income securities
Eurex repo for secured money market business, such as securities lending
  • 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.

Acquisitions

In July of 2015, Deutsche Börse said it was buying the foreign-exchange trading platform 360T for €725m, in what would be its biggest acquisition in almost a decade.

DB also announced plans to buy out SIX, the group that operates most of Switzerland’s market infrastructure.

Alliances and Joint Ventures

On May 27, 2015, Deutsche Börse agreed to a joint venture with the Shanghai Stock Exchange and the China Financial Futures Exchange to launch a Frankfurt-based exchange for investors outside China to trade yuan-denominated securities. The venture, called China Europe International Exchange, will start offering cash instruments in the fourth quarter of 2015. Shanghai Stock Exchange and Deutsche Börse will each own 40% and China Financial Futures Exchange the remaining 20% of the venture.[19]

On January 18, 2017, Deutsche Börse announced that it was teaming up with four members of the Liquidity Alliance (LA), an international group of central securities depositories, to launch a blockchain technology initiative targeting cross-border mobilization of security collateral. The distributed ledger technology-based "LA Ledger" prototype aims to enable a centralized and more efficient allocation of fragmented security positions to cover financial obligations of participants in multiple jurisdictions.[20]

Key People

References

  1. Deutsche Börse Company Business Areas. Deutsche Börse Group.
  2. Deutsche Boerse to Close Market That Didn’t Gain Traction. Bloomberg.
  3. Deutsche Borse Company Profile. Referenceforbusiness.com.
  4. "Deutsche Borse Ends its Quest for Euronext". The New York Times.
  5. Deutsche Borse Taps Cinnober New Market Surveillance Technology. Cinnober.
  6. Analysis: Boerse/NYSE deal markets global endgame. Reuters.
  7. German financial authority approves Deutsche Börse / NYSE merger. FuturesMag.com.
  8. Mergers: Commission blocks proposed merger between Deutsche Börse and NYSE Euronext. European Commission.
  9. Intercontinental Exchange to Acquire NYSE Euronext For $33.12 Per Share in Stock and Cash, Creating Premier Global Market Operator. Intercontinental Exchange, Inc..
  10. Deutsche Borse plans derivatives clearing house in Asia. The Financial Times.
  11. Press Release: Deutsche Börse supports market innovation by acquiring a stake in GMEX Group. GMEX Group.
  12. Deutsche Börse takes step nearer Singapore clearing house. The Financial Times.
  13. Deutsche Boerse to open Asia derivatives exchange. Reuters.
  14. Realignment of Executive Board responsibilities. Deutsche Borse.
  15. press release. Finextra.
  16. London Stock Exchange, Deutsche Boerse Agree on Merger. Bloomberg.
  17. London Stock Exchange wins shareholder support for Deutsche Boerse deal. The Telegraph.
  18. Deutsche Boerse gets shareholder approval for LSE deal. Reuters.
  19. Deutsche Boerse Starts Yuan Market With Chinese Exchanges. Bloomberg.
  20. Deutsche Börse launches joint blockchain collateral project. The Trade.