What Is the Frankfurt Stock Exchange (FRA)?
Located in Frankfurt, Germany, the Frankfurt Stock Exchange (FRA) is one of the largest and most efficient trading facilities in the world. It is the largest of the seven stock exchanges in Germany and the twelfth largest stock exchange in the world by market cap. The FRA posts several indices, including the DAX, the VDAX, and the Euro Stoxx 50. Its owner is Deutsche Borse, which owns the other German exchanges as well.
Key Takeaways
- The Frankfurt Stock Exchange (FRA) is Germany's largest stock exchange and the twelfth largest in the world by market cap.
- The FRA is owned by Deutsche Borse and is home to several indices, such as the DAX and Euro Stoxx 50.
- Approximately 90% of the turnover in Germany is done on the FRA and a large portion of Europe's.
- Germany is the largest economy in Europe and the fourth largest in the world.
- As of May 2020, the FRA has a market cap of approximately $1.7 trillion.
- The two main trading venues on the FRA are Xetra and Borse Frankfurt.
- The DAX is a financial index that consists of 30 blue chip companies on the FRA. It is one of the most widely followed indexes in the world.
Understanding the Frankfurt Stock Exchange (FRA)
The beginnings of the Frankfurt Stock Exchange (FRA) can be dated back to trade fairs during the medieval times in the 11th century. By the 1500s, Frankfurt had become a bustling city with active trade and many financial services. In 1585, merchants in Frankfurt decided to establish a stock market to set regulated currency exchange rates for trading purposes. This is considered to be the beginning of the Frankfurt Stock Exchange (FRA).
The FRA has virtually all of the turnover in Germany, approximately 90%, and a substantial share of the turnover in Europe. This is not a surprise as Germany is the largest economy in Europe and the fourth-largest economy in the world, with a gross domestic product (GDP) of $3.9 trillion in 2019. The FRA's market cap as of May 2020 is approximately $1.7 trillion.
Frankfurt Stock Exchange (FRA) Trading Venues
The FRA offers two trading venues: Xetra and Borse Frankfurt. Much of the exchange's profits come from Xetra, particularly through its trading system, which has allowed an influx of foreign investors to enter the exchange. Xetra offers trading of German stocks and exchange traded funds (ETFs). It affords increased flexibility for seeing order depth. Xetra was one of the first global electronic trading systems and now accounts for more than 90% of all stocks that trade on the FRA and 30% of all exchange traded funds in Europe.
Xetra trades approximately 1,000 shares, 1,800 ETFs, exchange traded commodities (ETCs), and exchange traded notes (ETNs). It includes 170 participants from 16 different countries. It is open from 9 a.m. to 5:30 p.m.
Borse Frankfurt focuses on German and international securities. FRA employs specialists on the trading floor to tend to these trades. Borse Frankfurt has the widest range of securities, which includes 11,500 shares, 29,500 bonds, 1,500 ETFs, 2,800 funds, and 1.37 million securities and warrants. Borse Frankfurt is open from 8 a.m. to 8 p.m.
The DAX
The DAX (Deutscher Aktien Index) is an index on the Frankfurt Stock Exchange (FRA) that consists of 30 blue chip German companies taken from Xetra. It is one of the most followed and viewed indexes in the world with a market cap of approximately $1.4 trillion. It is the German equivalent of the Dow Jones Industrial Average (DJIA). The DAX index was created in 1988 and accounts for approximately 75% of the market cap on the Frankfurt Stock Exchange (FRA).
The index weightings on the DAX are calculated by using a free float methodology for the market cap, and a measure of the trading volume. Because the DAX is weighted, the larger companies will have more of an impact on the performance of the index. To be eligible, a company must trade 15% or more of its market cap publicly, be listed for at least three years, and represent the German economy.
The companies on the DAX are some of the largest and most well-known companies in the world. It includes Volkswagen, Adidas, Daimler (Mercedes), Deutsche Bank, Siemens, Merck, BWM, Allianz, and Bayer.
FAQs
At the Frankfurt Stock Exchange, private investors can buy and sell around 1.5 million securities of German and international issuers. This includes all German and many international stocks, funds, bonds as well as certificates and warrants.
How does a stock exchange work? ›
Stock markets work as organized platforms where buyers and sellers come together to trade shares of publicly listed companies. At their core, these markets operate on the principle of supply and demand, with share prices fluctuating based on the perceived value of companies and overall market conditions.
Who operates the Frankfurt Stock Exchange? ›
Frankfurter Wertpapierbörse (FWB®, the Frankfurt Stock Exchange) is one of the world's largest trading centres for securities. With a share in turnover of around 90 per cent, it is the largest of Germany's seven stock exchanges. Deutsche Börse AG operates the Frankfurt Stock Exchange, an entity under public law.
Which stock exchange is FRA? ›
Located in Frankfurt, Germany, the Frankfurt Stock Exchange (FRA) is one of the largest and most efficient trading facilities in the world. It is the largest of the seven stock exchanges in Germany and the twelfth largest stock exchange in the world by market cap.
Can I buy stock on the German stock exchange? ›
Foreigners can invest in German stocks by using an international broker that offers investors access to companies listed on the German stock exchanges or exchange traded funds that invest in them.
How does the stock exchange work for dummies? ›
The stock market is the collection of physical and electronic markets around the world where investors can trade shares of companies. Most trading in the stock market happens on stock exchanges. The role of exchanges is to link buyers with sellers and keep transactions flowing smoothly.
What is the stock exchange in simple terms? ›
What is a stock exchange? A stock exchange is a centralised location where the shares of publicly traded companies are bought and sold. Stock exchanges differ from other exchanges because the tradable assets are limited to stocks, bonds and exchange traded products (ETPs).
What is a FRA in stocks? ›
In finance, a forward rate agreement (FRA) is an interest rate derivative (IRD). In particular it is a linear IRD with strong associations with interest rate swaps (IRSs).
How many companies are listed on Frankfurt Stock Exchange? ›
Listed companies on the Frankfurt Stock Exchange 2017-2023, by domicile. As of 2022, there were 489 companies listed on the Frankfurt Stock Exchange.
What are the trading hours in Frankfurt? ›
At Börse Frankfurt trading hours are in general from 8 until 22 CET. Differing from this are trading times for bonds (8 until 17:30).
Germany used to be a fragmented country in over 300 entities, varying in size and form. This fostered a sense of economic independence which is still evident today in the German capital market – with seven different regional stock exchanges.
How does German stock market work? ›
Xetra: The electronic trading platform
- every trading day from 9 a.m. to 5.30 p.m. . In Xetra, buy and sell orders usually meet with a price idea in a central, open order book. In the order book, the orders face each other and the system automatically checks every buy and sell order for its executability.
Can Germans invest in US stock market? ›
While U.S. investment securities are regulated by U.S. law, there are no provisions forbidding individuals who are not citizens of the U.S. from participating in the U.S. stock market.
How does a stock exchange make money? ›
The NYSE makes money through revenues from transaction fees it charges to brokerages, asset-management companies, and market makers. In addition, all members of the NYSE are required to pay yearly membership fees as well as an additional fee to apply.
How does a stock get listed on an exchange? ›
Each exchange sets its own requirements, which typically include minimum levels of cash flow and company assets. The company also must adhere to the exchange's standards of corporate governance. In order to be listed, a company must meet the qualifications set by one of the stock exchanges.
What is stock exchange for beginners? ›
The stock exchange or broker acts as an intermediary in the secondary market. If you buy and sell a share on the same day, the transaction is called an intraday trading. At the end of the day, the trader books either a profit or a loss.
How does stock trading actually work? ›
Stock trading involves buying and selling stocks frequently in an attempt to time the market. The goal of stock traders is to capitalize on short-term market events to sell stocks for a profit, or buy stocks at a low. Some stock traders are day traders, which means they buy and sell several times throughout the day.
