Market Segments and Transparency Levels
What is what?
Investors demand transparency, liquidity, legal certainty and
integrity. Clearly defined rules and stipulations ensure a
well-functioning capital market, which in turn is a key
prerequisite for investors who wish to invest in companies listed
on the stock exchange.
The rules, which provide investors with legal certainty and transparency, are either set by the public legislator or the stock exchange itself. In Europe, there are two ways of accessing the capital market: EU-regulated markets and markets that are regulated by the stock exchanges themselves (regulated unofficial markets). At FWB® Frankfurter Wertpapierbörse (the Frankfurt Stock Exchange), companies may list in the EU-regulated market segments Official Market or Regulated Market, or they may choose to include their shares in trading on the Open Market (Regulated Unoffical Market),which is regulated by the Frankfurt Stock Exchange itself.
The three market segments, Official Market, Regulated Market and
Regulated Unofficial Market, provide the legal frameworks for three
different transparency levels: Prime Standard, General Standard and
The Official and Regulated Markets are segments based upon public law, namely the German Securities Trading Act (WpHG). The admission criteria and ongoing transparency requirements are prescribed by the European legislator. Companies in the Official or Regulated Market fulfill the highest European-wide transparency requirements and enjoy all advantages of a full exchange listing.
The Regulated Unofficial Market, which was repositioned as Open Market in October 2005, with its sub-segment Entry Standard, is a segment based on private law. Companies are included in trading at fewer formal requirements. Entry Standard affords young small and medium-sized companies cost-efficient access to the capital market. For this reason, it is particularly aimed at qualified and experienced investors.
Besides these market segments that are regulated by law, there are two smaller market segments for foreign shares from stock exchanges outside of Germany. International blue chips from Europe and the US can be traded in a special quality segment, Xetra Stars. Newex is the trading segment for central and eastern European securities on the Regulated Unofficial Market of the Frankfurt Stock Exchange.