Table of Contents
Introduction
Deutsche Börse AG is a German stock exchange firm based in Frankfurt. Established in 1993, it has become a top European stock exchange. It connects to the German stock market and many other international exchanges.
Let’s explore the history of Deutsche Börse AG and its influence on the world financial market.
Overview of Deutsche Börse AG
Deutsche Börse AG is a German financial services provider. It is famous for managing the DAX and MDAX stock market indices. In addition, it operates Xetra and Eurex electronic markets. It is one of the world’s top 20 largest securities exchanges, listed on the Frankfurt Stock Exchange and Xetra.
It was formed in 1993 as a joint venture between Deutsche Börse Systeme AG and Reuters GmbH. It specializes in analyzing and administering stock markets. It also owns Clearstream Banking, one of Europe’s largest post-trade services providers. Its broad product range includes indices, options markets, equity derivatives, commodities derivatives, foreign exchange derivatives, structured products trading systems (ETR), and floor brokers networks.
Deutsche Börse AG gives customers tech-based solutions to assist their investments in the DAX30 Index or SDAX30 index. It also offers comprehensive content regarding investing opportunities through technical analysis services from independent brokers/analysts.
Early History
Deutsche Börse AG, one of the world’s oldest and most renowned stock exchanges, has a fascinating and long history. It was founded in 1585 in Frankfurt am Main, Germany. The purpose of this exchange was to trade and exchange shares and securities primarily within the German-speaking community. The exchange expanded and added other products and services in the following centuries.
Let’s take a closer look at the beginning of Deutsche Börse AG.
Founding of the Frankfurt Stock Exchange
The Frankfurt Stock Exchange was established in 1585 by a group of wealthy merchants. They wanted to make the market more liquid and easier to access. Initially, it traded in items such as wheat and metals. By 1645, securities were being traded too. In 1812, Prussia officially recognized the independent exchange. It then only focused on stock trading.
In 1868, Anthony Gibbs & Sons – a British trading house – made the first international securities transaction between a Swedish buyer and an American seller. It made Frankfurt an important financial center. Several companies offered their shares on the market, including Allianz Versicherungs-AG (insurance) in 1912 and Deutsche Bank in 1915.
In 1983, Deutsche Börse AG fully adopted electronic trading. It made it one of Europe’s biggest companies. Frankfurter Wertpapierbörse and SWX Swiss Exchange formed a joint venture in 1997. It created a leading platform for institutional investors, with protection for investors at every step.
Expansion and Growth of the Exchange
The root of the Deutsche Börse AG goes back to 1585. At that time, an exchange opened in Frankfurt am Main to help merchants. Through many years of development and enlargement, the business became what it is today with the founding of the Frankfurt Stock Exchange by Emperor Wilhelm I in 1879. In the late 1960s, computerized trading systems changed trading practices, making exchanges faster and more lucrative.
Deutsche Börse offers many modern products and services in reply to this alteration. From clearing services for stock exchange operations to investment funds governing and futures trading platforms. Plus, Deutsche Börse has purchased a lot of companies in Europe, Asia, and North America to extend its international market reach. Also, it has set up its electronic trading system, Xetra. This platform is the basis of Deutsche Borse’s equity transactions and provides low-latency financial data distribution and various analysis tools for traders everywhere.
Modern History
Deutsche Börse AG’s modern history started in 1993. That’s when the Mercantile and Banking Exchange joined with the Frankfurt Stock Exchange. Until 1997, the two companies remained separate. Then the newly combined entity was listed on the stock exchange, boosting its place in the world’s financial markets.
After that, Deutsche Börse AG grew through investments and acquisitions. Tech advances and financial newness shaped these changes.
Mergers and Acquisitions
Deutsche Börse AG (DBAG) was founded in Munich in 1989 as the combination of two existing stock exchanges: the Frankfurter Wertpapierbörse and the Harvester Börsenverein.
In 1998, DBAG merged with the Hamburg Stock Exchange. DBAG acquired the Berlin Stock Exchange the following year and started offering futures trading in 2005.
In 2009, DBAG looked to expand its presence in Europe and acquired Liffe and Stoxx from the London Stock Exchange. The move also gave DBAG access to options and futures trading markets. That same year, DBAG bought Clearstream Banking Luxembourg and Securities Technologies International (STI).
In 2010, DBAG made a deal with NYSE Euronext to join forces. It was also proposed that they create a “pan-European” stock exchange. Shareholders gave the go-ahead once concessions were made around access to European equity indices and clearing services.
In 2014, DBAG was renamed Deutsche Börse Group after incorporating Clearstream and STI. Three years later, in 2017, DBG proposed merging with London Stock Exchange Group Plc to form one of Europe’s largest market infrastructure providers. However, this plan failed to materialize due to antitrust laws, which would have reduced competition in European capital markets.
Recent Developments
Deutsche Börse AG was founded in 1992 and has since adapted to tech, international markets, and regulations. With a focus on innovation, the company has promised to respond quickly to industry changes and use technology to stay ahead.
They have acceleration programs for fintech start-ups at their capital markets lab, Deutsche Boerse Labs. Start-ups get access to expertise and contacts to further their projects. They also make venture capital investments and acquired Market Technologies, which focuses on predictive analytics.
For digital transformation, they invested in tech infrastructure and developed digital services. These include the Xetra trading system, Eurex Clearing Prisma, Eurex Bonds Trading, and an integrated trading platform. In addition, they use cloud tech for an efficient and secure clearing system, providing superior services compared to competitors.
FTI is transforming into a leading source of information tech services for financial institutions. It consolidates commodities business units and invests in Clearstream Holdings S A/ LuxCSD, Trayport, and FX Connect. BaFin monitors these companies and ensures they adhere to EU security standards, protecting customer data during Brexit or any economic instability.
Impact
Deutsche Börse AG has a rich history. It was founded in Frankfurt in 1585. The exchange was for trading securities and commodities. Through the centuries, it turned into a powerful financial firm. It has many subsidiaries and holdings. So, its effect on the financial world is huge. It includes its growth and how it influenced global markets.
Here, we will look at the historical impact of Deutsche Börse AG on the global financial markets.
Economic Impact
Deutsche Börse AG, established in 1993, has had a tremendous economic influence. It offers a centralized securities market with services such as ETFs, structured products, and derivatives. Xetra is its primary market, used by European traders to trade various assets.
The firm’s achievement is mainly due to the pre-trade transparency principle, allowing all participants to see bids and offers publicly before trading. It makes Deutsche Börse one of the most efficient markets in Europe (or even the world) – with order execution times of 75 milliseconds.
Investors can access research and investment advice regarding new products on Deutsche Börse’s venues. It gives them the necessary information to make informed decisions when dealing with European securities markets.
Moreover, Deutsche Börse provides services like:
- Clearing and settlement through Eurex Clearing AG
- Direct access through Eurex Repo, allowing investors from outside Europe to use its technology.
These initiatives enhance liquidity support for investment banks, fund managers, and private investors in certain regions, aiding price discovery and economic development in areas where Deutsche Börse operates.
Social Impact
Deutsche Börse AG is devoted to its social responsibility. Over the years, they have implemented various sustainability and poverty reduction initiatives. It includes engaging businesses with their Equity Platform, offering financial grants, and creating online money-management services to educate citizens.
The company also supports educational and environmental programs in Germany. Examples include online courses about money management and expanding access to healthy food for young farm start-ups.
Deutsche Börse AG also invests in reducing its carbon footprint. It includes:
- Improving energy efficiency
- Offsetting emissions
- Giving up coal investments
- Avoiding companies with animal cruelty or human rights violations.
Conclusion
In 2015, Deutsche Börse AG celebrated 20 years of success as a top global stock exchange operator. It had expanded its markets to include stocks, bonds, derivatives, investment funds, and ETFs. Over this time, Deutsche Börse modernized its infrastructure to protect investors and keep costs low.
In 2019, the company bought Instinet LLC (now Börse Global Markets) for €349 million.
Deutsche Börse is planning for 2021 with two new services:
- Exchange Electronic Trading will be via an in-house platform,
- and a futures/options clearing house.
They are also teaming up with international exchanges. This positions Deutsche Börse at the cutting edge of capital markets, with current products and services plus future initiatives.
