Berlin Stock Market

Börse Berlin has two market places under one roof. Apart from traditional trading on Xontro, the trading system of all floor exchanges in Germany, Börse Berlin operates the trading platform ETS under the brand Equiduct. Equiduct Systems Ltd. is responsible for the operation, and the maintenance and further development of the trading system.

Shares, bonds and funds: Berlin offers the full spectrum

Approximately 50 percent of instruments traded on Xontro are equities, with a strong focus on foreign companies. Nearly all NASDAQ securities are traded in Berlin, but companies from China or South Africa are also available. International Blue Chips are represented as well as interesting small caps; in total Börse Berlin enables trading in over 15,000 shares from 82 countries.

Foreign bonds compliment the international security selection at Börse Berlin. In Germany many of these are traded only in Berlin. Naturally Börse Berlin has the full range of fixed interest securities of the German Federation and its constituencies with bonds from companies and other issuers also on offer. Certificates and warrants round off the security offering in Berlin.

Alongside equities and bonds, investors find a large selection of public funds. FondsPlus is the market segment for actively managed investment funds from all product groups – among them equity funds with different investment focuses, real estate funds, annuity funds, money market funds, funds of funds, mixed funds and sustainability funds. Furthermore, a variety of Exchange Traded Funds (ETFs) and Exchange Traded Commodities (ETCs) are also on offer.

Information on new companies and news including share splits, de-listings, name changes and other corporate events can be found in the Notices section which is updated daily on trading days. More information about trading costs is available on the page Xontro in the Fee Structure section.

Equiduct – Best Execution, Order by Order

Equiduct is a pan-European trading venue offering two liquidity pools: PartnerEx, provides order by order best execution and the HybridBook, a fully electronic, ultra low latency platform. Around 1,100 European Blue Chips are traded on the platform. Alongside this Equiduct offers market data such as the VBBO – that is the best price you can effectively trade on, calculated on the basis of 7 relevant markets for two volumes – and the market analysis tools LFA and LFI. More information about Equiduct is available on the Equiduct Website at www.equiduct.com.

Two Market Places

Two market places under one roof

Börse Berlin uses Xontro as its trading platform since 1992. Xontro is a professional order-routing, trading and settlement system. It supports the entire trade process from electronic order routing to price fixing to settlement. In contrast to a fully automated trading system like XETRA prices are still fixed by humans – so called lead brokers – on Xontro. Xontro supports the lead broker in the price finding process. The system shows cumulated Buy and Sell offers. Out of these, the price that enables the highest turnovers is determined by way of an auction. The price is indicated to the lead broker who then carries the orders out accordingly.

Xontro enables the lead broker to intervene in order to regulate the market. They may assume a liquidity generating function for illiquid stocks, so investors get a chance to trade stocks that would otherwise not be tradeable. This means that the lead brokers step in as temporary counterparty in a trade that would not get carried out automatically otherwise, due to the lack of a counterparty. This is particularly interesting for investors seeking to trade less liquid foreign stocks.

Next to Xontro Börse Berlin operates the fully electronic trading platform ETS under the brand Equiduct. Equiduct provides a central limit order book called Hybrid Book and a best execution service called PartnerEx, which provides order by order best execution. The connection to several clearing agencies provides high flexibility in clearing and settlement. In addition Equiduct offers market participants access to a variety of market data.

More information about Equiduct is available at www.equiduct.com.

Market Segments

Börse Berlin has two market segments, the Regulated Market and the Open Market. The Open Market has the sub-segment Berlin Second Regulated Market (BSRM).

The Regulated Market

The Regulated Market is a market segment that is governed by public law. The proceedings for the admission of securities to the Regulated Market are subject to public law, the admission requirements are regulated by the “Exchange Law”, the “Exchange Admission Provision” and the “Securities Prospectus Act”.

The Regulated Market was established in 2007 through fusion of the Regulated and the Official Market. The admission requirements to the Regulated Market resemble the former admission requirements to the Official Market.

Companies that want to launch their IPO on the Regulated Market, need to fulfil the following criteria:

• They need to have existed at least three years
• They need to have equity capital of at least 1.25 million €
• At least 10,000 shares need to be issued with a freefloat of at least 25 %
• Submission of an offering prospectus aprroved by BaFin with information about financial statements, capital flow, profit and loss and business prospects.

After admission has been effected there are ongoing duties for the issuers such as the publication of annual accounts and of interim reports. Price relevant information needs to be reported pursuant to § 15 WpHG (Ad-hoc publicity obligation).

Companies that are already listed on another regulated market in Germany and Europe can be admitted to trading on the Regulated Market without an admission procedure, as long as the admission requirements and the reporting and transparency obligations of the other market are comparable to those on the Regulated Market.

The Open Market

The Open Market is a market segment of Börse Berlin organised under private law. Regulations enacted by the Management and the Exchange Council form its legal basis. The Terms and Conditions for the Open Market regulate the process of trading. The Terms and Conditions for Transactions regulate the participation in trading and the inclusion of securities to trading. The admission requirements are eased significantly in comparison to those of the Regulated Market. An application with information about the name and address of the issuer, the security class, ISIN or security code number, a short description of the type of business and the denotation of the home exchange suffices for the admission of company shares that are already traded on another regulated market or multilateral trading facility. There are no ongoing obligations for companies.

The Open Market provides a suitable platform for small to medium sized companies that plan their IPO. The admission requirements are easied by comparison to those of the Regulated Market:

• There are no specifications regarding the age of the company.
• The minimum nominal volume of the share issue shall at least be 250,000 Euro. The prospective market value of the capital available to the market shall not be below 1.5 million Euro.
• The shares to be included shall be spread sufficiently (freeflow of 20 %).

Ongoing obligations after an IPO are publications within the meaning of §§ 30 b and 30 e of the Securities Trading Act. Companies that made their IPO on the Open Market also need to publish price relevant information analogue to § 15 WpHG. Furthermore they need to submit interim reports.

Berlin Second Regulated Market (BSRM)

The Berlin Second Regulated Market is a sub-segment of the Open Market and also governed under private law. Electronic price determination is carried out for securities, that are admitted to a regulated market within the meaning of MiFID. As the securities are already admitted at another regulated market within the meaning of MiFID, investors can access information available about the stock via the home exchange. This is why the Berlin Second Regulated Market – although a segment of the Open Market – qualifies as a Regulated Market under European law within the meaning of MiFID.

Trade Reporting is carried out under the MIC (Market Identification Code) EQTB. For stocks, admitted to trading on the Regulated Market in Germany, which is governed by public law, trade reporting is carried out under the MIC EQTA – this affects approximately 35 German Blue Chips.

Short Sale Regulation

A new regulation has been put in place in Germany to regulate naked short sales: The Abusive Securities- and Derivatives Trades Prevention Act (Gesetz zur Vorbeugung gegen missbräuchliche Wertpapier- und Derivategeschäfte) will come into force on 27 July 2010 and implements changes to the Securities Trading Act (Wertpapierhandelsgesetz, WpHG).

The Act replaces the current General Decree of the Federal Supervisory Authority (BaFin) dated 18 May 2010.

This note summarizes the main changes that are relevant for Equiduct participants and does not cover the provisions on credit derivatives of § 30j WpHG. It also does not cover provisions that empower BaFin to conduct appropriate measures to protect the functioning of financial markets outlined in §4a WpHG.

Naked short sales in shares or government bonds (denominated in Euro, includes national, regional, local administrative units) admitted to trading on a regulated market of a German exchange are banned (new §30h WpHG).The ban does not apply to shares of companies domiciled outside Germany (except if the company is solely admitted to trading on a regulated market of a German exchange). The ban applies globally, and irrespective of the trading venue.

A ‘naked short sale’ applies when – at the end of the day the trade was concluded – the seller

• is not the owner of the sold securities and
• does not have any unconditionally enforceable claim under the law of obligations or under property law for the transfer of title in a corresponding number of securities of the same kind.

The ban is effective as of 27 July 2010. The ban does not apply to transactions concluded before the effective date, unless these are prohibited by a different rule.

Reporting of short positions

(Covered) Net short positions in shares admitted to trading on the regulated market of a German exchange must be reported to the BaFin until the end of the next trading day, if the net short position exceeds 0.2%of outstanding shares (new §30i WpHG). If the net short position exceeds 0.5% of outstanding shares, the position must also be reported to the public via the Electronic Federal Gazette within said period.

Changes in the net position that exceed said thresholds in ±0.1%steps must be reported accordingly.

A ‘net short position’ applies when the net position of all financial instruments related to an issuer results in a short economic exposure to its owner.

The transparency requirement becomes effective on 26 March 2012. Net short positions that have been created before the effective date must be reported the day following the effective date, unless they have been reported earlier.

Exemptions

Exemptions from the ban and the transparency obligations apply (§30h (2) sentence 1 and §30i (4) WpHG) to firms providing investment services, if they

• trade on own account on a regular and permanent basis, or
• fill client orders on a regular and permanent basis and hedge the resulting positions

and if the respective transaction is related to this business. BaFin must immediately be given notice about the intent to take on these activities, whereas the affected instruments must be declared (BaFin will provide an appropriate form as well as additional information in English on www.bafin.de soon).

Exemptions from the ban apply (§30h (2) sentence 2) to transactions which trading participants conclude with the customer for settlement of a transaction in financial instruments at a fixed or definable price (fixed price transaction).

The law will be enforced globally. BaFin will seek the support of the local regulators.

Please find a list of the instruments on Equiduct that are subject to the ban on naked short selling for download below. A systematic of the BaFin ban is also available for download below.

• Instrument list of Equiduct instruments that are subject to the German ban on naked short selling
• BaFin systematic of ban on naked short selling for Equities

Disclaimer

This document is for informational purposes only. It does not constitute legal advice and we are not acting as attorney. We make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained.

Frequently Asked Questions (FAQ)

Frequently asked questions (FAQs) regarding the ban on naked short-selling transactions in shares and certain debt securities pursuant to section 30h of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) are available for download here.

Xontro

A consistent reference market principle is in force in Xontro trading at Börse Berlin to ensure the implementation of the “best price principle” according to MiFID.

It ensures that execution in all DAX, MDAX, TecDAX, SDAX, EuroStoxx50, Stoxx50, AEX, ATX, CAC40, FTSE100, IBEX35, MIB30, SMI as well as DOW30 and NASDAQ100 securities is better or at least as good as the current volume weighted Xetra Spread. When Xetra is not available as a reference market – as is the case after 17:30 CET – the most liquid trading venue is used for reference. For foreign securities only a small deviation from the spread on the home market is permitted. When the respective reference markets are open, a deviation of max +/- 0.4% is permitted for Dow Jones stocks, and +/- 0.5 % for NASDAQ 100 stocks and securities from European indices.

The overall costs of a transaction result from the fees charged by the exchange, the lead broker and your bank. On the exchange-side transactions costs are defined in the Brokerage Rates.

Fees per executed order will be charged subject to the security class (plus VAT). Please find more information about fees on the Xontro Pricing page. The intermediation fee for brokers, the so called brokerage, is 0.08 % of the executed order volume. For DAX securities brokers charge half of the usual brokerage, i.e. 0.04 % of the executed order volume.

Your order is executed within seconds in Berlin. The lead brokers’ liquidity obligations guarantee a high likelihood that your order gets carried out. Through own-name transactions lead brokers can help you purchase stocks that would otherwise not be tradeable due to low liquidity.

Order types

Xontro enables the following order types:

• Unlimited order (Market Order)
• Limit Order
• Stop Order (Stop Buy/Stop Loss)

Furthermore the validity of the order can be defined (“good till date”). The time span available reaches from “good for day” to the last trading day of the calendar year.

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