Floating On The
Open Market
in Frankfurt
Technical Connectivity: Excellent
Investor Reach: Woldwide, especially Europe
Overall Listing Project Cost €/$: 80,000 (Bond)
Dual Listing: NA
The Open Market (formerly known as Freiverkehr) is primarily for trading foreign shares, and issuers are subject to lower transparency requirements than those of the Frankfurt Stock Exchange.
Here’s what Sebastian says:
“We only recommend the Open Markert in Frankfurt for bonds. Since Frankfurt has restructired the Open Market some years ago, It’s much easier to list stocks in Vienna and they are also on Frankfurt’s trading platform XETRA.”
The Open Market (formerly known as Freiverkehr) is primarily for trading foreign shares, and issuers are subject to lower transparency requirements than those of the Frankfurt Stock Exchange.
Why consider Open Market Frankfurt?
The Open Market is located in Frankfurt, one of Europe’s leading business centres. Previously, trades not included in the official stock exchange trading were conducted on the pavement in front of the official market. Today, unofficial trading occurs in an exchange-organised market regulated by the Frankfurt Stock Exchange, not by EU legislation.
This regulated unofficial market was renamed the Open Market in 2005 and has relatively low transparency obligations. Companies do not have to present a lot of information, such as a listing prospectus.
The majority of shares traded on the Open Market are from foreign companies, but German enterprises are also listed. Issuing companies can choose to be included in either of the following segments of the Open Market:
Scale: This segment is designed to help small caps raise capital, opening the door to national and international investors. Issuers must adhere to transparency standards that are greater than the Quotation Board.
Quotation Board: This segment is for issuers whose shares are already listed or included at another international or domestic trading venue such as the Aquis Growth Market. Dual listing allows businesses to benefit from increased access to capital, additional liquidity and having shares that can trade for longer.
A significant advantage of trading on the Open Market is that the Frankfurt Stock Exchange operates Xetra, probably the most advanced trading technology platform globally. It is incredibly fast and efficient, an ideal platform for high liquidity securities. Trading companies benefit from fast execution, high transparency, low trading costs and connectivity. Most international brokers are connected to Xetra, in contrast to other markets such as NASDAQ and Aquis that have connections with a few national brokers and old proprietary technologies. Learn more about London Main Market vs. AIM.
We recommend the Open Market for corporate bonds, where the minimum turnover requirements in place for raising equity do not apply. The main criteria for listing bonds here include submitting a prospectus, having a company history of two years and a placed bond volume of at least €20 million. The maximum bond denomination is €1,000.
Open Market Frankfurt Criteria List
For companies applying to trade on the Open Market Frankfurt, the requirements are more straightforward than the regulated market, and there are no follow-up obligations.
- Applications must contain a clear description of the share and clarify in which national or international market prices have already been established.
- If shares are not traded on any other market, companies must provide detailed information to allow for a proper share price evaluation.
- A company already trading on the Frankfurt Stock Exchange has to submit a written application for admission.
- Companies applying to the Scale segment have to present an approved prospectus for public offerings.
- Published material has to be written in German or English.
- Companies applying to Scale have to fulfil at least three of the following: Turnover of at least €10 million, annual earnings for the year of at least €0, equity capital of more than €0, at least 20 employees and accumulated equity capital of at least €5 million before the IPO.
- For companies applying to Scale, at least 20% of shares should be a public free float.
Open Market Important Points of Interest
- German and foreign shares, warrants, certificates, funds and fixed-income securities of German and foreign issuers are traded here.
- Shares from over 60 countries are traded on the Open Market.
- The Open Market is an unregulated market which means the Frankfurt Stock Exchange regulates it, not the EU.
- Companies trading on the Open Market are not subject to any ad hoc publicity obligations.
