, several of its financial markets are actually smaller than those of neighbors France and the UK. For example, Germany has the eighth-highest
, while the UK is third and France fifth. In part this is for cultural reasons: German retail investors are often more hesitant to invest in stocks than in countries like the United Kingdom or United States; and have less need to do so owing to Germany’s more generous government pensions. But another reason for this may lie in the nature of the Germany economy itself – the
than other countries, lessening the centrality of the stock market for generating revenue (compared to countries with a high portion of financial services companies like the UK).
The Frankfurt Stock Exchange: Germany’s primary stock exchange
Despite being relatively smaller than in some other major economies, the total
market capitalization of the Frankfurt Stock Exchange amounts to around two trillion euros, placing it just outside the 10 largest stock exchanges worldwide. Two main trading venues comprise the Frankfurt Stock Exchange: the traditional trading floor of the Börse Frankfurt, and the Xetra electronic trading system. The latter accounts for the vast majority of
trading volume on Frankfurt Stock Exchange. The
DAX index value is the main indicator of German companies’ share prices, being comprised of the 30 largest companies listed on the Frankfurt Stock Exchange by market capitalization. Included in the DAX are household names like carmakers BMW and Mercedes-Benz, sporting goods company adidas, insurer Allianz, and industrial companies Siemens and BASF.
Frankfurt is continental Europe’s most important financial hub
While Germany’s domestic financial markets may not be the largest in Europe, the economic integration created by the euro makes Frankfurt one of the
most important financial hubs in the Western Europe. Frankfurt is not only home to Germany’s primary equity market, but two major central banks: the German ‘Bundesbank’, and the European Central Bank. Part of Frankfurt’s importance comes from its role as a trading hub for capital and money markets. For example, trading of the 2.56 trillion euros of
outstanding German government debt is managed in the city. But just as important is the regulatory role Frankfurt plays in deciding German and euro-level monetary policy. For example, while the billions of
euros transacted daily in interbank lending in the eurozone flows freely across national borders, Frankfurt is home to the regulatory apparatus governing this crucial pan-European market.
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