Stock exchange trading is divided into several segments, which differ in terms of the requirements for the companies listed in them and the regulatory framework. The higher the market segment in which a share is listed, the higher the demands on transparency, liquidity and investor relations.
The different stock market segments
The former division into official trading, regulated market and over-the-counter trading has no longer existed since 2007. Since the Financial Markets Directive Implementation Act came into force, shares can only be admitted to the legally regulated market or to the open market (formerly over-the-counter market) organised on the stock exchange (i.e. under private law). Within the regulated market there are the two segments "Prime Standard" and "General Standard" created by the Stock Exchange.
Admission requirements in regulated trading
The Securities Trading Act regulates in §1 to §12 the admission requirements for the inclusion of a share in regulated trading.
- The expected market value of the shares to be newly listed must be at least 1.25 million
- The issuing company must have been in existence for at least three years and must have submitted annual reports in accordance with the regulations.
- The free float must amount to at least 25% of the total capital
- At least 10,000 no-par value shares must be in circulation
In addition to the criteria for admission, there are post-admission obligations after admission to the regulated market. In the General Standard, these are in detail:
- The ad hoc publicity obligations
- The obligation to prepare accounts in accordance with IFRS/IAS or US-GAAP
- The publication of an interim report
If an AG meets the requirements for a listing on the regulated market, it is admitted to the General Standard. An application by the listed company for admission to the Prime Standard has a chance of success if some additional criteria are met.
In detail these are:
- Quarterly reporting in English.
- Publication of a company calendar.
- Holding at least one analysts' conference per year.
- Ad hoc announcements also in English.
The conditions exclude smaller AGs simply because of the high administrative effort and costs involved. But even larger companies have not always wanted to submit to the criteria in the past. For example, the Porsche share was once removed from the MDAX by Stock exchange. The company did not want to publish quarterly reports because it did not consider them to be purposeful against the background of its highly seasonal business. However, membership in the Prime Standard is a condition for inclusion in the selection indices DAX, MDAX, TecDAX and SDAX.
In contrast to the regulated market, the Open Market in sgexness.com/mt4/ is not an organised market as defined by the Securities Trading Act. In contrast, the requirements for admission are much lower. Moreover, there are no follow-up obligations. Issuers do not have to publish a listing prospectus and are not subject to disclosure requirements. From the point of view of investors, entry into this segment is therefore associated with significantly higher risks. At the end of 2007, just under 9,000 securities were listed on the Open Market - including foreign securities.
