Trading partner of the WarrantsExchange
In order to maintain the quality standards of Börse Frankfurt Zertifikate Premium, the WarrantsExchnage makes very high demands of issuers who wish to trade in the Börse Frankfurt Zertifikate Premium segment. In particular, this includes the continuous transmission of bid and asked prices to the stock-exchange infrastructure via two redundant dedicated lines. Should either of them fail at some point, prices will continue to be transmitted via the other. There is no need for a temporary restriction or suspension of trading. In principle, products subject to the Börse Frankfurt Zertifikate Premium standards should be tradable from 9 a.m. through 8 p.m. The buy and sell prices for Börse Frankfurt Zertifikate Premium products must be applicable for certain minimum volumes. In the case of investment products, the minimum volume is EUR 10,000 (or 10,000 units). Prices for leveraged products must be applicable for order sizes of at least EUR 3,000 (or 10,000 units). In most cases, multiples of these minimum sizes can be traded at current prices. The quality and the execution speed of the individual issuers are monitored and analysed on an ongoing basis so that any problems can be addressed promptly.
The issuers of structured products such as certificates, warrants and reverse convertibles are usually internationally active banks and securities houses. These issuers assume the duties associated with issuing a structured product. In particular, this includes the duty to perform redemptions and/or interest payments which are subject to precise rules depending on the type of product. After issuing a product, the issuer’s main responsibility is to provide binding buy and sell prices (“quotes”) for their securities during trading hours on an ongoing basis or at the request of their lead brokers and thereby ensure liquidity for their securities. These quotes form the basis for price determination during trading. From the point of view of the investor, the narrower the spread (i.e. the difference between the buy price and the sell price), the better the issuer’s quote and the higher the security’s tradable volume. Apart from ensuring liquidity, the focus of issuers lies on the development, placement and marketing of new securities and product types.
Before a new security is offered to investors and tradable on the stock market, the issuer draws up a listing prospectus. The listing prospectus is reviewed by the Federal Financial Supervisory Authority (BaFin). It is the only document associated with the introduction of a new product that is legally binding. Today, issuer banks and the growing interest of private investors in certificates are the main motors for the growth of the market for investment and leveraged products. Issuers are in constant competition for the best price and the most innovative product. Unfortunately, in recent years this tough competition has resulted in a fairly complex market. In many cases, one and the same product goes by several different names, because each issuer tries to differentiate its own products from those of its competitors with creative names and skilful marketing.