Trading on the German stock exchange stands still for over four hours

Bull and bear in front of the Frankfurt stock exchange

A bug in the T7 electronic trading system led to the longest trading failure in many years on Tuesday.

(Photo: dpa)

Frankfurt, Dusseldorf The stability of their trading systems is for that German Stock Exchange essential. “Our capital is the trust of the market participants in us and our systems,” says CEO Theodor Weimer.

But it was precisely in the hectic times of the corona crisis that Germany’s largest stock exchange operator suffered the biggest breakdown in years on Tuesday. On Tuesday, a large part of the trade stopped for more than four hours from 9.25 a.m. The reason for the interruption was a technical problem with the electronic trading system T7, said a spokesman for the German stock exchange. “An error in the internal communication of the trading system triggered the problem.”

The default affected both equity trading via Xetra and derivatives trading in the most important division, Eurex. In addition, electronic trading did not work on many other stock exchanges that use the Hessen system. These include the trading centers in Vienna, Prague, Budapest, Zagreb, Ljubljana, Sofia and Malta.

In Frankfurt, the floor trading was not affected by the breakdown. However, it has only played a subordinate role for years. More than 90 percent of German stock trading is done electronically.

According to the German stock exchange, trading on the Eurex started again at 1.45 p.m., electronic stock trading on Xetra at 1:50 p.m.

For the company from Eschborn near Frankfurt, it is the worst breakdown in years. Compared to breakdowns at banks, failures at Deutsche Börse are rare. System availability at Eurex was 99.97 percent in the past twelve months.

Weimer hates failures “like the plague”

Most recently, there were two failures in the public eye, which were shorter than the current breakdown. On October 15, Xetra trading began an hour later due to technical problems, and on March 16, 40 minutes late.

The latter breakdown was particularly annoying for Deutsche Börse, after all, the group had proclaimed “Share Day” this Friday in March, where private investors could buy Dax shares and index funds free of charge. In addition, the IPO scheduled for that day was delayed due to the breakdown Siemens-Medical technology daughter Healthineers.

The head of Deutsche Börse Weimer was visibly uncomfortable. “A stock exchange boss hates it like the plague when there are network problems or software problems,” said Weimer a little later in the Handelsblatt interview.

The breakdown in March 2018, according to Weimer, was due to the fact that logging in of several customers’ trading applications to the system resulted in a blockage for all customers. “Such incidents are ugly, but not really worrying,” said Weimer. “What really worries me is massive cyberattacks on all corporate systems, including ours.”

However, the trading failure on Tuesday was not due to a hacker attack, said a spokesman for the Deutsche Börse Group – and thus rejected corresponding speculation on dealer platforms.

Many investors were annoyed by the failure. An hour-long disruption “is unfortunately not acceptable for an exchange,” wrote a user on Twitter. Another took it with humor and asked chief engineer Scotty from the Star Trek science fiction series for help.

More: Private investors are particularly affected by breakdowns in the certificate trade.


Stock exchanges in Asia: Nikkei closes in the red

Tokyo Stock Exchange

In Tokyo, the Nikkei index fell more than two percent.

(Photo: AP)

Tokyo The Asian stock markets gave way on Monday – despite rising oil prices following the decision to cut oil production unprecedentedly. The oil producers united in the Opec-plus association announced that after four days of marathon talks they had agreed to reduce the production volume for May and June by around ten percent of the global supply.

Nevertheless, traders in the Asian markets were unable to shake off the concerns about the corona crisis. The Tokyo stock exchange closed in the red. The financial markets in Australia and Hong Kong were closed due to public holidays.

“While the US Federal Reserve’s economic stimulus has initially dispelled fears of a financial crisis, the economy is far from returning to normal,” said economist Hiroshi Watanabe Sony Financial Holdings. Investors kept an eye on whether the coronavirus pandemic, as hoped, would soon peak in the United States and Europe.

The panic sales of the past month have subsided, judges Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management. Therefore, “the majority of investors do not want stock prices to rise as we are about to see more signs of an economic downturn,” Ichikawa said. There are also US company balance sheets coming up this week, and China will release its trade data on Tuesday.

The Tokyo stock exchange was weaker on Monday. The 225-strong Nikkei index closed 2.3 percent lower at 19,043 points. The broader Topix index fell 1.7 percent to 1406 points.

The Shanghai Stock Exchange was down 0.5 percent. The MSCI index for Asian stocks outside of Japan rose 0.1 percent.

More: You can read all current developments on the corona crisis in the news blog.


New aid from the Fed boosts Japanese markets

Courses in Japan

The Japanese stock markets end one of the strongest weeks in recent years.

(Photo: dpa)

Tokyo Based on positive guidelines from the USA, the Tokyo Stock Exchange rose on Friday. The Nikkei of the 225 leading stocks closed 0.8 percent up at 19,498 points. During the course of the week it recorded an increase of 9.4 percent, the second best week since December 2009. The broader Topix gained 0.9 percent to 1430 points.

The US Federal Reserve’s billions of dollars in economic aid to tackle the corona crisis had fueled Wall Street prices before the long Easter weekend. In Tokyo, they mainly lifted financial stocks.

So the shares of Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Financial Group (SMFG) and Mizuho Financial Group between 3.6 and 4.4 percent.

The Chinese stock exchange in Shanghai, on the other hand, fell one percent. Here, cloudy economic data in the wake of the corona crisis weighed on sentiment. However, the hope was supported by further government stimulus packages. The market in South Korea lost 1.3 percent.

More: All information about the corona virus is available in the current news blog.


Börse Stuttgart extends CEO Höptner’s contract by four years

Alexander Höptner

The head of the Stuttgart Stock Exchange is considered a digital expert.

(Photo: Stuttgart Stock Exchange)

Frankfurt The old boss is also the new one: the supervisory board of the Stuttgart stock exchange has extended the contract of the chairman of the management board, Alexander Höptner, by four years. This was announced by the regional exchange on Friday. Höptner will remain the CEO of the important certificate trading subsidiary Euwax.

Höptner has done “successful work”, the Supervisory Board explained. Since January 2018, he has been double head of Exchange and Euwax. In 2017 he started in Stuttgart as managing director for sales and IT.

“We are very pleased to be able to consistently pursue our strategic direction as a private investor exchange and a pioneer in the digital business with Alexander Höptner,” said Michael Völter, Chairman of the Supervisory Board. Both the traditional business and the new, digital business areas would be further expanded in the coming years. “The Stuttgart Stock Exchange will take advantage of the opportunities that arise from the increasing digitalization of international financial markets at an early stage,” said Völter.

The 49-year-old Höptner is considered a digital pioneer. Under his aegis, the Stuttgart company has so far successfully escaped the fate of the other German regional exchanges. The latter are only a shadow of themselves compared to the overwhelming competition from Frankfurt.

Höptner knows the market leader well: At German Stock Exchange he was responsible for IT. After leaving the company, he set up a marketplace for virtual goods with two start-ups. He sees cryptocurrencies such as Bitcoin and digital, “tokenized” securities as a new part of Stuttgart’s DNA – and as an opportunity for the regional exchange to also survive in the long term with Frankfurt.

“We are the German private investor exchange, which sets us apart from the competition,” Höptner told Handelsblatt in 2019. “In the past, we thought too much about which products the financial industry wanted. Now the question has to be asked: What does the customer want? We have a unique opportunity to be at the forefront of the next technological revolution: tokenization. ”

Under Höptner’s leadership, the Stuttgart Stock Exchange has launched a trading center for Bitcoin and Co. called Bison, which is aimed primarily at beginners. For professional investors, the Stuttgart-based company launched the Handelsblatt BSDEX (“Stuttgart Digital Exchange”), which is to become “Germany’s first regulated trading center for digital assets”. For example, the blockchain bonds planned by the federal government are to be traded here, but are still stuck in the legislative process.

Höptner also has plenty to do away from its crypto commitments: The turnover of the Stuttgart stock exchange fell between 2017 and 2019, from around 80 to around 68 billion euros. Over the next four years, the CEO has to prove that the decline can be stopped via digital business.

More: Farewell to “digital gold”: The corona crisis is turning the bitcoin world upside down.


What a parquet closure means for investors

Frankfurt Due to the corona pandemic, the traditional trading floor of the New York Stock Exchange will be closed from Monday. Two dealers had previously tested positive for the virus. “Our markets are able to work fully electronically,” said Nyse manager Stacey Cunningham. Despite the closure of the trading floor, all Nyse stores would continue to operate during normal trading hours.

Many investors are now wondering whether important stock exchanges in Germany are closing their floors and what effects this could have.

1. What is the current situation in Germany?

At the Frankfurt Stock Exchange, the largest stock exchange in Germany, the floor remains open. There are currently no considerations to close it, a stock exchange spokesman told the Handelsblatt. However, this has to be reconsidered if an employee should become infected with the corona virus.

Already now there are no more events in the trading hall, guests are no longer received. Usually there is an attendance requirement on the floor. This is now canceled. The dealers now work partly on site or at alternative locations.

“Regardless of the corona virus crisis, every trading company has a duty to provide alternative locations for its employees,” said the spokesman. That could also be in the home office.

Even at the Stuttgart stock exchange, which specializes in private investors, there are no considerations to close the floor, according to a spokesman. But they take the protection of their employees very seriously.

For this reason, specific precautionary measures have been implemented, which particularly affect employees in areas that are directly necessary for business operations. Several redundant teams are currently working spatially separated from each other, both within the stock exchange building in Stuttgart as well as in external premises and remotely.

2. What would be the impact for investors if, for example, Frankfurt closed the parquet?

The Frankfurt Stock Exchange operates the two trading venues Xetra and Frankfurt Stock Exchange. While Xetra is a fully electronic trading system, the Frankfurt Stock Exchange is what is left of the so-called floor trading.

Even if the trading hall in Frankfurt is closed, this will have no impact for investors, since the dealers could work entirely from their replacement jobs, the spokesman said. Investors could therefore continue to choose between the two trading venues.

3. What are the advantages of electronic trading?

Electronic exchange trading is characterized above all by its high level of liquidity and transparency for market participants. A brochure from Deutsche Börse states: “On Xetra, buy and sell orders are compared in a central, fully electronic order book, and each buy and sell order is automatically checked for feasibility. If there is a suitable offer, the transaction is carried out immediately. ”

Fully electronic trading is considered efficient and inexpensive. The Xetra prices are therefore also used as so-called reference prices, which investors can use as a guide.

4. What still happens on the floor?

In fully electronic trading, especially liquid stocks and index funds are traded. Xetra now has a market share of around 95 percent in Germany in the trading of Dax stocks. In order to ensure trading in small caps and other products, trading experts are still needed, even if they no longer have to be directly on the floor.

“These trading experts ensure the highest possible trading quality, especially in volatile market phases,” says the Stuttgart Stock Exchange. While only about 2,800 securities, including 1,000 shares and 1,800 index funds and other exchange-traded products, are available on Xetra, over 11,500 shares, bonds, funds, certificates and warrants can be traded on the Frankfurt Stock Exchange, for example.

The Frankfurt Stock Exchange as well as the regional exchanges and over-the-counter trading venues also offer longer trading hours than Xetra.

5. Which exchange is the cheapest for investors?

Answering this is not easy. Generally speaking, retail investors wishing to trade securities must do so through a broker. The fees charged by this broker, be it a bank or an online broker, play a crucial role.

A distinction must be made here between the explicit costs, such as order fees, which vary widely among the different brokers, and the implicit costs, which arise from the bid-ask spread.

In principle, investors can rely on Xetra opening hours between 9:00 a.m. and 5:30 p.m. to receive a market price there. Small investors in particular, who do not deal in detail with exchange trading, will certainly not go wrong if they choose Xetra as an exchange.

If you want to trade early in the morning or later in the evening and then choose another exchange, you can expect the bid-ask spreads to widen further and investors to pay more as a result.

For example, the electronic trading system Tradegate, which is operated by the Berlin Tradegate Exchange, is considered to be relatively cheap. However, brokers also get reimbursements from certain trading venues when they direct their customers to them. Sometimes they pass on some of these so-called kick-backs to investors, which enables them to trade particularly cheaply.

More: As long as the markets function smoothly, trading should continue. There is no point in closing your eyes to the crash.


The head of Deutsche Börse is to become the supervisory board of Deutsche Bank

Frankfurt The Deutsche Bank wants the CEO of the German stock exchange, Theodor Weimer, be elected to the Supervisory Board. Weimer is to replace Katherine Garrett-Cox, who will step down at the shareholders’ meeting, like Deutsche Bank with publication of their annual report announced.

“With Theodor Weimer, who is to move into the supervisory board, we gain an expert in the German and European financial industry and an outstanding banker for the supervisory board of Deutsche Bank”, said Paul Achleitner, the chief controller of the bank.

The personnel is significant: With Weimer, a candidate has been moving into the bank’s supervisory board for the first time in a long time, which has the format to replace Achleitner at the head of the committee after his contract expires in spring 2022.

However, it is also clear that Weimer would have to give up his senior position at Deutsche Börse early if he wanted to become chief controller of Germany’s largest money house. “As long as Mr. Weimer is chairman of the board of the German stock exchange, a position as head of the supervisory board is out of the question,” said a spokeswoman for the stock exchange. Weimer should move as a simple member to the supervisory board of Deutsche Bank, she emphasized. “The question of the chairmanship of the supervisory board does not currently arise.”

According to financial circles, Weimer received the green light from the head of the German Stock Exchange, Joachim Faber, for the candidacy for the Deutsche Bank supervisory board. Within the company, many hope that the CEO will fulfill his contract, which will run until the end of 2024 – after all, he only extended the contract in mid-February.

Experts warn of conflicts of interest

Weimer is very well connected in politics and the financial sector. He also worked for many years in management positions at banks, for example as head of the UnicreditSubsidiary Hypo-Vereinsbank or as a partner of Goldman Sachs in investment banking.

For experts, there is no question that he, as a member of the Supervisory Board, is a technical asset for Deutsche Bank. “Even if I do not like to comment on names, but it is an excellent choice !!!”, banking professor Sascha Steffen commented on Twitter. “We see Mr. Weimer’s nomination as fundamentally positive, because he has the necessary industry expertise and a high reputation,” said Vanda Heinen, an analyst specializing in corporate governance at Union Investment. “In order not to be accused of accusing the office, Mr. Weimer should resign from the supervisory board of FC Bayern Munich,” she warned.

Other experts warn that there may be conflicts of interest because Deutsche Bank is a major customer of Deutsche Börse. As head of the stock exchange, Weimer is very interested, for example, that Deutsche Bank will in future process more derivatives transactions in Frankfurt than in London.

“Theodor Weimer is undoubtedly an asset to the Supervisory Board of Deutsche Bank. But as long as he is the head of Deutsche Börse, this is a crystal-clear conflict of interests, ”said Ingo Speich, head of sustainability and corporate governance at Deka Investment, the Handelsblatt. The head of the exchange must be as neutral as possible.

It is unclear whether and how this finding will affect Deka Investment’s voting behavior at the Annual General Meeting. “We are examining whether and what that means for our voting behavior at the Deutsche Bank Annual General Meeting,” said Speich. Deka is one of the top 20 investors in Deutsche Bank.

“The question of a possible conflict of interest should have been clarified in advance with the supervisory authorities so that the Zeltner case does not repeat itself,” said Union Investment expert Heinen. Financial circles say that Deutsche Bank discussed the personnel with the supervisors before the announcement. In addition, the stock exchange is not a direct competitor of Deutsche Bank, so any conflicts of interest can be managed without major problems. A taste would probably still remain with some decisions.

Deutsche Bank has recently had bad experiences with conflicts of interest on the Supervisory Board. Jürg Zeltner, former head of wealth management at UBS, had to say goodbye to the control committee again after a few weeks. The supervisors had put pressure on him because Zeltner worked as a boss and investor at the Luxembourg private banking group KBL for a direct competitor of the Frankfurt money house.

The rumor that Weimer could one day succeed Achleitner has been circulating in Frankfurt for many months. When Weimer was contacted internally at Deutsche Börse, he reacted annoyed. At the annual press conference in February, he said he hadn’t thought about what to do after his contract expired in 2025. “I don’t have that much strategic thinking on my own behalf.”

The top earner receives 13 million euros

Weimer joins Deutsche Bank in a phase in which it is part of the largest corporate restructuring in its history. 18,000 jobs are to fall victim to this. The bonus pool for employees has also been reduced. The bank will pay a total of 1.5 billion euros in bonuses to its approximately 88,000 employees for the past financial year, as the bank’s annual report shows. That is around 22 percent less than the 1.9 billion euros for 2018.

However, Deutsche Bank has already fired many of the usually high-paying investment bankers. This is another reason why the bank has 583 fewer income millionaires than a year ago. At that time, 643 employees received total remuneration of more than one million euros.

A German banker – who is not mentioned by name in the annual report – no longer has to worry about the unpredictable consequences of the corona virus for Deutsche Bank and the entire financial industry: his total remuneration for 2019 amounts to more than 13 million euros.

The total salary of the anonymous top earner is thus as high as the total variable remuneration of the Executive Board in the past year. Despite the loss of billions in 2019, the bank’s management board will receive a total bonus of EUR 13.3 million, which is around half as much as in the previous year when the top managers received EUR 25.8 million in bonuses. Including fixed salary and allowances, the board of directors received 34.8 million euros from CEO Christian Sewing after 52.2 million in the previous year. Sewing itself received five million euros – two million less.

There will be no vote on the remuneration system at the Annual General Meeting this year. This is due to the new shareholder rights guideline, which only came into force in December 2019 and necessitates adjustments to the remuneration system. At the 2021 shareholders’ meeting, the Supervisory Board will then let the shareholders vote again on the compensation structures.

Little news about Corona

The statements made by the bank in its annual report on the corona crisis and its economic impact were less informative than the personnel decisions. The term Covid-19 occurs exactly 31 times on the 517 pages. However, the letter from CEO Christian Sewing only says: “The positive trend of the fourth quarter of 2019 continued at the start of the year. However, what the Covid 19 pandemic means specifically for the global economy and for our bank cannot be predicted at this point in time. ”

The bank’s perspective is at least a little more specific. The money house there warns that “we can be significantly affected by a sustained downturn in local, regional or global economic conditions”. Given the uncertainty about the spread, duration, and market impact of Covid-19, the forward-looking assumptions currently did not take into account any potential impact.

In the past year, the radical reconstruction caused a loss of 5.7 billion euros. Sewing had promised investors a black zero for operating profit in 2020, but that was before the pandemic questioned all plans.

More: Deutsche Bank under stress: Corona crisis makes conversion a race against time.


Expert initiates discussion about stock market closings

Frankfurt Stock Exchange

Exchange closings are currently not an issue for Deutsche Börse.

(Photo: dpa)

Frankfurt, New York, Tokyo The US leading index Dow Jones closed just under 13 percent on Monday. In percentage terms, this is the biggest daily loss since 1987 and, according to index points, the biggest loss ever. The unexpected cut in the key interest rate by the US Federal Reserve (Fed) was intended to instill new confidence in the stock markets, but caused uncertainty among investors.

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