Why Are More Indian Companies Choosing The Frankfurt Stock Exchange?
BERLIN, GERMANY, December 30, 2010 - In November 2008, Deutsche Börse AG, (owner of the Frankfurt Stock Exchange), and the Bombay Stock Exchange (BSE) concluded a cooperation agreement in which both agreed to simplify access to their stock exchanges for companies listed on their respective markets. Since this cooperation began, there have been many Indian companies listed on the Frankfurt Stock Exchange. Here are some of the advantages of the Frankfurt Stock Exchange for Indian companies.
A comparison of the liquidity of the different international stock exchanges has shown that, in general, the liquidity of the Frankfurt Stock Exchange is significantly higher than most. Strong liquidity through high trading volume is of paramount importance for a company to develop a meaningful valuation. Without trading volume, market capital is virtually meaningless.
Companies gain electronic trading access to investors all over the world through the Frankfurt Stock Exchange’s “Xetra” trading platform. Trades executed by international investors on Xetra have increased continuously in recent years and, as of the end of 2010, more than 65% of the total trades were from countries outside Germany. Companies from more than 80 countries are listed on the Frankfurt Stock Exchange. With more international listings than any other stock exchange in the world, the Frankfurt Stock Exchange is internationally regarded as the “International Stock Exchange”. And in a landmark decision in favor of public companies, naked short selling was banned completely in Germany in June 2010. The Frankfurt Stock Exchange receives massive exposure to investor capital with more than 250 international trading institutions and more than 4,500 traders worldwide. Investors directly connected to the Frankfurt Stock Exchange represent a full 35% of the world’s investment capital. Finally, the listing procedure at the Frankfurt Stock Exchange is one of the fastest in the world and the listing fees are highly attractive compared to other international competitors of the Frankfurt Stock Exchange.
One concern for Indian issuers is that, according to Indian law, a direct listing of shares of an Indian company on a foreign stock exchange is not possible. A direct admission would be conceivable only via a holding structure if the holding (and issuer of the shares to be admitted) has its registered seat outside of India and only the operational companies are located in India. If the holding, and the issuer of the shares to be admitted, has its registered office in the European Economic Area, the issuer will be treated as European issuer. As a result, certain regulatory reliefs or exemptions for issuers from third countries, for example with respect to particular post-admission obligations, consequently do not apply. Indian companies can simply list their company utilizing a holding company structure, such as a BVI Corp or UK Plc.
There are many great reasons for Indian companies to choose the Frankfurt Stock Exchange for their primary or secondary (dual) listing. For more information on listing your Indian company on the Frankfurt Stock Exchange, contact Go Public Pros GmbH at firstname.lastname@example.org or visit www.frankfurtstockexchange.de.
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