Stock exchange

Exchange trading takes place at established times, with the exchange itself performing the following main functions:

• Bringing together supply and demand (market function)
• Creating an environment in which companies can raise capital by issuing securities (mobilisation function)
• Guaranteeing that securities can be sold and transferred at any time (substitution function)
• Determining the current market price for an individual stock, and thus the market value of the company in question (valuation function).

The key indicators for the size of stock exchange are the stock exchange turnover and market capitalisation.

As stipulated in the German Stock Exchange Act, the supervision of the regional stock exchanges is handled by the government of the respective states (Länder). Higher-level tasks which affect exchanges throughout Germany, such as the ordinance of stock exchange rules and regulations and the terms and conditions of business, are assigned to the bodies of the stock exchange, which include in particular the Exchange Council (Börsenrat) and Business Management. The decision to establish or close down an exchange is made by the State Exchange Supervisory Office, which is the highest authority at the state level.

Depending on the focus of their activities, stock exchanges are classified according to the following criteria:

1) Goods traded (securities exchange, precious metals, currency and commodities exchange)

2) Type of transaction (cash market, derivatives market)

3) Organisation (floor trading, computer-based trading).