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Why Over 3,000 US Companies Have Chosen the Frankfurt Stock Exchange to Go PublicCopyright © 2008 Ron CroweThe Frankfurt Stock Exchange, one of the world's largest trading centers for securities, has over 3,000 United States companies listed. North American and other foreign companies are choosing Europe, over the United States, to go public because of the punishing Sarbanes Oxley Act introduced in the United States in 2002. Two studies-- one done by a group of executives and academics, and another that was conducted by McKinsey and Co. for New York Mayor Michael Bloomberg and New York Senator Charles Schumer-- have both reached the same conclusion. The conclusion being that excessive regulation is making the United States an uninviting place to sell new stocks, and singles out the Sarbanes Oxley Act, as the main reason. The act is the anti-fraud law that was passed after the debacle at Enron Corp. Both studies point to figures that show initial public offerings are migrating to Europe and Hong Kong. The Frankfurt Stock Exchange is owned and operated by Deutsche Börse, which also owns the European futures exchange Eurex and clearing company Clearstream. It is the largest of all German stock exchanges, responsible for approximately 90 percent of the securities trading volume in Germany. Today, with a total turnover of 5.2 Trillion € per year, the Frankfurt Stock Exchange strengthens its position as the world's 3rd largest trade-place for stocks, as well as the world's 6th largest by market capitalization. *It facilitates advanced electronic trading, settlement, information systems, as well as enables cross-border trading for international investors.* It offers many advantages to companies looking to take that first step into becoming a public company, but who do not want to do an IPO (Initial Public Offering), due to the length of time it takes and the cost. The Frankfurt Stock Exchange offers ease, speed to market, and low cost when it comes to listing a company. The ease of entry to the Open Market is due to the fact that audited financials are not required, and there are no asset or revenue requirements. Companies can be listed and trading in as little as 12 weeks for less then $70,000. Other benefits of listing with the Frankfurt Stock Exchange are the relaxed regulations that allow U.S. listed companies to avoid the punishing burden of the Sarbanes-Oxley Act that U.S. public companies must adhere to if they’re listed on a U.S. Exchange. Also a Frankfurt Stock Exchange listing further allows European investors to buy shares in North American companies in their local currency and helps establish a more significant presence for these companies in Europe and Asia. Going public on the Frankfurt Stock Exchange not only opens a company up to new investors, it also opens a company up to new markets consisting of over 100 million people in Germany, Switzerland, Austria, and Liechtenstein. European investors wanting to invest in Canadian and American companies pay higher brokerage fees if they have to buy the stock on the North American Market. The typical transaction fee a European investor is subject to, buying directly from the North American markets, is usually 15 to 20 percent of the invested capital. However, having a company listed on the German stock exchange, an investor will see those fees drop down to one tenth of the original fee, thus providing the European investor cheaper and easier trading conditions for Canadian and U.S. stocks. Also worthy of note, the German government provides tax incentives for German investors who hold their stock for a year or more. The day trading ratio in Germany is only at five percent. Having a listing on the Frankfurt Stock Exchange will provide an air of not only legitimacy and prestige, but also stability to any company. For those who may be worried about the perception of their company or its public appeal, having a listing on the Frankfurt Stock Exchange will increase a company’s public perception. This is key to providing a company with the resources and ability to expand the company, as well as raise capital. Furthermore, a listing on the Frankfurt Stock Exchange puts a company on the radar of the more affluent retail and institutional investors, searching the European stock exchanges and other financial websites, to help make their investment decisions. With a new investment climate in Europe, and changes in the OTC market in Germany, the time is now ripe for U.S., Canadian, and other foreign companies to enter the European public markets. Combine that with the fastest rate of growth, the highest earning per person in the EU, and the strong euro, and you can see why so many companies today are not going public on the NASDAQ, Bulletin Board, or Pink Sheet, but are headed straight to the Frankfurt Stock Exchange (FSE). About The Author:
*** Digital Reprint Rights *** *** Author Notification *** We ask that you notify the author of publication of his or her work. Ron Crowe can be reached at: ron.crowe@thephantomwriters.com *** Print Publication Reprint Rights *** If you desire to publish this article in a PRINT publication, you must contact the author directly for Print Permission at: ron.crowe@thephantomwriters.com
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