Germany’s Neuer Markt that came to symbolise the excitement during the boom of the late 1990s and was often referred to as Europe’s Nasdaq, is to close. The Neuer Markt, the German Borse’s market for high growth dynamic group companies, opened in March 1997 and between then and the end of the year 2000, when markets began to fall away, it listed over 300 companies, more than half of which were venture-backed.
As technology stocks and markets the world over took a tumble the glitter of the Neuer Markt was quickly forgotten and attention was turned to the need to tighten listing regulations so that companies that eventually came to be seen as flaky would not now be able to seek a listing.
The disappearance of the Neuer Markt is part of Deutsche Borse’s plans to divide the entire listed market in Germany into two segments that differ from each other with regards to their transparency standards. The two segments are known as Domestic Standard and Prime Standard and the latter will house the Neuer Markt.
Domestic Standard will have to fulfil the legal requirements of the Official or Regulated Market with regards to transparency. The Prime Standard requires issuers to maintain additional transparency standards that are common at an international level. Among the requirements from a Prime Standard listed company are the publication of quarterly reports, accounting according to international standards (IAS or US GAAP), a corporate calendar, a minimum of one analysts’ conference per year as well as reporting and ad hoc announcements being made in English. Since Neuer Markt listed companies already have to adhere to similar regulatory standards to those on offer under the Prime Standard those companies will be transferred to Prime Standard, as will SMAX listed companies.
The requirements for the Domestic Standard and the Prime Standard will be regulated under public law, which will ensure they can be implemented and as such the move is expected to bolster investor confidence. As things stand internationally accepted standards could only be defined in rules and regulations under private law, like those of the Neuer Mark and SMAX. This situation changed when the Fourth Financial Market Promotion Act took effect bringing a comprehensive reform of exchange law.
The move to Domestic Standard and Prime Standard will be voted on by the end of November and is expected to be implemented early next year.