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European Exchange Day 2018

25 Jun 2018

European Exchange Day 2018“If you think we can have a strong economy in the long term without a strong financial market, you’re wrong”

Theodor Weimer, CEO of Deutsche Börse AG, and Claus Döring, editor-in-chief of Börsen-Zeitung
© Börsen-Zeitung

Speaking at this year’s “Eurobörsentag” (European Exchange Day) event in Frankfurt, Theodor Weimer, CEO of Deutsche Börse Group, argued in favour of strengthening the financial sector in Germany. “The financial sector’s share of gross value added has been on a constant decline for the past few years in Germany,” he said. He explained that this was at the lower end of the scale for OECD countries, at 4 per cent, compared to the UK and USA, where the financial sector generated 7 per cent of national value added. “The financial system is the blood stream of the economy, with industry – and in particular SMEs – forming the muscles. This is why we need a stronger financial sector in Germany.” Weimer also said that the negative interest rates had had an unfavourable effect on the German financial market, for instance because the banks were no longer earning anything in their core business segment.

The theme of the 27th “Eurobörsentag” event in 2018 was “Brexit in the context of capital market efficiency: opportunities for the EU financial market?” It is organised by Börsen-Zeitung, Deutsche Börse Group and pwc.

He said that Brexit was politically painful, as the world’s fifth-largest economy had decided against the EU, and that Brexit would mean a reorganisation of the European financial market, making it an “historic opportunity” that Germany as a financial centre should seize. Weimer continued that policymakers need to acknowledge the importance of the financial system and campaign for Germany as a financial centre – which some of them already do. In his view, financial market competence should no longer be outsourced as much as it is now, but rather financial service providers should start encouraging capital market experts to come to Germany and Frankfurt again. Weimer concluded his plea by saying, “We need a road map for expansion of the financial centre, and we need to talk about it.”

The importance of advocating for a strong financial centre can be seen in clearing for OTC interest rate derivatives, or euro clearing. Around 95 percent of these products are currently cleared through the London clearing firm LCH. According to Erik Müller, CEO of Eurex Clearing AG, speaking on a subsequent panel about the challenges and impact of Brexit on capital flows, Deutsche Börse’s clearing business, Eurex Clearing, offers a market-led solution.

Although the regulatory process to determine the future framework for euro clearing is still underway, Eurex Clearing has already multiplied the cleared volume and raised the market share significantly with its partnership programme. Müller made Deutsche Börse’s objective clear, “We want to be the risk manager for systemically relevant euro business.”

Speaking on a panel on the financing of young businesses, Eric Leupold, Head of Department Pre-IPO and Capital Markets, referred to the tangible progress made in recent years, with Deutsche Börse’s Venture Network, new index Scale and FinTech Hub all playing a major role here in Frankfurt. However, there is still a lot to be done in Germany to secure financing for young growth companies. The conclusion here too was that it’s not possible without a strong financial market.

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