Please click the terms to see the explanation.
Source: Deutsche Börse AG

Safety cushion

The safety cushion is stated in percent and shows how far the current price ranges from the lowest price level of the certificate. This corresponds to the loss that may be occured by the underlying before the safety level is reached, i.e. all safety features of a certificate become invalid.

More information on the product types

Sale in the open market

A sale in the open market is often synonymous with a direct offering, and is a procedure used primarily by tap issuers. However, a syndicate bank may attempt to sell securities in the open market if an issue is not fully subscribed. The price of the securities is continually updated to reflect the market situation.

Prior to the placement of the securities, the issuer must publish an offering prospectus that indicates the first day of sale, as well as a non-binding placement price. There is no subscription period.

A private placement, in which securities are sold to large-scale institutional investors, is a special type of sale in the open market.

Schatz future

The Schatz future is traded on the Eurex® exchange. The underlying instrument is a notional bond that represents a basket of deliverable bonds with an interest rate of six percent and a remaining maturity of between 1.75 and 2.25 years. The value of a Schatz future contract is EUR 100,000.


SDAX ® was launched on 21 June 1999. It comprises 50 shares from classic sectors in the Prime Standard segment of FWB® Frankfurter Wertpapierbörse that rank directly below the MDAX ® shares in terms of market capitalization and trading volume. The base date for the index is 30 December 1987 = 1,000 points.

The composition of the index is reviewed on a semi-annual basis and adjusted in March and September. The criteria for weighting the shares in the index are: trading volume and market capitalization on the basis of the number of shares in free float, as well as position in the respective sector.

Decisions regarding changes to SDAX® are taken by the Executive Board of Deutsche Börse AG, which consults with the Arbeitskreis Aktienindizes (Stock Indices Working Group).

Secondary market

In the secondary market, securities are sold by and transferred from one investor to another. It is therefore important that the secondary market be highly liquid and transparent. The eligibility of stocks and bonds for trading in the secondary market is regulated by the Stock Exchange Act and the stock exchange rules and regulations. Foreign financial instruments can become eligible through the issue of depositary receipts. The derivatives market consists only of a secondary market for standardized derivative instruments (i.e. instruments with comparable contract specifications).

Secondary Purchase

In a secondary purchase, a venture capital fund sells off portfolio companies that are not developing according to plan and would otherwise have to be written off completely. Sometimes, a venture capital company will sell off its entire portfolio if it is uncertain that follow-on financing will be available. Typically, the buyer acquires holdings that are in a more mature stage of development, thereby avoiding the riskier early phase. For the start-up company, a secondary purchase is usually associated with considerable risk, but may be its only chance for survival

Sector fund

Fund that invests only in companies in one particular industry, such as telecommunications, software or technology


FWB Frankfurter Wertpapierbörse (the Frankfurt Stock Exchange) calculates 18 sector indices for the companies listed in Prime Standard: Automobile; Banks; Basic Resources; Chemicals; Construction; Consumer; Financial Services; Food & Beverages; Industrial; Insurance; Media; Pharma & Healthcare; Retail; Software; Technology; Telecommunication; Transportation & Logistics; Utilities. Allocation to a sector index occurs on the basis of the categorization into 62 industry groups. The base date for the index is 31 December 1987 = 100 points.


Securities include instruments such as stocks, bonds, mortgage bonds, and shares in investment funds. Banknotes, checks, and bills of exchange do not fall into this category.

Securities account

A securities account is used for the safekeeping of physical securities at a bank. In addition to protecting the owner from loss, securities accounts facilitate the administration of securities because dividend payments, etc., can be processed automatically. For monitoring purposes, the bank is obligated to maintain two different account ledgers, one of which is organized by account holder, and another which is organized by security. At the end of the year, or upon request, the bank informs the account holder of the securities in the account. In most cases, a depositary bank will appoint a custody and clearing bank to hold the securities in safe custody. Securities accounts can be either open or closed, and safe custody can take the form of collective custody or individual custody. In the case of an open account, the customer provides the bank with a list of the securities or valuables being held. By contrast, only the account holder knows the contents of a closed account, e.g. a safe deposit box. In collective custody, securities of the same type and class owned by different investors are held in a joint account. An individual investor is a joint owner of the entire account, and thus cannot claim to own a particular certificate, but instead is entitled to withdraw the same number of certificates that he deposited in the account. In individual custody, the securities of each investor are held separately. The name of the owner is printed on a strip of paper used to bind the certificates. The investor retains ownership of his shares, and can withdraw the original certificates. The custody of securities is regulated in the German Safe Custody Act (Depotgesetz).

Securities exchange

In practice, only securities (i. e. stocks, government bonds, mortgage bonds, public-sector bonds, corporate bonds, etc.) are traded on a securities exchange; derivatives trading takes place on a futures and options exchange. In Germany, there are currently eight securities exchanges, all of which use the floor trading system. Of these, FWB Frankfurter Wertpapierbörse (the Frankfurt Stock Exchange) is by far the largest.

Securities Trading Act

The Securities Trading Act (Wertpapierhandelsgesetz) is subject to supervision by the Federal Financial Supervisory Authority ( BaFin ). It is part of the Fourth Financial Market Development Act, and has been in force to full extent since 2002.

Seed phase

The seed phase is the initial phase in the life of a new company. It involves coming up with a business concept, developing an approach, and creating the first prototypes. In this phase, start-up companies usually have large capital requirements because they have not yet begun to generate sales.

Semiannual report (funds)

Investment companies are required by law to publish semiannual reports. Issuers of funds listed in the XTF® segment must forward their reports electronically to Deutsche Börse, which then publishes them on the XTF internet site.

Sensitivity (warrants)

The most important indicators of sensitivity are delta, gamma, rho, theta, and vega.


Completion of an exchange transaction - i.e., the delivery of the security or commodity in exchange for the equivalent in cash


Shares, which are issued by stock corporations, consist of a certificate and a dividend coupon sheet with renewal coupons. The bearer or owner of a share, called a shareholder, owns part of the company's capital stock, indicated either as a percentage of the total share capital or as a par value that is printed on the share certificate. The rights vested in the shares are regulated by the German Stock Corporation Act and the company's charter. Basic shareholder rights include:

the right to attend the annual general meeting the right to receive a share of the company's profits the right to subscribe to new shares the right to demand information the right to a share of winding-up revenues.  

Shares are classified according to various criteria, such as the way in which the capital stock is divided up, the fungibility of the shares, or the type of rights attached to the shares:

par value shares vs. no-par value shares bearer shares vs. registered shares (or registered shares with restricted transferability) ordinary shares vs. preferred shares.

Share buy-back

Until some years ago, share buy-backs were allowed in Germany only in certain cases. The German law regulating supervision and transparency in the corporate sector (Gesetz zur Kontrolle und Transparenz im Unternehmensbereich), enacted in May 1998, stipulates that companies can buy back up to 10 percent of their own shares on the stock exchange. The company's shareholders must approve the buy-back at the Annual General Meeting. Companies buy back their own shares when they wish to invest surplus capital or thwart a hostile takeover. Following a buy-back, the company in question has fewer shares on the market. As a result, the earnings per share increase, which in turn usually causes the share price to rise.

Shareholder value

Corporate strategy aimed at enhancing the value of the company - in particular, profits and cash flow - in the hope that this will in turn boost the price of the stock.

Shareholders' record

Companies that issue registered shares are required to maintain a shareholders' record. It provides information on the current shareholder structure and reflects any changes that occur. Shareholders have the right to view the shareholders' record.

Shareholders' right to request information

The shareholders' right to request information does not obtain if divulging such information would render the executive board liable, or if it would be detrimental to the company or any of its affiliates. Regulations on the type of information that must be disclosed can be found in the German Stock Corporation Act (Aktiengesetz), section 131.

Short position

Situation in which an investor sells securities that he does not yet own, with the intention of buying them more cheaply at the time of delivery. Antonym: Long position

Short sale

An investor who sells short is speculating that before the trade must be settled, he will be able to acquire the securities or commodities at a price lower than his selling price. The difference between the sale price and the purchase price is his profit - or loss. In Germany, exchange transactions must be settled within two days. An investor who sells short and is unable to deliver the securities before this time must borrow them from another party. He is then obliged to buy the securities and return them to the lender before the loan period or the repo agreement expires.

Single cash price

The single cash price is determined primarily for stocks which, owing to their small trading volume, are not admitted to continuous trading. The lead brokers pool all buy and sell orders received prior to the close of acceptance and determine the single cash price using the principle of highest volume transacted.

Single cash prices are also determined for stocks admitted to continuous trading if there are orders that cannot be executed for lack of a suitable counterparty. However, the single cash price has become far less relevant for orders in continuous trading since a minimum trading unit of one share was introduced to floor trading at FWB Frankfurter Wertpapierbörse (the Frankfurt Stock Exchange) in June 1999.

A single cash price is determined according to the following regulations:

The single cash price must enable the greatest number of shares to change hands (principle of highest volume transacted).

The lead broker must be able to execute all market orders.  

The lead broker must be able to execute all buy orders with a limit that is higher than the single cash price.  

The lead broker must be able to execute all sell orders with a limit that is lower than the single cash price.

The lead broker must be able to execute at least some of the buy and sell orders with a limit at the single cash price. In this case, the orders can be rationed, or executed in a particular order according to certain priorities.  

The lead broker supplements single cash prices with price addenda to indicate the type of transaction and the volume transacted.  

The procedure for determining the single cash price and the allocation of orders in cash trading are supported by the Xontro computer system.

Synonym: Cash settlement price


The SMAX segment was discontinued with effect of 31 December 2003 in the course of the new segmentation of the stock market. Half of the SMAX companies transferred to Prime or General Standard. The SDAX index has replaced the SMAX All Share Index as barometer for companies with small stock market capitalization.

Special fund

Special funds are owned by a maximum of 10 investors. In most cases, the shareholders of special funds are institutional investors. The shares, which do not carry a load, can be transferred only with the approval of the investment company. The investment policy of special funds are oriented to the individual needs of the shareholders.

Spezialized fund

Specialized funds tend to be more risky than classic investment funds because they commit their assets to a relatively narrow range of securities. They are suitable for investors who expressly wish to invest in a particular sector or region.

Spot market

In Germany, the settlement period is two trading days. Cash market transactions on FWB® Frankfurter Wertpapierbörse (the Frankfurt Stock Exchange) are settled both on the floor and in the Xetra® electronic trading system.

Antonym: derivatives market


The breadth of the spread is influenced, among other things, by the market situation and the terms of the warrant. The issuer defines the maximum, absolute or relative breadth of this spread for each of its securities. This maximum spread is the maximum bid-ask spread which the issuer will observe when entering quotes, irrespective of the market situation. It is therefore larger than the spread which the issuer normally enters, since it must also be observed in times of volatile market phases. The absolute spread actually entered by the issuer on average is posted as an effective spread as part of performance assessment. If a quote is entered with a spread which is broader than the predefined maximum spread, it will be rejected by Xetra®.

Spread certificate

If the price of the underlying share when the certificate matures is within the spread, the investor gets the share plus a cash adjustment in the amount of the difference between the price and lower limit. If the price is below the spread, he only gets the share; if it is above the price, he gets a cash adjustment in the amount of the upper limit plus the difference between the upper and lower limit. Spread certificates are worth it primarily when the investor expects neither strong price gains nor high losses of the underlying up to the end of the certificate’s maturity.

Spread Certificates

The innovative powers of issuers seem to know no boundaries. They meet the demands of investors with new constructions of warrants and other leverage products. Above average chances to make profits are countered by above average risks up to losing everything. The names of these exotic issues are just as creative:

Knock-ins Corridor warrants Hamster warrants Chooser warrants Turbo warrants CLICK warrants


In Germany, the majority shareholder has to hold at least 95 percent of a company’s shares before it can execute a squeeze-out.

Standard deviation

Volatility provides a means of measuring a stock's potential for profit or loss independent of market development. It assumes that past values are an indication of future performance. Because the volatility ratio expresses the extent to which the value of a security can expected to change in the future, it plays a particularly important role in the calculation of options prices.

Startup company

Startup companies are still in the development phase and have not yet marketed or sold their products to any significant extent.

Startup phase

New companies usually require large sums of capital during the start-phase because they have not yet begun to generate sales.


A market situation in which prices are slightly higher than they were on the previous trading day.

Stock corporation

Founding a stock corporation requires a minimum capital stock of 50,000 euro. The capital stock is divided into equal shares with identical par values; the minimum par value is currently one euro. Owing to the launch of the euro, many stock corporations now issue no-par shares to avoid the complications involved in converting deutschmarks to euros. Instead of being assigned a par value (and thus a monetary value), these shares represent the percentage of the capital stock accounted for by a single share. A shareholder owns part of a company's capital stock, and is only liable for the amount of the investment. A shareholder cannot be made personally liable. In Germany, a stock corporation is required by law to have three administrative bodies: · The executive board manages the stock corporation, representing it both in and out of court. · The most important tasks of the supervisory board are to appoint and dismiss members of the executive board, audit the financial accounts and management report, and, at the annual general meeting, to inform stockholders of developments that took place within the company during the financial year. · The annual general meeting comprises the company's shareholders. It elects a shareholders' representative to sit on the supervisory board, makes decisions regarding the application of profit and the payment of dividends, and grants discharge to the executive and supervisory board. Large firms are typically organized as stock corporations because this enables them to raise large amounts of equity capital, primarily by going public. Another way to procure additional funding is through a capital increase, which can take one of several forms. A company that issues a large number of small shares with low par values will often have a large number of shareholders.

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 (mobilization 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 capitalization. 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) Organization (floor trading, computer-based trading).

Stock Exchange Act (Börsengesetz)

The foundation for the Börsengesetz (BörsG) was laid in 1892 by a "Börsen-Enquête-Kommission" (Exchange Enquiry Commission) appointed by the Chancellor of the Reich. The task of the commission was to remedy the deplorable state of affairs which characterized the exchanges by developing guidelines for stock exchange activity. Important amendments followed in 1975, 1986, 1989, and in particular in 1994, with the enactment of the Gesetz über den Wertpapierhandel und zur Änderung börsenrechtlicher und wertpapierrechtlicher Vorschriften (the Second Financial Market Promotion Act). Each new amendment increasingly incorporated international law, adopting in particular the guidelines established initially by the European Community, and later by the European Union. One particular amendment - the Third Financial Market Promotion Act - was undertaken in 1998. It gives issuers easier access to the exchange, contains changes with respect to liability extending to statements made in an offering prospectus, and regulates the delisting procedure. The most recent amendment was made in 2002 when the Fourth Financial Market Promotion Act came into effect: This law especially underpins investor protection. The Börsengesetz comprises six main sections:

I. General provisions on the exchange and exchange bodies II. Exchange price determination and the broker system III. Admission of securities to Official Market IV. Derivatives trading V. Admission of securities to other trading segments VI. Regulations pertaining to penalties and fines; regulations on concluding transactions.

Stock index

A stock index is computed, updated and published on each trading day by stock exchanges, banks, consultancy firms, the business press, and other financial experts. It is calculated for individual market segments, sectors or groups of stocks.

Stock indices are calculated as both price and performance indices using the Laspeyres or Paasche formulas. The Deutsche Börse indices are capital-weighted, i.e. the weighting of a stock is measured according to the total capital of the stocks contained in the index. At the chaining date in June 2002, Deutsche Börse converted index calculation to a free-float weighting basis. Now, only the freely tradable portion of a company's capital stock in one stock category is used to calculated its weighting in an index. Only the larger and more liquid stock category respectively is taken into account for the selection index.

Trading volume and market capitalization, on the basis of the number of shares in free float, are the selection criteria for admission to a stock index.

If the development of a stock index is tracked over time, it provides information on the performance of the underlying stock portfolio. A stock index is therefore a useful indicator for market sentiment, the state of the economy, and trends in individual sectors. It can also serve as the underlying instrument or benchmark for certain financial instruments, such as stock index options.

Some examples of German stock indices are DAX®, the FAZ stock index and the Dow Jones Euro STOXX.

Stock market analysis

The goal of stock market analysis is to forecast how the price of a security will develop in the future. There are two approaches to stock market analysis: fundamental analysis, which appraises a company's earnings prospects, and technical analysis, which studies historical price data. Each method uses various mathematical formulas to identify and predict upcoming trends.

Stock option

A type of derivative which gives the holder the right to buy or sell a certain number of shares at an agreed-upon price (exercise price) within a given period of time or on a particular date. The right to buy a stock is known as a call; the right to sell a stock is referred to as a put. The person or institution that sells an option is also called the option writer.    

Stock price

Stock prices are calculated on the basis of available buy and sell orders either by a lead broker on the trading floor or via the electronic trading system.

Stock split

For example, in a 10-for-1 split, a shareholder will receive 10 new shares for each original share owned without having to furnish additional capital. At the same time, however, the fraction of the capital stock represented by one share decreases in proportion to the split ratio. In the case of par value shares, the par value of each share is correspondingly reduced. Companies often split their stock in order to make their shares appear less expensive in the hope that this will induce investors to buy.

Stop-buy order

When an investor places a stop-buy order, the stock will be purchased as soon as the price has risen beyond an established limit. Stop-buy orders are useful if an investor wishes to purchase a stock only after it has been "discovered" by other investors or broken through a resistance line, for example.

Stop-limit order

An order to buy or sell as soon as a predetermined price limit (the stop limit) is reached.

Stop-loss limit

A stop-loss limit represents a kind of warning to the investor. If the underlying instrument climbs above, or falls beneath, this limit, the knock-out certificate does not expire, but loses in value significantly. The investor then receives a residual value which depends on the knock-out limit.

Stop-loss order

A shareholder can use a stop-loss limit to minimize losses in the face of a price slide. The stock will be sold immediately if the price falls below an established lower limit. The advantage of a stop-loss order is that the investor does not need to constantly monitor the price of the stock.

Stop-market order

An order to buy or sell as soon as a specific price is reached.

Stop-sell order

This order is then executed when a share starts trading at or below the stop price. It then becomes a sell-at-best-offer order. When a stop sell orders are established as a means to limit losses, they are also called stop loss orders.


STOXX Ltd. is owned by Deutsche Börse AG and SIX Group AG. STOXX Limited provides and services the Dow Jones STOXX indices.

STOXX Europe 50

The STOXX Europe 50 index was introduced at the beginning of 1998 by Deutsche Börse AG in conjunction with Bourse de Paris, the Swiss Stock Exchange and the Dow Jones company. It is calculated as a price index and a performance index in euros and dollars. The base date is 31 December 1991 = 1,000.

The criteria for including a company in the index are market capitalization and trading volume of the European companies.
Until 1 March 2010 the index was named Dow Jones Stoxx 50.

STOXX indices

Stoxx Ltd calculates approximately 300 indices. Among those is the Euro STOXX 50, which comprises the largest companies in the euro area.

The base date for the calculation of the index is 31 December 1991 = 1,000 points. Aside from the blue-chip indices, STOXX offers regional indices as well as indices for individual growth segments or sectors. Admission to an index is – further to the index-specific criteria – subject to the market capitalization of the free float of the company. The indices are calculated as price and performance indices. The shares on which the indices are based are converted into euros or dollars.

Subscription period

When a new security is to be issued, investors typically have two weeks to submit their subscription orders. At the end of the subscription period, the issuer announces the offering price and the method of allotment.  

Subscription rights

Subscription rights enable shareholders to maintain a proportionate share of ownership in the company. On the first day that a subscription right is traded on the exchange, the calculated value of the subscription right is subtracted from the price of the existing shares. Although this results in a restructuring of shareholders' assets, the overall value of the assets does not change.

When the stock corporation law was liberalized, so-called - small stock corporations - were given the option of excluding the subscription right. This means that companies under a certain size are not obligated to grant subscription rights provided the capital increase does not exceed ten percent of the capital stock, or the offering price of the new shares is not substantially lower than that of the existing shares. The law thus guarantees that in such cases existing shareholders will continue to own more or less the same percentage the company's stock even without subscription rights, thereby ruling out a capital dilution.

Subscription rights are typically granted to shareholders in the event of a capital increase through contributions, a capital increase out of retained earning, or when the company issues either participation certificates or warrant-linked, convertible, or income bonds. The number of new shares to which each shareholder is entitled is expressed as the subscription ratio (i.e. the number of existing shares needed to acquire one new share). The subscription ratio reflects the extent of the capital increase, and is usually announced by the company's Executive Board.

Shareholders can either exercise their subscription right or sell it on the exchange during a subscription period of no less than two weeks that is to be announced by the Executive Board. Although the value of a subscription right can be calculated, once it has been admitted to trading on the exchange, its price is subject to the laws of supply and demand.

Example: The share capital of a stock corporation is to be increased from euro 4 million to euro 6 million. The subscription ratio has been set at 2:1, which means that shareholders can subscribe to one new share for every two shares they own.

Support buying

Support buying occurs when market participants purchase securities so that a particular price or interest rate level can be maintained at the current level, or boosted to a previous level following a decline.

Suspended trading

Trading in a security listed in the Official Market (Amtlicher Markt) or Regulated Market (Geregelter Markt) can be halted temporarily. The decision to suspend trading is taken by the Executive Board of the respective exchange. Suspended trading signals to investors that a new development – or rumors thereof – could have a considerable impact on the price of the security. Any outstanding orders are cancelled during a trading halt. Trading is suspended long enough to ensure that investors are informed of the relevant developments, although all attempts are made to keep the suspension as brief as possible.


In the case of a pure interest swap, two debtors trade different qualities of interest repayments. These debts are in the same currency. What matters most in the transaction is that different interest payment calculations (fixed vs. variable) are applied to the same principal balance. In addition, mutual capital demands are not allowed as part of the swap. The point of the swap is to give up an advantage in credit rating in return for a corresponding reward. The one party gets a counter value for giving up its creditworthiness while the other benefits in the form of lower interest payments. A similar concept is applied to currency swaps. In this case, the traded securities are based in different currencies.


In a switch, securities with a poor outlook are sold. The proceeds are then invested in securities with more favorable prospects. The sale and purchase takes place simultaneously between two counterparties.


A syndicate consists of several legally and economically independent companies, and is headed by one or more syndicate leaders. Syndicates are created to oversee large-scale financing operations, such as the placement of securities, in order to spread the risk among several companies. The members sign an informal syndicate agreement that specifies the purpose of the syndicate, the length of time it is to exist, its composition and ownership structure, and the tasks to be performed by individual member. The agreement also stipulates each member's liability and the extent to which it participates in profits and losses. The syndicate is usually dissolved when the stated goal has been reached. In the case of a new issue, banks or investment companies will form an underwriting syndicate which acquires the stocks or bonds from the issuer and places them in the capital market.

Syndicate bank

Syndicate banks support companies in issuing securities. Together with the issuer, they assume liability for statements made in the issuing prospectus.

Synthetic bonds

Synthetic bonds allow the yields of different, complex bonds to be compared. To do so, the coupon payment, maturity and yield are calculated such that the bonds have the same value at a base starting point.