The capital markets have changed considerably recently, forcing regional stock exchanges in Germany to rethink their business models to secure their long-term relevance. Can they survive through innovation and new offerings — or is their survival at risk? This article examines the current situation, competitive advantages, modernised platforms and the international orientation of regional stock exchanges.

The current importance of regional exchanges

Regional stock exchanges such as Stuttgart, Munich, and Hamburg traditionally play an important role as a platform for the listing and trading of securities of small and medium-sized companies. These exchanges often offer specialised markets that are tailored to the needs of these companies. For example, the stock exchanges in Munich and Stuttgart are characterised by innovative platforms.

Nevertheless, their influence is limited compared to large trading centres. The overall market share is largely dominated by electronic exchanges such as Xetra or Tradegate Exchange, which leads to increased competitive pressure. To withstand these challenges, regional exchanges must focus more on specialised offerings, innovative strategies and niche markets. They also face the challenge of keeping pace with increasingly complex regulatory requirements despite their limited size.

Competitive advantages and challenges

Although the large, international exchanges constitute the majority of the market, regional exchanges offer specific advantages that differ from those of the larger players. A key competitive advantage of regional exchanges is their proximity to certain markets and their flexibility in introducing new trading instruments. The Hamburg Stock Exchange and the Hanover Stock Exchange, for example, offer attractive conditions for trading in closed-end funds, which has long made them popular trading centres for niche products. 1

Another advantage lies in the expertise and trading offerings aimed at local and national investors. The regional exchanges can score points here with their customised approach and benefit from their proximity to specific investor groups. For investors who are less interested in the international markets and focus on specialised German products, they offer an attractive alternative and are often the first port of call. 2

Neobroker as a challenge and opportunity

Up-and-coming neobrokers such as Trade Republic and Scalable Capital have changed the market. With low-cost, user-friendly platforms, they are increasing the competitive pressure on traditional exchanges. At the same time, however, they open up opportunities: many neobrokers conduct their transactions via platforms such as Gettex or LS Exchange. This increased trading activity by small investors strengthens the position of regional exchanges and enables them to benefit from digitalisation.

Modernisation through innovative platforms and products

The regional exchanges have recognised the pressure to act and are increasingly mobilising resources to take measures that monetise their advantages over the major exchanges. To remain competitive, regional exchanges are increasingly focussing on digital innovations and modern platforms. One example of this is the increased use of Blockchain-Technologie, which is being used at the Stuttgart Stock Exchange to make trading in cryptocurrencies secure and transparent. 3 In addition, the Munich Stock Exchange is investing heavily in automated trading solutions via its Gettex platform, which are particularly tailored to the needs of private investors. 4 The introduction of electronic trading platforms such as Quotrix 5 at the Börse Düsseldorf and other technology-supported models also show how the regional exchanges are focussing on digital transformation.

In addition to blockchain technology, the use of artificial intelligence is also being researched in various areas, such as improving trade execution and optimising analysis tools. Modern trading platforms offer integrated analysis and automation functions that give private investors in particular access to more complex investment strategies. 6

All three examples are promising projects by individual exchanges that show the way for regional exchanges to remain competitive in the future. It is now up to other exchanges to follow suit and set an example.

International networking is key

A central building block for the success of regional stock exchanges is their international orientation. Co-operations with global custodians and the introduction of cross-border products expand the offering for German customers and attract international investors. This enables the stock exchanges to strengthen their market presence.

One example is Börse Stuttgart, which provides access to a sustainable, global index with the Amundi S&P 500 ESG ETF. Such products connect international markets with local investor needs and strengthen the position of regional stock exchanges in global competition. At the same time, they emphasise the importance of sustainable financial instruments, which are attracting more and more investors.

Conclusion: modernisation or extinction?

Regional stock exchanges in Germany must consistently modernise their business models to remain relevant both nationally and internationally. Their strengths — niche markets, proximity to local companies and specialised offerings — continue to be a decisive competitive advantage. However, without technological innovation and a stronger international focus, they risk losing importance. The next few years will show how successful they are in shaping change.

Our USP: strategy consulting and capital market expertise

Consileon’s extensive experience in strategic consulting projects is reflected in the successful implementation of numerous initiatives for our clients.

One example of our work is the strategic analysis of post-trade options for a regional stock exchange when introducing new products. In workshops with specialist departments and the Executive Board, settlement strategies were identified and evaluated in terms of feasibility, costs, and flexibility. In addition, we analysed pricing models and developed well-founded recommendations for optimising the settlement processes.

In another project, we supported a company in realigning its strategic objectives. We analysed success factors in the areas of company, market, and technology and developed clear recommendations for action on this basis.

We have also supported pioneering projects in the area of digital innovation. For a digital post-trade platform in accordance with eWpG we supported the transformation of processes and the IT landscape, the onboarding of pilot customers and the design of a distributed network.

Are you seeking a trustworthy partner with capital market expertise for your strategic project? Then get in touch with us.

Sources

  1. Regionalbörsen gegen Global Player: Wie deutsche Davids den globalen Goliaths trotzen – manager (manager-magazin.de) ↩︎
  2. Regionalbörsen gegen Global Player: Wie deutsche Davids den globalen Goliaths trotzen – manager (manager-magazin.de) ↩︎
  3. Krypto-Abteilung der Börse Stuttgart erweitert Infrastruktur mit AWS – FinanceFeeds ↩︎
  4. Die neue gettex-Website – Dein Tor zu kostenfreiem Handel und vielen weiteren Vorteilen | stock3 ↩︎
  5. Quotrix: Unser börslicher Handelspartner | justTRADE.com ↩︎
  6. KI an der Börse: Es droht der Kontrollverlust | heise online ↩︎