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The Exchange Council of the Frankfurt Stock Exchange resolved new criteria for the allocation of order books on Tuesday. The new procedure implements the guidelines set out by the ruling of Frankfurt Administrative Court, and makes use of the scope provided by the Court to take lead brokers’ performance into account.
In accordance with the new procedure, every authorized lead broker will receive order book groups with a maximum volume of two percent of the total order book turnover for the year. This allocation is not dependent on lead brokers’ performance. They will be allocated further order books on the basis of their individual relative performance weighted by the number of price determinations. Performance will be measured using the criteria established in the Exchange Regulations, such as the number of partial executions and allocation volume.
This means that the performance of lead brokers remains a key allocation criterion in the interests of the investors. The Frankfurt Stock Exchange will continue to meet the MiFID requirements for best execution.
The new allocation criteria are due to take effect as of 26 March 2007, the distribution applies for a period of 30 months. Because of Börse Frankfurt filed an appeal against the ruling by the Frankfurt Administrative Court the coming into effect of the new criteria is under reserve of the Higher Administrative Court of the Federal State of Hesse deciding timely prior to the implementation of the new criteria on the complaint. In the event that the decision allows the current regulations to be retained, the new allocation criteria will be void and the Frankfurt Stock Exchange will allocate order books according to performance only. The Exchange council has affirmed to return to an allocation based solely on performance if this would be feasible on a later decision of the Higher Administrative Court of the Federal State of Hesse.
