Financial Instruments and Markets: A Casebook

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Deutsche Börse

Since Werner Seifert had been appointed its CEO in 1993, Deutsche Börse had become the world's largest securities trading and related technology powerhouse, as measured by its revenue, profit, or market capitalization. Under his leadership, Deutsche Börse had successfully automated its cash market operations and created the largest fully electronic derivatives exchange in the world. Furthermore, by leveraging its technology and market know-how, Deutsche Börse had established a chain of related businesses offering superior information and operative systems to securities market participants.¹ As a result, the company could no longer be considered a mere stock exchange. Instead, Deutsche Börse had become a “transaction engine” providing turnkey services to the full range of market participants.² Seifert had long argued that Deutsche Börse would not support a market system in which exchanges were to become over-regulated utilities. Rather, he had promoted a landscape in which exchanges could compete based on the merits of their ability to offer new services and products and use technology to support and fuel innovation. Now, in May of 2002, Seifert found himself at a crossroads; faced with deciding the proper investments for Deutsche Börse to retain its competitive edge.

Deutsche Börse's holdings included a 50% stake in Clearstream International. Clearstream was one of two existing International Central Securities Depositories (ICSD) in Europe specializing in clearing, ...