Germany's Deutsche Börse this week announced a multi-pronged plan to reel in retail investors by making its home markets more transparent and also opening an Internet portal named after it's beleagured new market segment: Neuermarkt.com (www.neuermarkt.com). The portal is designed to be a worldwide investor forum that links everyone to everyone. "Neuermarkt.com is a brand name with worldwide recognition," says Josef Nägel, a Deutsche Börse administrator who conceived the project along with colleague Eric Müller. "In America, more people know Neuer Markt than know Deutsche Börse."
But Neuermarkt.com the portal is not to be confused with Neuer Markt the segment. Carnage there has been attributed at least in part to poor information dissemination among German retail investors. Now online brokerages, information providers and even other German exchanges are scrambling to get as much information into investors' hands as possible — a concept that has been frustratingly slow to develop on the continent.
The tiny Berlin Stock Exchange, for example, which primarily trades OTC shares in foreign companies, announced a new online trading system in November that will be woven directly into brokers' interfaces. German retail broker Consors and banking cooperative Bankgesellschaft Berlin, hope to become part owners of the exchange to demonstrate their commitment to the little guy. A week after Berlin's announcement, Deutsche Börse unveiled Xetra Live, which early next year will allow retail customers of participating brokers to see all bids and offers in the exchange's electronic trading system — essentially permitting them to watch their orders hit the market and see them getting filled.
The new site is one of many true information exchanges entering the German market, bringing the kind of transparency Americans have enjoyed for years. "American fund managers especially complain that there's too little information about our companies," Müller says. "Now they can access our site from the U.S., and all the data is standardized. There's no spin, and no advertising message." Anyone with an Internet connection will be able to access both Deutsche Börse's database and that of Multex.com, which has built a thriving business delivering analyst reports online in the U.S., to compare the performance of companies with other firms in the same sector. Deutsche Börse has already built a studio from which to broadcast online interviews with CEO's, and there will also be online analyst and press conferences.
Transparency does have its limits. Regarding Neuermarkt.com's own cost, Deutsche Börse board member Volker Potthoff would only say they spent an amount "in the single digit millions" in deutschmark terms — meaning between $500,000 and $5 million — to set up. They plan on earning money by charging brokers and analysts for linking to their sites. It's a business model that's already proven successful in the U.S., where Multex raked in $70 million this year — only 19% of which came from pop-up and banner ad sales. The bulk of the money comes from fees charged for Web hosting and downloads. Multex Investor Europe (www.multexinvestor.co.uk), a 50/50 joint venture between Multex and Reuters, is handling much of the business end for Neuermarkt.com.
"The transparency is so new to them here!" said Multex Investor Europe's CEO Richard Burdge. The company's American site has 2.3 million registered users who downloaded more than 15 million analyst reports over the last two years — some for free and others at a cost. Burdge says the average amount of time analysts wait to release their reports is down from 30 days to seven, and he figures it will shrink even more as other providers jump into the game. As the American experience has proven, there's no guarantee that informed investors will make money — but it at least keeps them coming back for more.
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