Expert Report on Stock Exchange Reform on behalf of the Federal Ministry of Finance
Stock exchanges have been affected by a profound transformation in international capital markets which has brought with it a significant intensification in stock market competition at the national and international levels. The German stock exchange must also confront this wave of change – the legislature equally so.It was before this background that in early 1996 the Federal Ministry of Finance commissioned the preparation of an economic, legal and comparative law analysis (Gutachten) by the Institute working together with Prof. Dr. Bernd Rudolph (Maximilians-University, Munich, Institute of Capital Market Research and Finance). The expert report was to address the dual question of the basic parameters that are to be defined in a modern, market oriented stock and the legislative revisions necessary in Germany to allow the creation of such a law.
Prepared under the central leadership of Prof. Dr. Dr. Dr. h.c. mult. Klaus J. Hopt, Institute Director, and Dr. Harald Baum, Institute Senior Research Fellow, the study was completed in December 1996 and comprised approximately 1,300 pages. In the summer of 1997 an expanded and updated book version edited by Hopt, Rudolph and Baum was published: “Börsenreform: Eine ökonomische, rechtsvergleichende und rechtspolitische Untersuchung,” (Stuttgart 1997). The expert analysis expounded the fundamental economic details of a modern stock exchange institution and, taking the legal-historical development into account, devised a series of far-reaching reform proposals for the German stock market including the trading of options and futures. The comparative law foundation herein was built upon a detailed analysis of the capital market and stock exchange law experiences of important foreign legal systems. Drawn upon were the USA, Great Britain, Japan, Switzerland, France, the Netherlands and Austria. The preparation of the report included conducting numerous discussions with stock market practitioners in and outside of Germany and engaging in on-site research at the most important international stock exchange centres in order to attain an up-to-date account of the very much in flux legal developments ongoing within the examined countries. The study ultimately resulted in 30 legislative recommendations.
In 2002 a law designed to promote the further advancement of German financial centres went into effect, i.e. the Viertes Finanzmarktförderungsgesetz (the Fourth Financial Market Promotion Act). Among others, the Act contains a comprehensive amendment to the Stock Exchange Act and incorporates many of the significant proposals found within the expert report; explicit reference to the report is found in the legislative reasoning of the Act.