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7 Nw. J. Int'l L. & Bus. 507 (1985-1986)
The Regulation of Insider Trading in Germany: Who's Afraid of Self-Restraint

handle is hein.journals/nwjilb7 and id is 517 raw text is: The Regulation of Insider Trading
in Germany: Who's Afraid of
Joseph Blum *
From near total destruction forty-one years ago, the Federal Repub-
lic of Germany has emerged as the fourth wealthiest industrialized na-
tion. Germany's gross national product exceeds $655.5 billion,'
economic expansion continues at a rate of almost 3% per annum,2 and
world leaders now look to Germany as the European economic locomo-
tive. Yet despite this wealth, the German capital markets3 remain minis-
cule in comparison to those of other industrialized nations. In terms of
market capitalization, for example, the Frankfurt Exchange is only a
fraction as large as those of New York, Tokyo, Montreal, and London.'
This development has had a significantly adverse effect on the ability
of German companies to raise equity capital. The average Eigenkapital-
quote (stockholder equity rate) in German stock corporations has fallen
* Mr. Blum is currently associated with the law firm of Latham & Watkins in Washington,
D.C. He recently completed a fellowship granted by the Robert Bosch Foundation in the Federal
Republic of Germany, during which he worked on securities matters at the Bundesministerium der
Justiz (Federal Ministry of Justice) in Bonn.
2 THE ECONOMIST, June 7, 1986, at 123.
3 There are eight German stock exchanges: Frankfurt, Dusseldorf, Berlin, Hamburg, Munich,
Hanover, Stuttgart, and Bremen. Of these, Frankfurt is the most important (accounting for 44% of
the total turnover in domestic shares, 84% of the domestic bonds, 57% of foreign shares, and 87%
of foreign fixed-interest securities) followed by Dusseldorf and Hamburg. Wegen, Federal Republic
of Germany, in INTERNATIONAL SECURITIES LAW AND PRACTICE 5 (J. Robinson ed. 1985).
4 In 1980, the market capitalization of the New York Stock Exchange amounting to $1.2 tril-
lion greatly exceeded the capitalization of the exchanges in Tokyo ($341 billion), London ($133
billion), Montreal ($113 billion), Frankfurt ($72 billion), Toronto ($67 billion), and Paris ($45 bil-
lion). INSTITUTIONAL INVESTOR, Nov. 1980, at 197.

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