After several years of haggling, eight regional stock exchanges agreed on a first step towards creating a centralised stock market trading system under the umbrella of the dominant Frankfurt exchange.
The move did not, however, send shivers through London securities firms or the Stock Exchange, because it is only one of a number of changes needed to make Germany truly competitive against the highly developed financial markets of London.
The German stockbroking industry faces the unpleasant fact that, according to London Stock Exchange figures, 11 per cent of the turnover in domestic German shares takes place in London, where dealings are cheaper. The proportion has grown from 10 per cent a year ago.
It was a similar shift of British domestic business to foreign exchanges - particularly New York - that helped to provoke the shake-up in the City in the mid-1980s, which led to Big Bang.
Nevertheless there are growing fears in the City that the competitiveness of Germany's financial markets is bound to improve over the next decade to match the power of its economy, much as Japan's banking and securities industry grew on the back of a huge trade surplus.
Observers in London believe there is unlikely to be any rapid threat to Britain's pre-eminent position in European securities trading. But there is a risk of steady erosion over the years by Germany, similar to what happened in the engineering industry between the 1950s and the 1970s.
Under the new plan, at the beginning of next year Frankfurt will turn itself into an umbrella organisation, Deutsche Borse AG. The move is designed to improve co-ordination with the other smaller exchanges and lay the basis for future advances in trading techniques.
The new central Frankfurt exchange will also embrace Germany's three-year-old futures and options exchange, the Terminborse, and the country's hitherto independent clearing and settlements agency for German securities.
The development is seen by the German government and the Frankfurt financial community as essential to improve Germany's competitiveness in international stock and bond trading.
For the present, however, foreign investors are unlikely to notice much difference. For they have traded almost exclusively in Frankfurt anyway, rather than smaller floors in cities such as Hamburg or Dusseldorf.
More important, this initial centralising step only lays the basis for the technological and procedural improvements that are still needed to bring down trading costs in Frankfurt, which most brokers see as its biggest disadvantage to London.
'If you prove to a foreigner that it's cheaper to deal in Germany, then he'll deal in Germany,' said Robert Kerr, of Credit Lyonnais Securities in London.
Furthermore, taxes and other technical factors that make it more expensive to trade in Germany will remain unaffected by the reform, although they are likely to be addressed soon.
Another consideration for investors is the weaker supervision of the German market.Reuse content