The Neuer Markt's worst performers; % fall over last 12 months

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A series of management scandals among Neuer Markt-listed firms has undermined the confidence of investors in corporate transparency, the government said.

The Neuer Markt, a subsidiary of the Deutsche Boerse group which operates the Frankfurt stock exchange, sparked a speculative fever in the late 1990s, and made millions of Germans investors for the first time.

But the total value of listed shares has collapsed from 234bn euros (�142bn; $200bn) in March last year to just 58bn euros this week.

Of the 342 Neuer Markt stocks, 22 have fallen by more than 95% in the last 12 months.

Punishing the weak

It is these weak-performing stocks that the Neuer Markt hopes to target for de-listing.

Deutsche Boerse: Betting on a high-tech future

Within a few weeks, the exchange plans to bring in new rules that will trigger a de-listing if a share falls below its issue price, or becomes a "penny stock", with a value of below one euro.

At present, 30 of the market's shares would be classified as penny stocks.

According to a report in FT Deutschland, seven firms currently among the Nemax-50, the market's elite, are already considering a voluntary delisting.

The new rules come only three months after the last time the Neuer Markt tightened its regulations.

In March it brought in fines for companies that fell behind in reporting quarterly results.

Trouble at the top

The situation on the Neuer Markt has provoked concern among the government.

Schroeder: Worried about corporate governance

The market was conceived as a mechanism to facilitate capital-raising by new or small companies, which lacked the financial muscle or track-record to list on the main Frankfurt exchange.

The Neuer Markt's lighter regulation quickly made it a favourite among high-tech firms, attracting listings from all over the world - including UK companies such as online travel agency ebookers.com.

But in the current gloomy atmosphere it has raised fears over sloppy corporate governance.

This has prompted the government to call for the drawing up of a new corporate code, which is likely to demand more honest, frequent and thorough reporting of performance to investors.

A preliminary report on corporate governance was presented to a government commission by German chancellor Gerhard Schroeder on Tuesday.

The commission has until next summer to make its recommendations on a new corporate code.