Copenhagen Stock Exchange (CSE): What It is, How It Works.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

What Is the Copenhagen Stock Exchange (CSE)?

The Copenhagen Stock Exchange (CSE) serves as Denmark's official market for securities. The CSE became a limited company in 1996 and lists shares, fixed income instruments, and derivatives for trading. The CSE exchange uses an electronic ordering system to facilitate efficient order matching. It currently is part of the Nasdaq Nordic group.

Share prices on the CSE are listed in Danish Kroner (DKK).

Key Takeaways

• The Copenhagen Stock Exchange (CSE) was founded in 1808 as Denmark's securities exchange.
• In 2005, the CSE joined the Nasdaq OMX group as part of its Nasdaq Nordic division.
• Today, the CSE lists two major equity indices for Danish shares, the OMX C20, and OMX C25.

Understanding the Copenhagen Stock Exchange (CSE)

Founded in 1808, the Copenhagen Stock Exchange (CSE) has been Denmark's primary asset exchange. In 1998, the CSE entered the NOREX Alliance with Sweden's Stockholm stock exchange. NOREX eventually grew to include stock exchanges in Oslo, Iceland, and regional markets as it sought to take advantage of greater international investment opportunities by using a common trading platform and regulatory structure.

NOREX along with the Copenhagen Stock Exchange became a member of the OMX Exchange group in 2005, which then became part of Nasdaq in 2008. Nasdaq Nordic is the Nasdaq subsidiary that includes the Copenhagen, Stockholm, Helsinki, and Iceland exchanges.

The CSE manages the OMX C20, a stock index launched in 1989 containing 20 of the exchange's blue chip companies. The C20 is Denmark's premier benchmark equity index. Investors can buy or sell futures and options with the C20 Index as the underlying asset. The OMX C25 stock index was launched in 1996 which is a second market value-weighted, free float-adjusted, and capped index. The C25 index contains the 25 largest and most traded shares on Nasdaq Copenhagen.

Nasdaq Nordic

Denmark's economy is among the most developed in the world. "Denmark’s economy performs notably well in administrative efficiency. Open-market policies sustain flexibility, competitiveness, and large trade and investment flow, and the transparent and efficient regulatory and legal environment encourages robust entrepreneurial activity. Banking regulations are sensible, and lending practices are prudent," according to the Heritage Foundation.  

Parent company Nasdaq states that it's "the creator of the world's first electronic stock market, its technology powers more than 90 marketplaces in 50 countries, and 1 in 10 of the world's securities transactions. Nasdaq is home to approximately 3,900 total listings with a market value of approximately $13 trillion."

International Investing

Despite the growing availability of trading opportunities on foreign exchanges, many domestic investors find cross-border tax issues and capital controls more complicated and expensive than their desire for international diversification warrants. Tools such as American Depositary Receipts (ADRs) and domestic funds that trade in shares of international stocks may provide a more convenient method of investing in international equities.

ADRs allow investors to purchase blocks of shares of foreign stocks held and issued by U.S.-based banks. ADRs essentially act as a domestic vehicle for foreign equities. Traders can buy and sell them in U.S. dollars, receive dividend payments, and generally receive tax treatment equivalent to shares of domestic stocks.

Mutual funds and exchange-traded funds (ETFs) offer similar flexibility and arguably greater familiarity since most investors have more familiarity with these products than ADRs. Investors need only seek out mutual funds or ETFs intended to provide international exposure and purchase their shares. Such funds generally focus on countries or regions with additional options available for emerging markets or developed markets outside the United States and Canada.