The Xetra is an electronic trading platform owned by the Frankfurter Wertpapierbörse (FWB). It is the largest German stock exchange and 60% of all DAX listings are traded via the platform. The DAX is the leading German share index. The Xetra is accessible from Monday to Friday from 9.00 a.m. to 5.30 p.m.
More than 200 trading partners from European countries, Hong Kong, and the United Arab Emirates are connected with Xetra’s servers in Frankfurt. The Xetra has high liquidity which speeds up order execution. Designated Sponsors post quotes often which further increases liquidity. All transactions take place electronically in euros and orders can be executed partially.
Regulation, Protection, and Admission of Securities
The Federal Financial Supervisory Authority (BaFin) and several other institutions oversee the Xetra. There are protective mechanisms in place to avoid mistrades. Examples of these protective mechanisms are volatility interruption, market order interruption, and liquidity interruption measures. The Deutsche Börse AG and Börse Frankfurt Zertifikate AG handle the admission of new securities to the Xetra.
Development of Xetra
The Eurex trading technology formed the basis for Xetra’s trading technology. Deutsche Börse Systems, Deutsche Börse AG, and Andersen Consulting developed the platform together. They positioned the Xetra trading technology as a brand from the start. Their goal was to give Xetra a good position in the market and license it to other exchanges.
Xetra’s trading technology is being used by the Vienna Stock Exchange, the Ljubljana Stock Exchange, the Prague Stock Exchange, the Budapest Stock Exchange, the Irish Stock Exchange, the Bulgarian Stock Exchange, the Malta Stock Exchange, the Cayman Islands Stock Exchange, the Zagreb Stock Exchange, and the Shanghai Stock Exchange.
Xetra replaced the IBIS trading platform in 1997. Xetra had lower transaction costs, a better geographical location, and the ability to keep trading partners anonymous. The biggest problems to overcome were system instability, scalability, and latency.
In June 1997 the Xetra GUI frontend was released to speed up familiarisation among users. Later that year the back-end went operational. In 1998 intraday auctions, stop orders, and Designated Sponsors were added, whilst minimum order sizes were lowered. In 1999 quality-of-life improvements were added like extended volatility interruption, increased order validity duration, and IPO pricing. In 2000 warrant trading and evening trading were added. A year later the frontend and API changed from C++ to Java. In 2002 Xetra launched BEST which enhanced its performance.
2007 introduced split market data streams which increased trading speed and caching. A year later Xetra launched certificates trading, actively managed funds trading, a new MidPoint order type, and basic multi-currency support. In 2011 all shares and bonds tradable at Börse Frankfurt migrated to Xetra. Xetra added new order types like Strike Match and Top of the Book in 2011 as well. 2012 and 2013 saw more new order types added and improved risk management tools for OTC trades. In 2014 and 2015 Xetra expanded the current risk management features, and added the Volume Discovery order and ETF quote request functionality.
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