What Is Xetra?
Let me explain Xetra to you directly: it's an electronic stock exchange system based in Frankfurt, Germany, owned and run by the Deutsche Börse Group. Since its launch in 1997, this platform has provided electronic trading for stocks, funds, bonds, warrants, and commodities contracts.
You should know that most trades in Germany happen through Xetra, plus about one-third of continental Europe's exchange-traded funds (ETFs). If you're an investor using Xetra, you get low costs, high transparency, and fast execution on your trades.
Key Takeaways
- Xetra is a trading technology platform operated by the Deutsche Börse Group.
- Launched in 1997, the platform accounts for more than 90% of all trading in shares at all German exchanges.
- Xetra was one of the first global electronic trade systems and still lists the DAX.
- It offers increased flexibility for seeing order depth within the markets, and it offers trading in stocks, funds, bonds, warrants, and commodities contracts.
- Trading activity takes place between 9 a.m. and 5:30 p.m. local time Monday to Friday, except for major holidays.
Understanding Xetra
As I mentioned, Xetra is a fully electronic trading platform headquartered in Frankfurt, Germany, and operated by the Deutsche Börse Group, which also owns the Frankfurt Stock Exchange or Frankfurter Wertpapierbörse. This group is a diversified organization covering the full financial value chain, including listing, trading, clearing, settlement, custody services, and liquidity management.
Xetra started in 1997 as one of the first global electronic trading systems and has grown to handle the majority of stock trades on the Frankfurt exchange. In fact, over 90% of all share trading in Germany goes through it, along with about 30% of ETF trading in continental Europe.
What you get with Xetra is more flexibility to see order depth in the markets. Being fully electronic, it provides a trading setup with low costs, high transparency, and quick order turnaround, especially for highly traded shares like those in the DAX index, which covers 40 of the largest and most liquid German companies on the Frankfurt exchange.
Trading on Xetra runs Monday to Friday from 9 a.m. to 5:30 p.m. local time, with no activity on major holidays. There's a daily opening auction at 8:50 a.m. and a closing auction at 5:30 p.m.
As of July 2022, Xetra has 149 trading participants, with about half based in Germany.
Xetra vs. Other Electronic Trading Systems
Xetra is one of the largest electronic trading systems globally, but it's not the only one and wasn't the first to bring automated trading ease.
The first automated system for direct trading among U.S. institutions came in 1969 with Instinet, originally called Institutional Networks. Nasdaq launched its own in 1971, where trade orders were handled over the phone on these and similar systems.
The New York Stock Exchange introduced its Designated Order Turnaround (DOT) system, letting brokers route orders straight to floor specialists. By 1984, SuperDOT expanded that to handle nearly 100,000 shares at once. Nasdaq responded with the Small Order Execution System to compete.
Today, electronic trading dominates public markets over physical floors, thanks to internet technology. Few exchanges still use physical trading floors; most, like Xetra, are electronic globally. But there are risks, especially higher cybersecurity threats.
Individuals face some cyber-attack risks, but larger entities like businesses and governments are prime targets. The U.S. Department of Homeland Security uses advanced measures to protect sensitive info from countries, nation-states, and hackers. Systems storing credit card data or exchanges like Xetra are high-risk.
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