Deutsche Börse, the German exchange group, has introduced a new function on its closed order book that offers automatic order execution at the mid-point of the bid/ask spread.
Xetra MidPoint will be available to the exchange’s members from 24 November and is designed to save trading costs for large orders. The service will be available for around 1,500 equities and exchange traded funds and matching on the Deutsche Börse’s closed order book will be continuous.
“We worked out that implicit costs – spreads and market impact – made up 80-90% of the total execution costs. Xetra MidPoint is designed to help cut back on those,” a Deutsche Börse spokesperson told theTRADEnews.com. “Now, instead of slicing up large orders on the displayed order book, market participants can trade blocks in one piece on the closed order book and reduce market impact as well.”
Xetra’s closed order book is specifically designed to execute large block trades anonymously. Prices for the instruments on the closed book are taken from the open Xetra order book. The Xetra MidPoint service is available for orders in DAX stocks worth more than €25,000 and for orders worth more than €10,000 in other stocks. Price determination can be fully traced.