German exchange group Deutsche Börse has launched a market-maker driven trading model for bonds on its Xetra electronic trading platform.
The model, which Deutsche Börse describes as a “continuous auction with specialists”, will trade around 700 euro-denominated corporate bonds, which are listed on FWB Frankfurt Stock Exchange, the group’s main bourse. Other types of bonds will be added in the future.
According to Deutsche Börse, the model combines the advantages of electronic trading on Xetra and the support of ‘specialists’ – or market makers – which it said will be able to provide liquidity and good prices even for small order sizes.
Private investors and small-to-medium-sized institutions will benefit from the specialists’ continuous quote provision and near-real-time execution, as well as the fact that they do not charge commission, the exchange group added.
Three brokers – Close Brothers Seydler Bank, ICF Kursmakler and Wolfgang Steubing – meet Deutsche Börse’s criteria for bond specialists and will be responsible for trading in the initial crop of 700 corporate bonds.
Deutsche Börse described the launch of bond trading on Xetra as another milestone in its European growth strategy. It launched Xetra International Market, a pan-European trading platform for blue-chip equities, at the beginning of November and yesterday announced plans to buy a 75% stake in Tradegate, an off exchange trading platform aimed at private investors, and convert it from a multilateral trading facility to a regulated exchange.