Deutsche Börse has upgraded its electronic trading system Xetra. Buy and sell orders from around the world are listed side-by-side in the main open order book and executed automatically. 4,600 traders from all major banks and brokerage firms in 18 countries are connected to Xetra.
The improvements involve network adjustments, higher-performance hardware and new software functionalities. The average data transfer time for a 'round trip' (the time required for an order to travel from the participant via the Xetra network to the Xetra back-end, and for confirmation of receipt to be sent back to the participant) is on average 16 milliseconds for the fastest participants. The fastest round- trip time is less than ten milliseconds on Xetra.
The improvements were implemented for algorithmic trading, in which computers evaluate trading signals and automatically place buy and sell orders in the system. Algorithmic trading is dependent on extremely short round-trip times in order for the system to be able to react quickly and flexibly to market movements. More than 30 percent of the order book volume and more than 40 percent of the orders on Xetra are already computer generated. This is a growing trend, the firm says. Algorithmic trading boosts liquidity and results in closer spreads for the securities traded, which benefits all market participants.