Thought Leadership

Xetra: Twenty Years of Firsts

Published In November 2017 | Sponsored by Deutsche Börse
Dr. Martin Reck, Managing Director, Deutsche Boerse AG

Today, picturing the European securities trading landscape without Xetra seems virtually impossible. That was not always the case: While Deutsche Börse had played a leading role on the German stock market, the European angle first came into life with the introduction of the first fully integrated electronic trading platform for German equities operated by a regulated exchange in November 1997. 

Right from the beginning Xetra has aimed to serve the needs of different kind of clients ranging from institutional investors, prop traders, market makers to retail investors and issuers. Now, approximately 190 trading participants from 16 European countries, as well as from Hong Kong and the United Arab Emirates benefit from the highest liquidity in German equities and ETFs, leading to higher turnovers at more competitive prices in these securities than any other exchange worldwide can offer. This heterogeneous order flow coming from an international diversified clientele increases the price quality and results in an attractive international instrument portfolio. 

Xetra holds a market share of 90 percent in Germany, and 65 percent in DAX® constituents trading throughout Europe. Also, Xetra is not only world market leader in German Blue chips trading, it is the global reference market for German shares and the leading market in European ETF trading, too. The trading platform owes much of its success to its superior trading technology which has been innovated on a regular basis over the last two decades. With each new Xetra release version, Deutsche Börse has not only aimed for faster, better and more reliable technology but has provided additional, in many cases exclusive benefits for market participants, making trading on Xetra safer and more efficient. Innovative trading functionalities for different types of securities, such as equities, ETFs, funds, bonds and structured products were created to answer particular requirements participants might have in certain trading situations in order to optimize the trading efficiency for everyone. 

Today, more than 1.6 million securities can be traded. One of Deutsche Börse's latest efforts to further optimize trading efficiency on Xetra is nothing short of a revolution: the migration to the powerful state-of-the-art trading architecture T7. T7’s cutting-edge technology delivers ultra-low latency, robustness and safe handling of very high throughput. The migration to T7 also means a comprehensive harmonisation of Deutsche Börse's cash and derivative markets, and trading participants benefit from synergies resulting from the alignment on a common technology for the trading of cash and derivative products, as well as lower access barriers to the derivative market and vice versa.

Another first: Initializing the ETF boom in Europe

Only three years after starting Xetra, Deutsche Börse introduced ETFs to the European market. Right from the start, Xetra has been the pan-European trading venue of choice regarding ETFs. With a market share of more than 33 percent of all ETF trading throughout Europe and a product offering of nearly 1,500 ETFs and ETPs from 24 issuers, the XTF segment has managed to pool liquidity in ETF trading like no other European trading venue, with the tightest spreads and lowest transaction costs.  

More than the sum of its parts

Trading on Xetra does include a cost-efficient and complete service chain. Thanks to Deutsche Börse's integrated business model, straight-through processing includes not only clearing and settlement of each and every instrument traded on Xetra, but also the elimination of counterparty risk due to Eurex Clearing, one of the leading clearing houses in Europe, acting as central counterparty for every trade executed on Xetra. Additional safety and effective protection against potential disadvantages during highly volatile markets or fraudulent behaviour of other market participants are provided by Xetra's protective mechanisms and Deutsche Börse's market surveillance.

All in all: a cutting-edge trading technology, innovative functionalities, a vast, heterogeneous liquidity pool, and the fairness and transparency only a regulated exchange can offer - anyone can see the unique attraction of the Xetra experience - offered and provided for some 20 years now.