Deutsche Börse: New Xetra function minimizes trading costs

21 November 2008

As from Monday, trading members will be able to trade around 1,500 equities and exchange traded funds (ETFs) at Deutsche Börse at the midpoint of the current bid/ask spread of the open Xetra order book. This new Xetra MidPoint function enables market participants to execute larger orders on market-neutral terms, and to lower their trading costs.

Xetra MidPoint orders are placed in a closed order book and executed there in continuous trading at the midpoint of the current best bid and best ask price from the open Xetra order book. Price determination can be fully traced.

“Larger volumes can be traded with Xetra MidPoint without market impact:
with
transparent prices and the security that a regulated market such as the stock exchange offers,” said Rainer Riess, Managing Director of Deutsche Börse’s Cash Market Development department. “As Xetra MidPoint orders are always executed at the midpoint of the best bid and ask prices, implied trading costs, which constitute the bulk of the total trading costs, are reduced for the investor.”

Xetra MidPoint orders are specially marked with the code “XM”. Legally, they are considered to be exchange-concluded transactions. Xetra MidPoint orders are possible in DAX stocks for amounts of € 25,000 and more; the threshold for other stocks is € 10,000.

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