The exchange: electronic and virtual
We are all familiar with the traditional image of an exchange: stock brokers meet in a large hall and trade from their pits by calling out bids. However, developments have long since gone a giant step forward. Today, exchange trading primarily takes place electronically in a virtual market place. With its fully electronic trading system, Xetra®, Deutsche Börse has been one of the pioneers in this regard. Xetra heralded in a new exchange age. Why?
- Xetra is everywhere. In former times, deals were exclusively conducted on the floor. Exchanges were prestigious buildings where the brokers had to be present if they wanted to buy or sell stocks. Xetra severs that link between physical presence and participation in trading. The Xetra exchange is located wherever there are trading screens hooked up to it.
- Xetra is reliable. Customary computer applications can “crash”. However, what might be annoying for a private person can trigger immense losses in the capital markets within a very short space of time. For this reason, Xetra has to be reliably available for Deutsche Börse clients. And in 2005 it certainly was, boasting 99.99 percent uptime.
- Xetra spells liquidity. Every day more than 4,300 brokers on average close 330,000 transactions through Xetra; on some days the figure actually hits 400,000. Sales then exceed the 10 billion euro mark. High liquidity has a decisive advantage: It ensures a lower spread between bid and offer prices, something from which all the capital market players benefit.
- Xetra means low trading costs. High liquidity has another effect that is especially good news to the trading participants: The costs per trade fall. Deutsche Börse charges its customers the most favourable transaction costs in Europe. But the so-called floor trading continues to exist, as the two trading platforms complement each other. Floor trading offers private investors in particular numerous advantages: At Börse Frankfurt they can trade shares, certificates, equity bonds, index funds and warrants – in fact, a total of more than 60,000 instruments.
The Deutsche Börse Group
With stock market capitalisation of around EUR 10 billion (December 2005), the Deutsche Börse Group is the world’s leading service provider to the securities industry, offering products and services for issuers, investors, intermediaries and data vendors alike. The Group covers the entire process chain: from shares and futures trading via order settlement and the dissemination of market information, through to development and operation of electronic trading systems.
Deutsche Börse AG is listed on the FWB® Frankfurt Stock Exchange. The Group has some 3,000 staff members at its head office in Frankfurt as well as at its bases in Chicago, London, Luxembourg and Zurich.