What Is Xetra?

Xetra is a trading technology platform that is operated by Frankfurter Wertpapierbörse (FWB), the Frankfurt Stock Exchange. It offers electronic trading in stocks, funds, bonds, warrants, and commodities contracts.

Launched in 1997, the majority of all trades transacted in Germany are through the Xetra trading venue: more than 90% of all trading in shares across all German exchanges is now conducted through Xetra, making it the largest of Germany’s seven stock exchanges. In addition, about 30% of all trading in exchange-traded funds (ETFs) in continental Europe is transacted through Xetra.

Key Takeaways

  • Xetra is a trading technology platform operated by the Deutsche Börse Group, which accounts for more than 90% of all trading in shares at all German exchanges.
  • Xetra was one of the first global electronic trade systems and still lists the DAX 30 index.
  • Xetra offers increased flexibility for seeing order depth within the markets, and it offers trading in stocks, funds, bonds, warrants, and commodities contracts.

Understanding Xetra

The Deutsche Börse Group operates Xetra, which is headquartered in Frankfurt, Germany. A diversified exchange organization, Deutsche Börse Group has a range of products and services that span the financial industry’s value chain, including listing, trading, clearing, and settlement, along with custody services, liquidity management, and more. The Xetra platform offers increased flexibility for seeing order depth within the markets.

Deutsche Börse Group is headquartered in the financial center of Frankfurt/Rhine-Main and has branches in Luxembourg, Prague, London, Zurich, Moscow, New York, Chicago, Hong Kong, Singapore, Beijing, and Tokyo.

Xetra was one of the first global electronic trading systems; it has grown to account for the majority of all stock trades on the Frankfurt Exchange (FRA). The FRA is one of the oldest exchanges in the world and includes notable indices, such as the DAX, the VDAX, and the Eurostoxx 50. FRA hours are from 9:00 am to 5:30 pm on weekdays. The DAX 30 is Germany's benchmark stock market index and is run on the Xetra platform, where it is sometimes referred to as the Xetra DAX.

In addition to opening up the German markets for increased foreign investment, it is currently being used by stock exchanges in Ireland, Vienna, and Shanghai.

170+

There are approximately 170 trading participants on Xetra, and around 50% originate outside of Germany.

Other Electronic Trading Systems

In 1969, the first automated system for direct trading among U.S. institutions launched, Instinet (originally named Institutional Networks). Nasdaq was the second automated system to launch in 1971. In the early automated trading systems, trading occurred over the phone (although broker-dealers were able to see the prices other firms were offering).

Shortly thereafter, the New York Stock Exchange (NYSE) launched its Designated Order Turnaround (DOT) system. This allowed brokers to route orders directly to specialists on the floor. In 1984, SuperDOT emerged, which effectively expanded the number of shares sent to the floor at one time to nearly 100,000. Nasdaq soon offered the Small Order Execution System (SOES) to compete with NYSE.

Today, electronic trading dominates the public markets; however, with greater connectivity comes greater cybersecurity threats. While individuals remain at some level of cyber-attack risk, larger entities such as businesses and government systems are often the main targets of cybersecurity attacks. The U.S. Department of Homeland Security uses high-tech cybersecurity measures to protect sensitive government information from other countries, nation-states, and individual hackers. Any financial system that stores credit card information from its users is at high-risk, along with systems like exchanges.