A Leading German Electronic Trading Platform

What Is Xetra?

Xetra is an all-electronic trading platform managed by the Deutsche Börse Group in Frankfurt, Germany. It is pivotal for trading stocks, funds, bonds, warrants, and commodities, handling over 90% of share trades in Germany. Xetra’s high efficiency, transparency, and low-cost structure benefit both domestic and international traders. It also caters to around 30% of ETF trading in Europe.

We’ll explain Xetra’s operations, its advantages, and how it compares to other global electronic trading systems. Discover how this platform facilitates fast trades and why it’s a leader in electronic trading systems globally.

A Deep Dive into Germany’s Premier Trading Platform

As mentioned above, Xetra is a fully electronic trading platform. Headquartered in Frankfurt, Germany, the exchange is operated by Deutsche Börse Group, which also owns the Frankfurt Stock Exchange (FRA) or Frankfurter Wertpapierbörse. Deutsche Börse Group is a diversified organization with a range of products and services that span the financial industry’s value chain. This includes listing, trading, clearing, and settlement, along with custody services, liquidity management, and more.

Xetra launched in 1997 and was one of the first global electronic trading systems and has grown to account for the majority of all stock trades on the FRA. In fact, more than 90% of all share trading in Germany takes place through Xetra. This is on top of about 30% of all ETF trading that takes place in continental Europe.

The Xetra platform offers increased flexibility for seeing order depth within the markets. And because it is a completely electronic platform, it offers investors a trading platform with low costs and high transparency as well as fast turnaround times for their orders. This is especially true for shares that are highly traded, including those that are on the DAX. This index represents 40 of the biggest and most liquid German companies that trade on the FRA.

Trading on the Xetra electronic platform takes place Monday to Friday between 9 a.m. to 5:30 p.m. local time. There is no trading activity on major holidays. The platform hosts an opening auction daily at 8:50 a.m and a closing auction at 5:30 p.m.

Comparing Xetra to Other Top Electronic Trading Systems

Xetra may be one of the largest electronic trading systems in the world, but it certainly isn’t the only one and wasn’t the first to offer the ease of automated trading.

The first automated system for direct trading among U.S. institutions was launched in 1969 and was called Instinet (originally named Institutional Networks). Nasdaq followed with its own automated system in 1971. Trade orders were made on these and other similar systems over the phone.

The New York Stock Exchange (NYSE) launched its Designated Order Turnaround (DOT) system, which 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.

Electronic trading is fairly common in today’s financial industry. It dominates the public markets over physical trading activity, thanks to the rise of internet technology. In fact, very few exchanges offer trading on a physical trading floor. Instead, the majority of trading takes place globally on electronic platforms like Xetra. But there are risks—notably, 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.