What Is Xetra?

The Deutsche Börse Group operates the Xetra trading technology platform. Since its launch in 1997, it has become the go-to platform for trading shares at all German exchanges, accounting for over 90% of trades. Xetra was one of the first electronic trade systems in the world and still lists the DAX. With its advanced features, Xetra allows increased flexibility in viewing order depth within the markets and offers trading in stocks, funds, bonds, warrants, and commodities contracts. Trading activity on Xetra occurs between 9 a.m. and 5:30 p.m. local time from Monday to Friday, except for major holidays.

Basics

Xetra, an electronic stock exchange based in Frankfurt, is a pivotal component of Germany's trading landscape. Under the stewardship of the Deutsche Börse Group, this platform was inaugurated in 1997. It facilitates electronic trading in various financial instruments, encompassing stocks, funds, bonds, warrants, and commodities contracts.

Remarkably, Xetra commands the lion's share of trading activities within Germany. Additionally, it claims a substantial portion, approximately one-third, of continental Europe's exchange-traded funds (ETFs) trading volume. Discerning investors who opt for Xetra as their trading platform of choice reap the benefits of cost-efficiency, transparency, and rapid execution times, which are pivotal attributes in today's fast-paced financial landscape.

Xetra: The German Electronic Trading Powerhouse

Xetra, situated in Frankfurt, Germany, stands as a pioneering fully electronic trading platform, expertly managed by the Deutsche Börse Group, a versatile entity encompassing a comprehensive range of financial services, from listing and trading to clearing, settlement, custody, liquidity management, and beyond.

Launched in 1997, Xetra quickly became the dominant force behind stock trading on the Frankfurt Stock Exchange (FRA), orchestrating over 90% of all stock transactions within Germany. Moreover, Xetra plays a substantial role in continental Europe, facilitating approximately 30% of ETF trading.

This cutting-edge platform empowers investors with unparalleled flexibility, granting insights into market order depth. It boasts low-cost, transparent trading, delivering swift execution times, particularly advantageous for highly traded shares, such as those featured in the DAX index, representing the 40 largest and most liquid German companies on the FRA.

Xetra's trading window operates weekdays from 9 a.m. to 5:30 p.m. local time, with trading paused on major holidays. The platform orchestrates an opening auction at 8:50 a.m. and a closing auction at 5:30 p.m. As of 2023, Xetra's extensive network comprised 143 trading participants, with approximately half of them based in Germany, underscoring its global significance.

Xetra vs. Other Electronic Trading Systems

Xetra, despite its stature as one of the world's largest electronic trading systems, shares the stage with several predecessors that paved the way for automated trading. In 1969, the first leap into automated trading among U.S. institutions materialized with Instinet, initially named Institutional Networks. Nasdaq swiftly followed suit in 1971, forging its own automated system. These systems revolutionized trade order placement, albeit via telephone. The New York Stock Exchange (NYSE) entered the arena with the Designated Order Turnaround (DOT) system, enabling direct order routing to floor specialists. In 1984, the emergence of SuperDOT increased the volume of shares dispatched to the floor, reaching nearly 100,000 at a time. Nasdaq countered with the Small Order Execution System (SOES) in competition with NYSE.

Today, electronic trading is the dominant force in the financial industry, overshadowing physical trading due to the internet's ascendancy. Few exchanges continue to operate physical trading floors, with the majority embracing global electronic platforms like Xetra. However, this transition comes with its perils, notably the heightened cybersecurity threats.

While individuals remain vulnerable to cyberattacks, larger entities such as businesses and government systems often bear the brunt of these assaults. The U.S. Department of Homeland Security employs advanced cybersecurity measures to safeguard sensitive government information from foreign nations, nation-states, and individual hackers. Financial systems that store user credit card information and exchanges are at elevated risk in this digital age.

Conclusion

Xetra, managed by Deutsche Börse Group, has been a dominant force in electronic trading since 1997, handling over 90% of German stock trades and a significant portion of European ETF trading. Today, electronic trading prevails over physical trading due to internet technology, but it also faces heightened cybersecurity risks, demanding robust protection measures for financial systems. In this evolving landscape, Xetra continues to shape the future of electronic trading.