Xetra Trading Platform for Europe Schreibgesch tzt by benbenzhou


									        GBV-Kolloquium "IT in Banken und Börsen" - WS 02/03

Xetra ®
Trading Platform for Europe

 Kolloquiumstag der Universität Gießen                        Deutsche Börse AG
 December 6, 2002                      1


n Xetra Facts

    –   International network of members
    –   Price leadership
    –   Successful development of Electronic Securities Trading in Germany
        with Xetra
    –   Xetra the Initiator for the cash market
    –   Deutsche Börse’s integrated offering
    –   The market for Exchange Traded Funds (XTF)
    –   Xetra Outsourcing Overview

n Trading on Xetra
n Xetra Best

                       GBV-Kolloquium "IT in Banken und Börsen" - WS 02/03

Xetra Facts -
Xetra international network of members
                                                                                                                                                                                           396 Xetra Members :
                   Access Point                                                                                                                                                                 •      237 Members in Germany
                   Additional Member                                                          Norway (1)                                                                                        • 159 Members in other European
                                                                                                                                                                                                •     3602 registered traders
                                                                                                                                                                                                •     40 % of Members from outside
United Kingdom (47)
                                                                                                                                                                   Finland (2)
    Ireland (4)
                                                                                                                                        Sweden (2)

                                                                  Belgium (5)
                                                                                                                                 Netherlands (20)
                                      Luxembourg (4)
                                                                                                                                   Germany (234)

                                                                                                                                 Switzerland (14)
                   France (16)
                                                                                                                                                                                                                              Hong Kong (1)
                                                                                                                       Austria (24)
                   Portugal (1)
                                                                                                                            Italy (7)

                                                  Spain (8)
                                                                                                                                                                      Greece (4)

http://www.xetra.de <Global Network>                                                                                                   3

Xetra Facts -
Economies of scale led to price & service leadership
      Daily transaction and price developments
                                                                                                                                               Transaction Fees (Trading, Clearing, Settlement)
      Xetra                                                                                                                         Fee per executed order in EUR

                                                    70%                                                                             30                                                                                       Euronext *
            80                                                                                                                      25
                                                                           46%                                                                                                                                               Xetra **
                                                                                                 30%                                20
                                                                                                                                    15                                                                                       LSE ***

               0                                                                                                                    10
                           1998                     1999                 2000                   2001
                             Trades/day, in thousands                                  Costs per trade
      Availability                                                                                                                      1
                         99,98%                   99,97%                99,88%                  99,99%                                                                                                                          Order volume
      Xetra                                                                                                                                                                                                                     in T €
                                                                                                                                                         5         10           15         20               200 400    600
                                                                                                                               • Front -end software for Xetra members included (in contrary to
            80                                                                                                                   LSE and Euronext)
                                                                                                                               • Orderbook depth in Xetra included (LSE charges separately -
            40                                                                                                                   LMIL)
                                                                                                                               • Order entry in Xetra included (LSE and Euronext charge
              0                                                                                                                  separately)
                          1998                     1999                 2000                    2001
                                                                                                                               • No charge of partial executions (in contrast to Euronext)
*      Euronext: Trading: € 0,60 per trade plus € 0,34 additional fees per orde r for order entry; clearing Floor: € 0,15: Range: 0,5/0,3Bp;Cap: € 18,10 per trade; settlement: € 0,082 per trade, 80% netting
       acceptance assumed; ratio partial executions to executed orders: up to x % for ordervolume of 600 T €                           4
**     Xetra New: Floor: € 0,70/ Range: 0,56bp/ Cap: € 21,00; average clearing/settlement fee € 0,54 per trade; ratio partial executions to executed orders: up to 5,59 % for order   -volume of 600 T €
***    LSE: order charge 1 p, transaction charge 5 p, exchange charge 8bp (Floor 25 p, Cap £ 12,5); share of aggressor trades 60% (auctions considered); clearing fee 0,25p per trade;
       settlement fee 0,26p per trade; PE/EO-ratio analogue Xetra; exchange rate € /£: 1,67
                                   GBV-Kolloquium "IT in Banken und Börsen" - WS 02/03

Xetra Facts -
Successful development of Electronic Securities Trading in Germany with Xetra

Growth market shares order book turnover
                                                                                                                                            Implicit trading costs for Dax-Shares
shares                                                                                                                                      basis points for March of each year
                                                                                     4                                       100%
                                                          12            8                                           7
Region                                 15                                            10
                                                          21                                                                                                       -31%
                                       29                                                                          Current 92,4%
FWB                                                                                                                  Sep 2002

                                                                                     86                            91

                                                                       73                                                                                                          6,9
Xetra                                  56

                                   1998              1999             2000          2001                           2002
                                                                                                                                                       2000        2001
                                                                                                                                                                   2001           22002

                                            Xetra increases market share in                                                              Liquidity     Xetra improves market efficiency
                                            Germany continuously                                                                                       and lowers trading costs

                                                                                                                                   5                              Quelle: Kassamarktstatistik & Xetra Research

Xetra Facts -
Xetra the initiator for the cash market

       § Access to over 6.200 securities from countries world wide.
       § Xetra maintains more than 90% of the market share for all stocks traded in Germany.
Thousand Trades per Day

                          300                                                        9                                                        Continuous Trading & Auction



                                                                                           Billion Euro per Day


                          250                                                 261
                                                                                                                                            DAX                  • 30 German Blue chips

                          200                              197 210    214            6                                                                           • 70 German mid caps

                                                                                     5                                                                           • Approx. 247 high growth
                          150                                                                                                          NEUER MARKT                 stocks - Including NEMAX 50
                          100                                                        3                                                                           • Approx.76 small caps
                                                                                                                                           SMAX                    (blue “micro chips”)
                                   62                                                2
                          50                                                                                                               STOXX                 • Dow Jones Euro STOXX 50
                                                                                     1                                                                             and Dow Jones STOXX 50
                           0                                                         0                                                                           • 85 Exchange Traded Funds








                                                                                                                                       Liquid Foreign
                                                    2. Q
                                                     1. Q

                                                   3. Q

                                                                                                                                                                 • Over 560 liquid foreign stocks
                                                                                                                                       Stocks & Liquid             and small caps
                                                                     Source : Group Deutsche Börse
                                                                                                                                         Small Caps

                                  Hybrid Market Models                                                                                 Auction Only             • Over 5000 equities mostly of
                           Eurex Bonds                                       Eurex Repo                                                 Other Stocks              foreign origin but also
                                                                                                                                                                  domestic small caps

http://www.deutsche-boerse.com                                                                                                     6
            GBV-Kolloquium "IT in Banken und Börsen" - WS 02/03

Xetra Facts -
Deutsche Börse‘s integrated offering

         Hedging /                                                                                                                                                       Hedging /
         Arbitrage                   XTF                                                                                                                                 Arbitrage
                                     Trading of 63 index funds and
                                     22 actively managed funds

          XETRA                                                                                                               EUREX
                                                                                                                              Derivatives on ETFs:
          Trading of global blue chips,
                                                                                                                              •4 ETFs options and
          i.e. Xetra US Stars segment
                                                                                                                              •4 ETFs futures

                                                                                           Hedging / Arbitrage


Xetra Facts -
The market for Exchange Traded Funds (XTF)
§    Intraday-trading of Index funds and Actively Managed funds.
§    Continuous market Pricing ( as opposed to once daily)
§    Can be used as straight forward investment or hedging and arbitrage instrument.
       INDEX FUNDS (63)
    § Issued by EETFC (2),                                                                                                                                    ACTIVE FUNDS (22)
      based on DJ STOXX and                                                                     XTF - Xetra Turnover
                                                                                                                                                            § Issued by DWS (11), based
      DJ EUROSTOXX 50                                                                                                                                         on European, Asian and
                                        Average Volume per Month in Million Euro

    § Issued by INDEXCHANGE                                                        7.000
                                                                                                                                                              American stocks and
                                                                                                                                                              sectors such as Biotech,

      (31), based on DJ country                                                    6.000
                                                                                                                                                              Internet, Pharmaceuticals,

      and sector Indices and on                                                    5.000

      DAX, MDAX and NEMAX                                                                                                                                     Gold mines.

      50.                                                                                                                                                   § Issued by Unico (2), based



    § Issued by LDRS (13),                                                         2.000
                                                                                                                                                              on European and Global
      based on FTSE Global                                                                                                                                    equities.
      indices                                                                           0                                                                   § Issued by Xavex (7)
    § Issued by Unico (7), based                                                                                                                              (Deutsche Bank), based on





                                                                                                                                                              a Bond and Equity






      on MSCI indices.






    § Issued by Fresco (10),                                                                      Source: Deutsche Boerse AG
      based on DJ indices.
http://www.deutsche-boerse.com/XTF                                                                                8
            GBV-Kolloquium "IT in Banken und Börsen" - WS 02/03

Xetra Facts -
Xetra Outsourcing - Overview of Services
                                             • Xetra Functionality
                                                  • System development
                                                  • Xetra back end with different market models
                                                  • Xetra front end open interface Values -API
                                                  • Xetra front end application Xetra Trader
                                             • Technical Access to Xetra Members
                                                  • Currently about 400 Xetra members
                                                  • Multiple market access for Xetra Members
                                             • Xetra Operations
                                                  • Initial Setup
                                                  • Operation of production and simulation environment
                                                     including hardware
                                                  • Technical support
                                             • Network Operations
                                                  • Various Access points world wide (e.g. in Dublin,
                                                     London, Helsinki, Amsterdam, Vienna, Zurich, Milan,
                                                     Paris, Madrid, Zurich, Hong Kong, Tokyo, Frankfurt)
                                                  • Operation of Back-Bone lines including hardware
                                                  • Technical support
                                             • Customer Service
                                                  • Technical member set -up & readiness support
                                                  • Technical Helpdesk

http://www.xetra.de <Outsourcing>               9


n Xetra Facts
n Trading on Xetra

        –     Xetra Market Model
        –     German trading schedule & trading forms for stocks
        –     Order types & specifications
        –     Xetra trading screen
        –     Xetra Live trading screen for retail investors
        –     Safeguards in auctions and continuous trading
        –     Xetra XXL
        –     Xetra Block Crossing Market Model

n Xetra Best

           GBV-Kolloquium "IT in Banken und Börsen" - WS 02/03

Trading on Xetra
Principles of the Market Model

                     Concentration of                                                                   Creation of
                     total liquidity in                                                                 equal and
                     one central order                                                                  decentralised
                     book per security                                                                  market access

                                                           Market Model
                                                        Equities & Warrants

                      degree of                                                                      Specific provision
                      transparency of                                                                of additional
                      order book and                                                                 liquidity by
                      trading activity                                                               Designated


Trading on Xetra -
German trading schedule & trading forms for stocks

           9:00                                   13:00                     17:30                                   20:00 CET

Pre-                                                                                                                                                          Post-
                     Continuous Trading                        Continuous Trading                      Continuous Trading
trading                                                                                                                                                       trading

   Continuous Trading
    § Trading in an open order book with accumulated volumes
      displayed for individual limits
    § Continuous price determination and execution of orders by

      price/time priority                                                                                                                          Order book

                                                                                                                                                   balancing *

                                                                                          Call Phase
   Auctions                                                                                                                                          Market

    § Transparency with open or partially closed order book                          Display of indicative price, best
    § Determination of an auction price corresponding to the highest                    bid /ask limit for equities.
    § Executable order volume with the lowest surplus
                                                                              * For sponsored and DAX100 instruments there is no order book balancing
                                                                              phase but a market order surplus indication during the Call phase

             GBV-Kolloquium "IT in Banken und Börsen" - WS 02/03

Trading on Xetra -
Order types & specifications of order types                                                 Xetra offers the European Harmonised
                                                                                            Market Model agreed in 2000 by eight
                                                                                            major European exchanges

                              Limit orders are bid and ask orders which are to be executed at their
  Limit Order
                              specified limit or better.

     Market                       Market orders are unlimited bid or ask orders. They are to be executed
     Order                        at the next price determined.
                                  Iceberg Orders are large orders with quantities only partially visible in the
 Iceberg                          order book. Normally used by the trader to avoid adverse price
 Order                            movements.
   Market-to-                     Market-to-limit orders offer the high probability of execution of market
   Limit Order                    orders combined with protection against unintended price impact.

                        Validity Constraints                                                       Execution Conditions

         Good-for-day                    Auction Only
         Good-till-date*                 Opening Auction Only                         Immediate-or-Cancel            Stop Limit Order
                                                                                      Fill-or-Kill                   Stop Market Order
         Good-till-cancelled*            Accept Surplus Order
                                         Closing Auction Only
     * Max. validity of 90 days


                                                            Accumulated buy                 Accumulated sell
                                                          quantity at a given              quantity at a given
                                                                 limit.                           limit.
Trading on Xetra -                               Number of
                                               Buyers/Orders          Best Buy   Best Sell
                                                                                                               Number of
                                                behind each             price     price                    behind each limit.
Xetra trading screen                               limit.

                                                                                                                                          Indication of the
                                                                                                                                          trading phase
  Market Depth -                                                                                                                         (Continuous Vs.
10 Best Bid / Best                                                                                                                           Auction)
Ask prices updated
   in real time

                                                                                                                                             Order Entry

  A highlight on the
screen indicates the
execution of a Trade.

              GBV-Kolloquium "IT in Banken und Börsen" - WS 02/03

Trading on Xetra -
Xetra LIVE trading screen for retail investors
                                                                                               1   Market Overview
                                                                                                   All relevant order book
                                                                                                   information is shown.
                                                                                                   Additionally, order book depth
                                                                                                   and individual instrument
                                                      2                                            charts may be opened and an
                                                                                                   alert function can be
   4                                                                                               displayed.

   5                                                                                          1a   Order Book Depth
                                                                                                   Five best bids & asks are
   1                                                                                               shown on an instrument basis.

                                                                                               2   Intraday Charts

                                                                                               3   Info
                                                                                                   Individual price information is
                                                                                                   shown within this window on
1a                                                                                                 the basis of the actual mouse

                                                                                               4   Instrument Profile
                                                                                                   A predefined or user-defined
                                                                                                   instrument group can be

                                                                                               5   Instrument
                                                                                                   By entering either the
                                                                                                   national or international
   3                                                                                               instrument code (ISIN) or the
                                                                                                   instrument short name,
                                                                                                   individual or a set of
                                                                                                   instruments can be selected.


Trading on Xetra -
Safeguards in auctions and continuous trading

  Interruption                                                               Volatility Interruption
     § In order to ensure price continuity                Static Corridor
       a volatility interruption occurs if the            Upper Limit
       potential execution price is outside a
       predefined price range.                            Dynamic Corridor
                                                          Upper Limit

                                                              Share price*
  Market Order                                            Dynamic
  Interruption                                            Corridor Lower
     § In order to improve the probability                Static Corridor
        of execution of market orders during              Lower Limit
        auctions, the call phase is extended
        if at the time of price determination
        a market order surplus exists.

* Initial share price represents the Last Auction Price

             GBV-Kolloquium "IT in Banken und Börsen" - WS 02/03

Trading on Xetra
Xetra XXL – Block trading without negative price effects

                                    n   The goal of Xetra XXL is to achieve efficency in block trading, improve
                                        transparency and reduce transaction costs to a level comparable to
                                        telephone/OTC trading.
                                    n   Target group for Xetra XXL is Institutional Investors

                                    n   Clear increase in portfolio performance by the lowering of transaction
                                        No spread costs/ no negative price effects/ competitive price and fee model.
                                    n   Fair and supervised block trading at stock exchange prices.

                                    n   Anonymous trade of share blocks with completely closed order book
                                        (trading of DAX -, MDax and selected NEMAX50-Shares)
                                    n   Concentration of liquidity at fixed times in defined crossing auctions
                                        (34 auctions per day).
                                    n   Order execution after volume/time priority always based on the current
                                        midpoint (in the middle between bid/ask of the Xetra order book).

                                    n   Trading volume until August 2002: 1,692 Million €
          Activity                  n   Major single deal: 311 Mio. € (4 Million unit)


Trading on Xetra -
Xetra Block Crossing Market Model

          9:00 9:30 10:00               13:00                                17:30                     20:00

Pre-                               .      .
                                  Continuous     .        .       .     .     .
                                                                      Continuous      .    .       .          .
                                                                                                           Continuous        .       Post-
trading                            Trading                             Trading                              Trading                  trading

Block Crossing
                                                                                      Block Crossing
 § Half hourly auctions (no auctions at 9:00, 13:00, 17:30 and                           Auction
 § Available for DAX 30, MDAX and NEMAX 50 instruments                                             Midpoint price
 § Minimum order sizes €2M or €5M for DAX30 equities and                                         from order book
 €0.5M and €1M for MDAX and NEMAX50 equities.
 § Determination of an auction price corresponding to the best
 Bid / best Ask midpoint of the order book at the time of the Price


 Determination.                                                                     Pre                                       Pre

 § Large blocks can be crossed whilst avoiding adverse price
                                                                                    Call                                      Call
 movements or large number of partial executions.                                  Phase Phase                               Phase

        GBV-Kolloquium "IT in Banken und Börsen" - WS 02/03


n Xetra Facts
n Trading on Xetra
n Xetra Best

    –   Market demand
    –   Market Model
    –   Advantages of Xetra BEST


Retail customers demand immediate order execution
with price advantage

                § Immediate Execution
                  (Ca. 60% of all floor-orders (mainly retail) are
                  immediately executable; immediate execution is
                  generally being paid through price surcharges
                  (indirect transaction costs caused by spreads or
                  market impact)

 Customer       § Price advantage
                § Best Execution

                § Supervision of trading

                § Transparency of execution

          GBV-Kolloquium "IT in Banken und Börsen" - WS 02/03

Motivation is the conviction that the differentiation of the
industry structure will gain pace

                                         Differentiated industry structure
Order Value Distribution
• Current central limit order book
  transfers order value to investors
                                             Retail Investors            Institutional Investors
• Order value on floor also
  extracted by Maklers                                  Intermediated Investors
• Internalization aims at realization
  of order value
                                           Retail focused       Universal      Wholesale focused
Consolidation of Industry
• Differentiated industry will lead to
  re-consolidation efforts (transpa-                    Internal Platforms
  rency, best execution)
                                                     Deutsche                              Off-
• Xetra BEST already addresses                     Deutsche Börse                       Exchange
  these efforts at an early stage                      Börse
• Reference market itself ensures
  best execution


 As active market designer Deutsche Börse counters
 trend of market fragmentation
  Deutschen Börse‘s contribution                             Deutsche Börse‘s offer

   Provide equal access to a best execution
   functionality for all market participants                    n
                                                                n   all market participants have
                                                                    all market participants have
                                                                    access to Xetra BEST, Best
                                                                    access to Xetra BEST, Best
   Ensure investor protection by                                    Execution possible thorugh
                                                                    Execution possible thorugh
                                                                    third party
                                                                    third party
   guaranteeing best execution as a neutral
   operator                                                     n
                                                                n   Best Execution as part of
                                                                    Best Execution as part of
                                                                    exchange trading with
                                                                    exchange trading with
                                                                    independent and neutral
                                                                    independent and neutral
   Integrate reference market (Xetra order
   book) and best execution-functionality
                                                                n   consistent price-/time-priority
                                                                    consistent price-/time-priority
                                                                n   obligation to simultaneously
                                                                    obligation to simultaneously
   Improve liquidity in the reference market                        provide quotes to the order
                                                                    provide quotes to the order
                                                                n   immediate publication of Xetra
                                                                    immediate publication of Xetra
   Ensure transparency for the overall                              BEST trades
                                                                    BEST trades

        GBV-Kolloquium "IT in Banken und Börsen" - WS 02/03

Xetra BEST provides a second execution venue in addition
to the order book
                                                                   Direct order book entry
                     Broker                                        • "Traditional" order routing
                                                                   • alternatively: orders routed
                                                                     through by Best Executor

                                                                   Own Best Execution offer

   Investors         Broker               Best Executor            Internal matching of order flow
                     (XYZ Bank)           (XYZ Bank)               acquired from proprietary

                                                                   Third party Best Execution
                     Broker                Best Executor           Xetra BEST offers opportunity
                     (Sparkasse XY)        (ABC Bank)              to attract order flow from third
                                                                   party intermediaries

                                                                       Xetra BEST

 Xetra BEST executes retail orders against the
 Best Executor immediately within the current Xetra spread

                                  Bank                                Xetra Backend
                       Order                          Order
                                  = Best
                                  Executor                        Check, if
                                                                   order executable
                                                                   within Xetra BEST
                                                 Designation of
         Investors                               Best Executor-   if yes,
                                                 ID                  immediate execution
                                                                     against Best Executor

                       Order Bank                     Order       if no,
                                                                     immediate entry into
                                  = Order Flow                       Xetra order book

             GBV-Kolloquium "IT in Banken und Börsen" - WS 02/03

Xetra BEST functionality is based on Xetra order book


       Customer order                                Marketable                            Key principles
       Internal quote by                             "buy" order
       Best Executor                                                                       ü price improvement
       Regular limit orders

                                                       Internal                            ü order book consistency
                                       No             matching ?           Yes
                                                                                           ü ex-ante entry of quotes
                                                                   Matching with
                                  Routing through
 Xetra order book                                                   BE* quote              ü immediate transfer of
                                                                                             orders into the order
         25.20                          25.20                                                book
         25.10                          25.10
         25.00                          25.00                                              ü transparency
 Bid               Ask                                                 24.90

         24.00                          24.00                                              ü additional liquidity
         23.90                          23.90                                                provision
         23.80                          23.80

                                                                                                   *: BE = Best Executor

 Xetra BEST offers execution in reference to
 the Xetra order book

 Example - Order Matching in Xetra BEST (1/2)

  Xetra order book                          Best Executor
                                            Bid                                    Ask
  Bid                           Ask         Reserve                 Relative Relative              Reserve
  Volume          Limit       Volume        Size       Size BoundaryLimit    Limit    BoundarySize Size

                 54,46         320          20.000     600 59,00        +0,02      -0,01      52,00   600 20.000
                 54,41          50
                 54,39         170                                             Best
        60       54,35                                                         Quote
       180       54,32
       140       54,31
       540       54,30

  Xetra-Spread = 54,35 : 54,39                                    Best Quote = 54,37 : 54,38

            GBV-Kolloquium "IT in Banken und Börsen" - WS 02/03

Xetra BEST offers execution in reference to
the Xetra order book
Example - Order Matching in Xetra BEST (2/2)
 Buy-Order                                Execution of the order with Best Executor
 Market Order ; Size: 50

Xetra order book                          Best Executor

     Xetra-Spread = 54,35 : 54,39         Best Price = 54,38 € (0,01 € Price improvement)

 Bid                     Ask
 Volume        Limit   Volume

              54,46      320
              54,41       50
              54,39      170
       60     54,35
      180     54,32
      140     54,31
      540     54,30


Possible order book situation

1.          Size at best bid/best ask < Order Size ≤ Size Best Quote

Buy-Order                                1. Calculation of the “volume weighted price”
Market Order ; Size: 500
                                         Pvolume   = (170*54,39 + 50*54,41 + 280*54,46) / 500
 Xetra order book                                  = 54,4312 €

 Xetra-Spread = 54,35 : 54,39            2. Determination of the execution price
                                         PBest Price = 54,42 € (0,01 € Price improvement)
 Bid                     Ask
 Volume        Limit   Volume
                                         3. Ex ante execution on Xetra
              54,46      320
                                         Best Executor buys 170 for 54,39 € and 50 for 54,41 €
              54,41       50             (autom. Execution)
              54,39      170
       60     54,35
                                         4. Execution of customer order
      180     54,32
      140     54,31
      540     54,30                       Best Price = 54,42 € (0,01 € Price improvement)

           GBV-Kolloquium "IT in Banken und Börsen" - WS 02/03

Possible order book situation

2.         (Order Size > Size Best Quote) or (Order Size > Maximum Order Size)

 Buy-Order                                     Execution of the order with Best Executor
 Market Order; Size: 900

 Xetra order book
  Xetra-Spread = 54,35 : 54,39
                                                       no execution in Xetra BEST
 Bid                       Ask                                and immediate
 Volume       Limit     Volume
                                                             transfer of order
                                                          into Xetra order book
             54,46        320
             54,41         50
             54,39        170
      60     54,35
     180     54,32
     140     54,31
     540     54,30


Xetra BEST trades are immediately published
but marked

Information stream

     Time              Volume        Price                     Reasons for marking:

       10:01:02                 60    54,39                    • guarantee separability for
                                                                 vwap calculations
       10:01:16              180      54,37*
                                                               • price has on-exchange status
       10:01:42              140      54,39                      but is not an exchange price

       10:01:52              540      54,35*

 * example for marking Xetra BEST trades

              GBV-Kolloquium "IT in Banken und Börsen" - WS 02/03

Best Executor acts also as liquidity provider within
the Xetra order book

                                                          Xetra                   Requirements comparable
        Xetra BEST                                                                to “AA”-Designated
                                                        Order Book
                                                                                   n   max. Spread 2,5%-5% depending
                                  Best Executor
    BEST Executor                                                                      on segment
                                  acts also as             Manager
                                  Liquidity Manager                                n   min. quoting volume €10’-€30’
                                                                                       depending on segment
    min. 100 Executor                                   provides liqui-                Presence in the order book
n    BEST equities                                                                 n
                                                        dity in the                    (average of quoting time) min. 9,5
n   offers Best Execution                               central order                  hours
    for own customers
           bietet Best                                  book
                                                                                   n   Refund of transaction costs, if
      Execution für eigene
    and for third-party                                                                quoted spread is, on average,
      Kunden und Dritte an
    orders (Order Flow                                  Exception:
                                                                                       75% narrower than max. spread
    Provider)                                           DAX30 stocks
                                                                                   n   Additional requirements
                                                                                       (e.g. participation in auctions)


Xetra BEST is easy to communicate to the investor and
the entire market
                                                       Xetra BEST

    n   Best execution
        Xetra BEST execution is only possible, if the price is better than the actual price within the order book (price
        improvement or depth improvement).

    n   No Partial Execution
    n   Order book consistency
        Ensure consistent price-/time priority within the order book; all orders in the order book with better limits than
        Xetra BEST trades have to be executed in advance.

    n   Ex ante entry of Best Executor Quotes
        BEST quotes must be submitted before the orders are entered.

    n   Automatic routing into order book
        Orders not executable against pre-entered BEST quotes, are routed into the Xetra order book immediately.

    n   Transparency
        Immediate dissemination of all Xetra BEST transactions with price and volume.

    n   Liquidity management in the Xetra order book
        Obligatory quotes from Best Executors in Xetra order book.

      GBV-Kolloquium "IT in Banken und Börsen" - WS 02/03

What are the advantages of Xetra BEST?

                  First fully integrated hybrid market model
                  Interaction with own and acquired order flow
  Best Executor
                  Well known Xetra interface
                  Usage of established pan-European network

                  Provide customers with immediate Best Execution

   Order Flow     One stop shop on most liquid trading system
    Provider      Default order routing due to exchange status
                  No need to establish additional infrastructure

                  Best Execution
                  Immediate execution
                  No partial fills
                  Independent trading surveillance


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