OREANDA-NEWS. Deutsche Börse introduced a more advanced version of its Xetra electronic trading system on Monday. With the new 16.0 release, the operator of the Frankfurt Stock Exchange offers its customers new matching functions specially designed for larger volume orders. In addition hardware optimisation has furthermore led to an overall performance improvement and reduction in latency.

“With the new Xetra Release we are supporting our customers from an early stage concerning the implementation of regulatory requirements resulting from the EU Markets in Financial Instruments Directive, MiFID II. We are furthermore increasing the attractiveness of on-exchange trading compared to OTC trading through new features such as the Volume Discovery Order,” said Dr Martin Reck, Managing Director Cash Market at Deutsche Börse.

The new Volume Discovery Order (VDO) is a MiFID II-compliant solution for safe execution of large orders on Xetra with minimum market impact. The EU financial market directive will only allow a very limited proportion of order volume to be traded on dark pools; market participants will therefore need an alternative for large-volume orders and the VDO offers this alternative. The new order type has received a dedicated Waiver from the European Securities and Markets Authority (ESMA) and the Hessian stock exchange regulator and is therefore not subject to the volume caps restriction. The VDO is based on the existing Iceberg Order and enables the hidden part of the order to be executed against other VDOs at the midpoint of the bid-ask spread in the order book through a second limit. Leading asset management institutions have welcomed the new order type, amongst which are Allianz Global Investors, Deka Investment and Union Investment.

Another new feature is the “Designated Sponsor Quote Request” for ETFs and exchange-traded products, which combines the features of OTC and exchange trading. Market participants on Xetra will thus be able to enter quote requests and trade against the quote directly in the order book. As a result, participants will benefit from potential price improvements for large orders as a result of interaction with the entire order book, from efficient order processing along the existing process chain and from the security of a central counterparty.

In future it will also be possible to trade all 1.3 million structured products on the Börse Frankfurt venue using a quote request functionality. The securitie's specialist can respond to quote requests, which are then directly tradable for the sender.

Xetra® is a registered trademark of Deutsche Börse AG.