Xetra Bonds to Offer Continuous Trading for Bonds

Steven Bobson, Europe & Americas Editor
September 27, 2012 /

With effect from 1 October, bond trading on Xetra will be expanded to include over 2,000 international government and corporate bonds and 60 German government bonds. Trading participants will benefit from a transparent and liquid bond market and gain access to a broad investor network via Xetra.

For the first time, the open Xetra order book will have a depth of 5, showing the five best bid- and ask-limits and the market data dissemination offers trading participants complete transparency in pre and post trading. Xetra Bonds thereby meets the highest transparency requirements.

Designated sponsors and specialists provide additional liquidity in trading and quote bid and ask prices on a continuous basis. The first designated sponsors are Optiver V.O.F. Netherlands, Florint B.V. and Close Brothers Seydler Bank AG, which also acts as specialist. Further specialists in bond trading are Steubing AG and ICF Kursmakler AG.

Continuous trading of German government bonds is settled via the central counterparty (CCP) Eurex Clearing. This means that counterparty risk will be reduced for all trading participants, internal business processes simplified and the efficiency of workflows further improved. The CCP acts as counterparty between the trading partners, who themselves remain anonymous, but deposit appropriate collateral for their open positions.

“We already meet the transparency requirements of the revised MiFID financial market regulations which will be mandatory in two to three years’ time,” said Rainer Riess, Managing Director Xetra Market Development at Deutsche Börse. “Exchange trading always means transparent pricing. However, a large number of government and corporate bonds are still traded OTC – with a lack of transparency, high risks and unclear prices for trading participants and investors. Xetra Bonds is a pan-European bond trading model with high transparency and binding quotes; designated sponsors and specialists provide high liquidity – so all market participants profit equally.”

Xetra is Deutsche Börse’s cash market. The trading system of the same name connects some 200 participants from partner exchanges and 230 European banks and broker firms admitted to trading on the Frankfurt Stock Exchange, from 20 countries. Over 1,000 ETFs, 400 ETCs and ETNs, 10,000 equities from 70 countries, 26,000 corporate and government bonds and 1 million structured products are traded on Xetra.


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