Xetra continuous trading with Best Executor (Xetra BEST)

Xetra continuous trading with Best Executor (Xetra BEST)

With Xetra BEST (Best Service), Deutsche Börse offers an integrated feature for the best possible execution of securities in continuous trading on Xetra:

  • Best Execution with immediate full execution and price improvement compared with the Xetra order book
  • MiFID-compliant, exchange-based, supervised trading in a Regulated Market
  • Trade supervision: As it is part of exchange trading, Xetra BEST offers Best Execution with independent trading supervision by the Trading Surveillance Office (HÜSt) of theFrankfurter Wertpapierbörse (FWB®, the Frankfurt Stock Exchange).
  • Use of the existing Xetra infrastructure 

Trading time: 9.00 a.m.–5.30 p.m.

Tradable instruments: Equities and ETFs in continuous trading with auction on Xetra.

 

In addition to the benefits of order execution on Xetra (e.g. highest execution speed, low implicit and explicit transaction costs), Xetra BEST guarantees the investor better prices and full execution of orders. Full execution against an admitted, so-called Best Executor is performed with automatic price improvement compared with the Xetra order book, thereby ensuring best execution.

How the service works

Continuous trading with Best Executor is based on the price optimization model complemented by the Best Executor feature. It is a Xetra trading service for bilateral trading.

Best Executors offer the service to their own customers as well as to other trading participants; it involves executing orders with an automatic price improvement compared with the execution price currently possible in continuous trading on Xetra, while at the same time avoiding partial executions. To this end, during trading time Best Executors input a relative Quote in the trading system. The relative Quote defines ...

  • how high the price improvement is compared with continuous trading order book (relative limit),
  • the price limit at which the Best Executor executes orders (boundary to protect the Best Executor from strong fluctuations in price),
  • for which individual order volumes the Best Executor executes orders in the price optimization model (size) and
  • up to which total volumes the Best Executor executes orders (reserve size).

Transparency

  • Pre-trade information:
    Given that orders are executed immediately in the price optimization model, they are not displayed prior to execution. Nor are quotes by the price optimizer.
  • Post-trade information:
    Once the orders have been executed, all transactions are published immediately. For each transaction, the price, volume and time are published. The transactions are distinguished as being in the price optimization model.
    Should a transaction be settled by a central counterparty, the customer behind it remains anonymous in post-trading as well. In transactions where no central counterparty is involved, the name of the customer is visible.

Pricing and order execution

  • Order prioritisation:
    Orders are not prioritized. They are either executed immediately in the price optimization model or entered in the continuous trading order book.
  • Pricing:
    For an order executed in the price optimization model there is an improvement in price over the possible execution price in continuous trading (volume-weighted average price). The improvement in price must be at least €0.0001.
  • Order execution:
    Pricing occurs continuously. All incoming new orders in the price optimization model are immediately checked to see whether they can be executed. Should order execution be possible in the price optimization model, it occurs immediately. Should order execution in the price optimization model not be possible, the order is entered in the continuous trading order book. This is the case, for example, if ...
    - the order cannot be executed in full against a visible order on the other side in the continuous trading order book or
    - the price optimizer did not input a quote.

Orders can only be executed in the price optimization model if the security is being traded at the same time in continuous trading. Should continuous trading be interrupted (e.g. by an auction), there can be no execution in the price optimization model. In such cases, incoming orders are entered in the auction order book.

Should an order be executed in the price optimization model at a price at which orders in the continuous trading order book are entitled to be executed, these are executed first against the price optimizer. This ensures consistency with regard to the order book.

Possible uses

The price optimization model can be used in particular for the following purposes:

  1. Internalisation of orders by the price optimizer
  2. Improvement in price over the reference market
 

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