German stock market Deutsche Boerse to change Frankfurt floor trade by 2012

Deutsche Boerse to change Frankfurt floor trading

FRANKFURT — Deutsche Boerse AG is changing the way it operates floor trading on the Frankfurt Stock Exchange, introducing specialist traders and the Xetra electronic trading system by March 2012.

The moves should increase the German stock exchange’s competitiveness and allow access to European customers who want to buy and sell shares there. It will also probably result in fewer brokerage companies dealing on the exchange — there are 20 now — but Deutsche Boerse couldn’t say how many would remain.

“We saw that if we didn’t change the market model, we’d lose more volume,” Frank Herkenhoff, a Deutsche Boerse spokesman said Tuesday. “This decision brings the broker-led trader model to an end in two years. The Xetra is a pan-European system with banks across Europe; a much broader base of investors will be able to channel orders to Frankfurt.”

The Xetra system will replace the current electronic trading system called Xontro.

Herkenhoff said the moves are partly a result of government deregulation of the trading market in 2007. Currently, only around 120 German banks place orders on the exchange. Previously, outside orders had to go through German banks.

With the new arrangement, about 240 banks from across Europe will be able to execute orders on the Frankfurt floor.

The new floor specialists will be employees of the brokerage companies that operate at the exchange and will be required on the trading floor of the downtown Frankfurt exchange. The specialists will have tasks such as ensuring trades are backed by sufficient liquidity.

The system is already used at other exchange sites that use the Xetra system.

Deutsche Boerse said the decision was made to address the exchange’s competitive environment, which has seen floor trading volumes decline in recent years, and as national and international trading pressure has increased. Deutsche Boerse also said the measures are intended to ensure international investors have access to all tradable securities.

The changes could be made sooner than March 2012 if “a smooth transition to the specialist model has been ensured,” Deutsche Boerse said.

Shares of Deutsche Boerse were up 1.2 percent at euro51.97 ($70.20) in Frankfurt afternoon trading.

On the Net:

http:www//deutsche-boerse.com