Monday November 30 2015
News Source: Global Exchanges
Focus: Trading Systems and Technology
Type: General
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.
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. Securities’ specialists can respond to quote requests, which are then directly tradable for the sender.
Click on the link above for further details