Deutsche Börse has launched a new service which allows for an optimized on-exchange execution of large-sized ETF orders. Called Xetra Quote Request, the service exploits the exchange group’s complete service chain – from trading, clearing and settlement to trade reporting and market data dissemination – to reduce settlement and counterparty risks, and ensure compliance with best execution requirements for large orders.

Martin Reck, Managing Director, Cash Market, at Deutsche Börse.

The service is supported by leading European ETF market makers, including among others, Goldenberg Hehmeyer, Susquehanna International Securities and UniCredit Bank.

Around 500 ETFs will be covered initially by the new service, with additional products being added over the coming months. 

Martin Reck, Managing Director Cash Market at Deutsche Börse, said: “Deutsche Börse is committed to improving the efficiency of on-exchange trading in ETFs. Xetra Quote Request provides investors with an effective alternative to executing large-sized ETF orders. It is an initiative which is seeing great support both from ETF issuers and market makers.”

Instead of having to negotiate ETF transactions bilaterally over-the-counter (OTC) or through request-for-quote (RFQ) systems, Xetra Quote Request enables investors to send quote requests to all registered Designated Sponsors (market makers) of a selected ETF. Designated Sponsors respond to quote requests by updating their quotes in the Xetra order book, thus enabling execution of large-sized orders by submitting additional liquidity to the market when needed. Investors therefore benefit from a potential price improvement over execution against a single market maker quote, and ensure best execution by simultaneously interacting with the full liquidity available in the order book.

Jane Sloan, Head of iShares Capital Markets EMEA at BlackRock, commented: “In 2015, we saw almost €100bn worth of iShares ETFs being traded on the Deutsche Boerse. Xetra Quote Request is another example of industry innovation that will bring greater transparency and liquidity to ETF markets.”

John Keogh, Managing Director of Susquehanna, added: “As a leading ETF market maker we are pleased to have Xetra Quote Request as an innovative tool to help us achieve our mission to provide liquidity to the growing number of investors in ETFs.”