Deutsche Boerse Starts Pan-European Trading, Takes On Rivals

By Nandini Sukumar

Nov. 2 (Bloomberg) -- Deutsche Boerse AG, Europe’s largest exchange by market value, is starting a new venture for pan- European stock and derivatives trading, as it fights off new trading systems and seeks to take business away from other traditional exchanges.

Xetra International Market, which uses the German exchange’s existing electronic system, goes live today. The exchange is offering the 260 existing customers of Xetra, its electronic trading system, the opportunity to trade European stocks and the corresponding equity and index derivatives. XIM will have 10 brokers providing liquidity on its markets at debut, Rainer Riess, managing director of Xetra Market Development, said in an interview last week.

“We want to gain solid market share and that will take some months,” Riess said. “It takes a period of 12 months to build initial market share. Five percent is some kind of threshold for any venue to be successful so that’s the first hurdle to strive for.”

Deutsche Boerse, London Stock Exchange Group Plc and NYSE Euronext have faced a barrage of new pan-European rivals including Turquoise and Chi-X Europe Ltd., which are backed by investment banks, and the European ventures of Bats Global Markets and Nasdaq OMX Group Inc. The new entrants have taken business away, in part by offering cheaper trading of stocks listed on primary markets.

French, Dutch Stocks

XIM starts by offering trading of French, Dutch, and Belgian stocks listed on the Dow Jones Stoxx 50 Index. Two weeks later Finland and Spain will be added, Riess said. The company’s Eurex Clearing unit will provide post-trade services for the system and settlement will be local.

With its new system, Deutsche Boerse is taking a different route to its peers. Nasdaq has a separate London-based MTF, as does NYSE Euronext with NYSE Arca Europe, which trades 400 to 500 stocks that aren’t listed on NYSE Euronext’s four European bourses. LSE has set up a dark pool called Baikal, after the deepest lake in the world, which has its own chief executive officer and will be run separately from the bourse.

To contact the reporter on this story: Nandini Sukumar in London at nsukumar@bloomberg.net;