Continuous trading in subscription rights via Deutsche Brse’s pan-European electronic trading system Xetra will be available to investors from 3 January.
Subscription rights trading is part of the latest version of the Xetra software release 7.1, which was launched on Monday.
Prices for subscription rights will also continue to be determined once daily on the floor of the Frankfurt Stock Exchange.
“All of the roughly 300 Xetra participants from around 20 countries are now able to take part in subscription rights trading – including participants who do not have access to floor trading at the Frankfurt Stock Exchange,” explains Rainer Riess, Managing Director of Deutsche Brse and responsible for the Cash Market.
Deutsche Borse says fully electronic trading will enable its customers to better utilize the arbitrage opportunities between subscription rights, their underlying stocks, and the corresponding derivatives on Eurex.
According to Riess, “trading in subscription rights will become more liquid, transparent, and international.” Subscription rights and underlying stocks being traded on the same electronic platform, with very narrow spreads, will benefit companies that issue rights, he adds.
Trading is supported by a so-called “Designated Sponsor”, who continuously quotes buy and sell prices throughout the entire trading day, facilitating liquid trading in the open Xetra order book. The lead manager together with the issuer applies for the inclusion of the subscription right at Deutsche Brse. The minimum order volume for subscription rights with a nominal value of at least one euro is 1,000 units, the minimum order volume for subscription rights with a nominal value of less than one euro is 5,000 units.