High-frequency trading – a discussion of relevant issues - Xetra
High-frequency trading – a discussion of relevant issues - Xetra
High-frequency trading – a discussion of relevant issues - Xetra
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<strong>High</strong>-<strong>frequency</strong> <strong>trading</strong> <strong>–</strong> a <strong>discussion</strong> <strong>of</strong> <strong>relevant</strong> <strong>issues</strong> May 2013Trading safeguards as protection against extreme, unreasonableprice moves4Trading safeguardsIllustrationDescriptionCentralCounterpartyTradingParticipantClearingMember• Trading safeguards exist to protect the orderly priceformation process.• Trading safeguards at Eurex Exchange and <strong>Xetra</strong> arecalled “volatility Interruptions”.• Trading is interrupted* “before the damage is done” <strong>–</strong>i.e. before a trade is made at volatile prices.• For options markets, Eurex Exchange <strong>of</strong>fers MarketMaker protection tools to limit their risks.4Exchange(Eurex Exchange/<strong>Xetra</strong>)* From a technical perspective, <strong>trading</strong> is not interrupted. Instead, the market model is merely switched from “continuous <strong>trading</strong>” to “call auction”. Therefore,the process <strong>of</strong> <strong>trading</strong> still resumes, as Participants can still delete, modify and enter orders in anticipation <strong>of</strong> the auction price.51
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