Important trading information for bond trading

 

*ratG – fixed-income securities

Trading in fixed-income securities at the Stuttgart Stock Exchange is conducted according to the principle of a “continuous auction.” This means that whenever the order book situation allows transactions to be matched by the trading system, an auction is initiated for the respective instrument.

All orders present at that time are taken into account. The QLP then attempts to offset potential imbalances by providing liquidity. Typically, the QLP sources this liquidity from market makers or other markets, or supplies it directly.

The trading system then determines the market price using a defined price discovery algorithm.

In rare cases, situations arise where the QLP cannot provide the necessary liquidity, and the trading system cannot determine a price without further liquidity. Such situations often occur with sold-out products and are characterized by an extreme imbalance between buy and sell orders within the bid-ask spread.

For example, extremely high demand for a product that is already sold out may meet very limited supply. To avoid buyers receiving minimal executions that are economically unreasonable given execution ratios and fees, while still enabling sellers to achieve execution, the rules allow the QLP—after consulting with market supervision—to apply a special form of liquidity provision. Contrary to the auction principle, the QLP may disregard the demand of other clients and only ensure execution for sellers. The trading system then determines a price with the designation ratG.*

Although this may initially seem disadvantageous for buyers, the regulation is ultimately beneficial. Buyers avoid uneconomical micro-executions. The QLP consolidates liquidity for the instrument and can typically provide economically reasonable allocations at a later stage.

In rare cases, where no additional sell orders can be executed, buyers will not receive any allocation.

Sellers, however, benefit from immediate execution of their orders.