What is the Tradegate-Boerse

On which exchange to buy? Why there are different exchanges

Frankfurt, Berlin and Munich. Many German metropolises have their own stock exchanges. But how did the trading venues differ from one another and what role do online platforms such as Xetra or Tradegate Exchange play in this? And on which exchange should I buy? We give you an overview.

Stock exchanges have been around for a long time. In Germany for a long time. In 1540, the first trading centers were opened in Augsburg and Nuremberg, where people shouted to each other about the purchase and sale of valuables. Up until a few decades ago, these so-called “floor exchanges” were the standard and, through films such as “Wall Street”, also shaped the image of the stressed businessman who wants to get rid of his securities with waving hands in pop culture. There are hardly any floor or floor exchanges today - there are currently seven in Germany. And if so, they exist alongside electronic trading venues such as Xetra, the online branch of the Frankfurt Stock Exchange. Beginners are often faced with the question of which exchanges actually exist and on which I should invest my money. You quickly notice that the share prices for the same security can differ greatly in different places. We give you an overview of what there is to know about stock exchanges.

What types of exchanges are there?

They are long-established, but by no means dead: the classic floor exchanges. Berlin Stock Exchange, Frankfurt Stock Exchange, Munich Stock Exchange, Stuttgart Stock Exchange and the BÖAG stock exchanges, which include the Düsseldorf, Hamburg and Hanover stock exchanges. Stocks or ETFs can be purchased here as at all other trading venues, although many of these providers now work with electronic offshoots in order to carry out a large part of their securities transactions. The best-known example is the Frankfurt Stock Exchange with its electronic branch Xetra.

Xetra was put into operation in 1997, stands for "exchange electronic trading" and is the most important representative in Germany with a market share of over 90 percent in share trading and trading in exchange-traded funds. Over four billion euros are turned over there every day. With over 1,500 ETFs listed in the product portfolio, Xetra is also the “market leader” in Europe. But of course the Frankfurters are not alone. Other well-known online trading venues in Germany are the Trade Exchange founded in 2009 or the Düsseldorf offshoot Quotrix, introduced in 2001. That’s not the 27 places left at the end of the 19th century, but investors still have some choice.

What are the differences between the exchanges?

In addition to the fact that the individual exchanges are in different locations, there are a few other differences that need to be taken into account. The question of which exchange to buy on should also be considered. The stock exchanges are not all open at the same time. While Xetra opens its doors at 9 a.m. to close again at 5:30 p.m. sharp, Berlin starts an hour earlier and does not close until 8 p.m. Different prices for the same security can also be traced back to the fact that trading is still taking place on one exchange while there is a standstill elsewhere. But you shouldn't let that unsettle you.

More important are the various costs and offers with which the stock exchanges want to set themselves apart from one another. Regional ones can generally have a lower turnover, so that partial executions can occur. Means that an order with papers for which there is hardly any trading cannot be executed in one piece, but in several stages. This is of course more expensive than a one-time execution, but it can also happen with fully automated platforms such as Xetra. In fact, the stock exchanges in Hamburg and Hanover even advertise that there can be no partial executions because specialists can avoid partial executions better than fully automated systems.

On which exchange to buy?

In addition, the North Germans are considered the market leader in the area of ​​fund trading. In Berlin, on the other hand, they are specialists in stocks from abroad. Although the range of securities on regional stock exchanges is generally somewhat more limited than online providers, the providers often advertise "best price" offers to compensate for the dwindling clientele.

In the case of electronic sites such as Xetra and Tradegate, on the other hand, advertising is low-cost, as the fully automated process eliminates broker fees, so no “middleman” executes the order. Standard values ​​are usually the cheapest to trade here. At Tradegate, private investors even trade completely free of transaction costs, as Tradegate primarily earns its money through proprietary trading. At least in Stuttgart, however, it is again advertised that, even with a brokerage fee, it is still below the Xetra prices. A thorough comparison can be worthwhile, but sometimes the choice is made for you. With online brokers such as Trade Republic, trading takes place exclusively via the electronic Lang & Schwarz Exchange.

Frankfurt, Hamburg or Stuttgart. Not all stock exchanges are the same. With a little preparation, however, you can definitely find the right parquet for you. It is important to pay attention to the costs, liquidity and prices.

If the prices on exchange 1 are currently bad, then you should sell on another exchange. What is important here are the costs of buying and selling, and how many of the corresponding stocks, funds and ETFs are traded there. After all, you don't want to wait forever for the order to be executed.

Photo source: Photo by Aditya Vyas on Unsplash