Liquidity through Designated Sponsors
Designated Sponsors are market participants who post binding buy and sell offers for the trading of less liquid securities. There can be one or several Designated Sponsors per security. The trading participant submits an application to be admitted as a Designated Sponsor on Deutsche Börse Xetra to the Frankfurter Wertpapierbörse (FWB®, the Frankfurt Stock Exchange).
With regard to the provision of liquidity, Designated Sponsors are subject to high quality criteria (minimum requirements). By way of example, when quoting Designated Sponsors must observe a maximum spread (between the buy and sell price) and a minimum quote volume (minimum lot size which must be posted on both sides of the order book). Furthermore, they are obliged to adhere to a minimum quotation duration. Due to their quotation activity, Designated Sponsors are in principle also subject to the applicable rules for Regulated Market Makers under MiFID II / MiFIR.
By the support of Designated Sponsors, continuous trading on Xetra is available for less liquid securities:
- Xetra trading participants pledge, as Designated Sponsors, to post binding prices for securities in continuous trading with auctions, thus ensuring that the securities can be traded.
- The high probability of execution makes trading less liquid assets more attractive for investors.
- Issuers benefit from higher demand for their security.
- For all securities with insufficient liquidity traded on Xetra, at least one Designated Sponsor ensures additional liquidity.
Trading time: 9:00 a.m.-5:30 p.m.
Tradable instruments: Equities, ETFs and ETPs
