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The new Top of the Book Order is Deutsche Börse's contribution to a higher market quality. The order type narrows the order book spread and is beneficial for the entire market.
Technically it was implemented with Xetra Release 12.0 and there already is huge interest from trading participants.
This is how the Top of the Book Order works: by entering a Top of the Book Order, a trader ensures that an order is either placed on top of the order book and thereby reduces the current order book spread, or rejected.
Prior to the new release, Deutsche Börse had conducted a series of market tests and the collected data showed clearly that this order type results in narrower spreads. It improves the market efficiency for all trading participants because liquidity goes up and transaction fees go down.
Deutsche Börse considers participants who use the Top of the Book Order as liquidity providers and grants them credit instead of charging a transaction fee.
Client feedback has been excellent, the first contracts with Top of the Book Liquidity Providers have been signed and there is high demand for this innovative order type.
