Deutsche Börse Seperates Fees For Trading, Clearing And Settlement Of Equities - Liquidity Increased By Over 50 Percent Following Introduction Of The Equity Central Counterparty - Savings Of Over 500 Million Euros In Implicit Trading Costs

Starting on January 1, 2005, Deutsche Börse is introducing a new pricing model for equities trading. The most significant changes are a differentiation of fees for all three steps of the process chain trading, clearing and settlement, as well as a redefinition of the pricing basis in clearing. The aim is to more precisely accord with the needs of customers in electronic trading. With the new pricing model, Deutsche Börse remains the lowest-priced provider of trading, clearing, and settlement in Europe. At the same time, Eurex Clearing is the first clearing house in Europe that does not charge for partial order execution, providing traders total predictability of clearing fees in advance of order execution.

Introduction of the Xetra electronic trading platform, with its open-limit order book, allowed Deutsche Börse to reduce trading costs and offer access to trading participants regardless of their location. Given the strong growth of international business on Xetra, and the associated need for greater flexibility and more efficiency in the areas of trading and settlement, Deutsche Börse launched the central counterparty for equities in April 2003. Market efficiency and quality were thus further increased. Since the introduction of the central counterparty, the liquidity of Xetra as measured by the "Xetra liquidity measure" (XLM) has increased on average by more than 50 percent. For participants, this has resulted in a reduction in implicit trading costs of more than 500 million euros to date.

In the new pricing model, clearing costs will be displayed separately from settlement costs, and the settlement fee will be calculated according to the resulting settlement instructions. In this way, participants benefit in settlement directly from the consolidation of transactions in clearing, especially through netting.

Moreover, the clearing charge for Xetra transactions in no longer calculated based on partial executions within a trade, but, for the first time in Europe, on the basis of executed orders. This pricing model makes it possible for participants to calculate not only the trading charge, but also the fees for clearing before an order is executed.

The new fee model is also to be augmented by a component to promote electronically generated, liquidity-enhancing orders in Xetra. Cost sensitive trading activities that have positive effects on liquidity in trading, such as arbitrage-based trading for own account, are thus given an additional boost. Related pilot programs used by Deutsche Börse in 2004 to study the effect of such pricing models were very well received by the market and have served to further improve market quality. Deutsche Börse plans to present the program in detail in the fourth quarter of 2004, following completion of a test phase currently underway.

1. Current Xetra Pricing Model

   • Trading:
     Floor: 0.70 euro/ order
     Range: 0.56 basis points
     Cap: 21 euro/ order

   • Clearing & Settlement:
     0.55 to 0.45 euro/ partial execution (max. 15 partial executions/ order)

2. New Xetra Pricing Model

   • Trading:
     Floor: 0.60 euro/ order
     Range: 0.48 basis points
     Cap: 18 euro/ order

   • Clearing:
     0.52 euro/ order
     +0.15 basis points (max. 6.20 euro/ order)

   • Settlement:
     0.425 euro/ settlement instructions

Example calculation (average Xetra data):

In the future, a 45,000 euros order will cost a total of 3.39 euros, comprising 2.16 euros for trading, 1.20 euros for clearing and 0.03 euro for settlement.
Following the current price model, the total cost would be 3.40 euros: 2.52 euros for trading and 0.88 euros for clearing and settlement.