Global investing makes sense. It provides diversification in your portfolio, which can protect your money from problems in individual countries. It also allows you to take advantage of growth in emerging economies. Xetra is an electronic trading platform that started on the Frankfurt Stock Exchange's Deutsche Borse and links the Irish, Viennese, Bulgarian and Shanghai Stock Exchanges and the European Energy Exchange to make it a key part of global trading.
Since its inception in 1997, Xetra has grown to daily service as many as 100 million transactions in approximately 900,000 international securities. Licensed securities brokers from all over the world can place orders for equities, exchange-traded funds (ETFs), exchange-traded commodities (ETCs), exchange-traded notes (ETNs), warrants and certificates, mutual funds and subscription rights. A totally electronic trading system, it offers centralized trade clearing through Eurex Clearing AG. Its system services 250 financial institutions and securities brokerages, with 4,500 traders in 18 countries, making it one of the fastest and most efficient trading systems in the world.
International Brokerage Firms
To trade securities listed on Xetra, apply for a brokerage account at a brokerage firm that provides international trading. Most of the major brokerage firms provide international trading to their clients, online or through their branch offices. Search online for international securities trading firms and, before you open an account, check to see if the firm offers the Xetra-traded securities you are considering. The process for entering a buy or sell order for securities traded on Xetra should be similar to what you are used to when placing orders on U.S. exchanges. However, you might be limited to day orders only, rather than being able to enter good-until-cancelled orders and other order strategies, so ask your broker about any differences to expect.
Trading International Securities
If you are a beginning investor, or not experienced in international investing, keep in mind that foreign securities are regulated differently than those in the United States. The U.S. Securities and Exchange Commission lists currency fluctuations, lack of liquidity, lack of information and differences in market operations as things to consider when you invest. You might also find that the shareholder rights you are accustomed to in the U.S. are different under foreign legal systems. Although the securities exchanges serviced by Xetra are well-established and domiciled in relatively stable economies, you might not understand the social, political and economic forces at work in those countries -- forces that affect the trading of their securities.
Similar to Nasdaq
The U.S. domiciled National Association of Securities Dealers Automated Quote system is similar in concept to Xetra because it is an electronic trading platform that differs from physical exchanges like the New York Stock Exchange and the Chicago Board of Trade. Trading is accomplished on both virtual exchanges through computers that link to brokerage firm traders and market makers, rather than transacting orders on a physical exchange floor.
Victoria Duff specializes in entrepreneurial subjects, drawing on her experience as an acclaimed start-up facilitator, venture catalyst and investor relations manager. Since 1995 she has written many articles for e-zines and was a regular columnist for "Digital Coast Reporter" and "Developments Magazine." She holds a Bachelor of Arts in public administration from the University of California at Berkeley.