Difference between revisions of "DTB"

From MarketsWiki
Jump to: navigation, search
Line 1: Line 1:
{{helpAddContent}} <!-- Have a big article with lots of text?  Remove this template! -->
+
<!-- Have a big article with lots of text?  Remove this template! -->
 
{{Infobox_Company  <!-- Feel free to remove comments like this when you add real info -->
 
{{Infobox_Company  <!-- Feel free to remove comments like this when you add real info -->
 
| company_name =  
 
| company_name =  
Line 22: Line 22:
  
 
== History and People==
 
== History and People==
The DTB was the first new German exchange of any kind to launch since before the Second World War. It traces its genesis to the mid-1980s, when Frankfurt-based [[Deutsche Börse]] and a consortium of German banks launched what eventually became the “Finanzplatz Deutschland” initiative to both promote an equity culture in Germany and establish Frankfurt as a financial center to rival Paris and London.
+
The DTB traces its genesis to the mid-1980s, when a consortium of German banks launched what eventually became the “Finanzplatz Deutschland” initiative to both promote an equity culture in Germany and establish Frankfurt as a financial center to rival Paris and London.
 
[[Rolf Breuer]] had just been named head of Deutsche Bank, and it was he who recruited [[Berlin Stock Exchange]] CEO [[Jörg Franke]] to head the new “screen-based” (as opposed to “floor-based”) DTB.
 
[[Rolf Breuer]] had just been named head of Deutsche Bank, and it was he who recruited [[Berlin Stock Exchange]] CEO [[Jörg Franke]] to head the new “screen-based” (as opposed to “floor-based”) DTB.
The idea of launching a fully-electronic exchange was radical at the time, and had never been tried in a mature market. [[SOFFEX]] and Options Market Stockholm ([[OM]]) were the only electronic exchanges operating without an open outcry trading floor, while the [[Chicago Mercantile Exchange]]’s [[Globex]] platform only operated when the trading floors were closed.
+
The idea of launching a fully-electronic exchange was radical at the time, and had never been tried in a mature market. Switzerland's [[SOFFEX]] and Sweden's Options Market Stockholm ([[OM]]) were the only electronic exchanges operating without an open outcry trading floor, while the [[Chicago Mercantile Exchange]]’s [[Globex]] platform only operated when the trading floors were closed.
 
Germany was just beginning to dismantle Deutschland AG, and the market potential was staggering. The consensus among traders and exchange executives at the time, however, was that electronic platforms might serve certain low-volume niche products, but could not compete with trading floors in terms of speed or ability to handle complex orders.
 
Germany was just beginning to dismantle Deutschland AG, and the market potential was staggering. The consensus among traders and exchange executives at the time, however, was that electronic platforms might serve certain low-volume niche products, but could not compete with trading floors in terms of speed or ability to handle complex orders.
 
Franke and Breuer, however, reasoned that only by locating DTB in cyberspace could they avoid falling victim to the rivalry among the nation’s eight regional stock exchanges, seven of which would likely boycott a trading floor located in the eighth.
 
Franke and Breuer, however, reasoned that only by locating DTB in cyberspace could they avoid falling victim to the rivalry among the nation’s eight regional stock exchanges, seven of which would likely boycott a trading floor located in the eighth.

Revision as of 18:55, 28 December 2007

'
Website http://

The Deutsche Terminbörse (German Derivatives Exchange, or DTB) was the forerunner of today's Eurex.


History and People

The DTB traces its genesis to the mid-1980s, when a consortium of German banks launched what eventually became the “Finanzplatz Deutschland” initiative to both promote an equity culture in Germany and establish Frankfurt as a financial center to rival Paris and London. Rolf Breuer had just been named head of Deutsche Bank, and it was he who recruited Berlin Stock Exchange CEO Jörg Franke to head the new “screen-based” (as opposed to “floor-based”) DTB. The idea of launching a fully-electronic exchange was radical at the time, and had never been tried in a mature market. Switzerland's SOFFEX and Sweden's Options Market Stockholm (OM) were the only electronic exchanges operating without an open outcry trading floor, while the Chicago Mercantile Exchange’s Globex platform only operated when the trading floors were closed. Germany was just beginning to dismantle Deutschland AG, and the market potential was staggering. The consensus among traders and exchange executives at the time, however, was that electronic platforms might serve certain low-volume niche products, but could not compete with trading floors in terms of speed or ability to handle complex orders. Franke and Breuer, however, reasoned that only by locating DTB in cyberspace could they avoid falling victim to the rivalry among the nation’s eight regional stock exchanges, seven of which would likely boycott a trading floor located in the eighth. They quickly decided to license SOFFEX’s (NAME OF SYSTEM??) system, and then hired Anderson Consulting (which had built (NAME OF SYSTEM??)) to adapt it for the German market. Meanwhile Franke, Breuer, and the banking consortium were lobbying to change the legal status of futures contracts, which at the time were regulated by gaming laws. That rendered them legal but un-enforceable – especially in the event of heavy losses or margin calls. Template:Infobox Midpage Need Sponsor The xx law was passed on xx, and the exchange executed its first trade on xx. Its debut contracts were xx and xx. Volume grew steadily, and the system faced its first test during the xx Gulf War, when volumes spiked to xx. Although the trade-matching engine performed flawlessly, remote users experienced sluggish response times due to unexpectedly high volumes of messaging traffic on the exchange’s feeds – a phenomena that became the bane of electronic markets throughout the 1990s and early 2000s. This bandwidth issue resulted not from the higher volume of trades executed, but from the surge in the number of trades placed, cancelled, or altered as volatility increased. The exchange responded by increasing bandwidth and putting restrictions on the number of free messages per trade – measures implemented by virtually all electronic exchanges at some point since.

The Battle of the Bund

In 1997, DTB became the first – and so far only – exchange to wrestle volume away from an existing liquidity pool when it captured volume in Bund futures and options away from the London International Financial Futures Exchange (LIFFE).



References