Buy or sell stocks at night or on the weekend? This was previously not possible on the German stock exchange. That should change, at least for DAX stocks.
The Deutsche Börse in Frankfurt has announced that the shares of DAX companies can now be traded around the clock on its subsidiary platform 360X. But the partners are still missing. And there are a few things to consider. An overview.
What are the conditions for private investors?
So far, regular trading on the Frankfurt Stock Exchange via the XETRA trading platform has closed at 5:30 p.m. Extended trading ends at 10 p.m. Anyone who places an order afterwards has to wait until the next trading day for it to be executed. Only then will the order be taken into account in ongoing stock market events - along with the prices then in effect.
This is now set to change via the Deutsche Börse subsidiary, the 360X platform. Even at night or on weekends, the real securities - i.e. those that are not held as digital financial instruments ("tokenized") - of the 40 most valuable German listed companies, such as SAP, Siemens or Airbus, can be purchased here.
However, in order to be able to trade there, private individuals still need a broker, such as the house bank where their own depot is located. Also important: 360X is a separate platform that is separate from trading via XETRA.
“It is also monitored and regulated by Bafin, but it is not a stock exchange in the legal sense and somewhat less strict requirements apply to it,” explains Jochen Stanzl, chief market analyst at Consorsbank, in an interview with tagesschau.de.
How does pricing take place?
The trading mechanism of 360X is different than that of Deutsche Börse's XETRA trading. During the day, the principle is as follows: During regular trading hours, numerous securities are offered for sale and purchase, and the price is determined based on supply and demand in the order book.
On 360X it looks different: "Anyone who urgently wants to buy a Rheinmetall share at three in the morning because a war has broken out sends out a purchase offer and then waits for counteroffers," explains capital market expert Stanzl. The whole thing is called Request for Quote. The buyer can decide whether to accept or reject any of them. If no agreement is reached, no deal will be concluded.
Another important difference: Unlike during regular trading hours, there is no continuous trading via XETRA at night and on weekends and therefore no constantly updated XETRA price. However, this also means that there is no always up-to-date reference value. At night, for example, the actual price can differ significantly.
What is the benefit of extended times?
In particular, it enables a quick response to unforeseen events. “The new trading is particularly interesting for all investors who absolutely want to get into an unusual position,” says Stanzl.
However, he does not believe in a large volume at night: "Most people sleep at night." The volume in after-hours trading is already significantly lower than during regular trading hours.
However, he also emphasizes: "Of course there are always tinkerers who will explore this. For example, if very good numbers come from the USA after the trading session, which are likely to have an effect on a DAX company. They will then see whether they can get in there cheaply."
In addition, Deutsche Börse itself also has an interest in the new offer: round-the-clock trading is already commonplace in the crypto sector - and these investors are increasingly interested in conventional securities. In addition, competitors such as the London Stock Exchange have also announced similar moves.
Where are the risks?
Anyone who wants to buy or sell at night is likely to be faced with a larger price range than during regular trading hours. “The trader obviously also has the risk that he has to hold the opposing position from three in the morning until the next morning. He wants to pass on this risk,” says chief market analyst Stanzl.
In addition, while there are many buyers and sellers for a share on XETRA during the day, there are significantly fewer at night. As a result, the prices at which traders want to buy and sell are often significantly different. If you really want to get rid of a piece of paper in the early hours of the morning, you may get less money for your share.
Can you get started right away?
Anyone who feels the acute need to buy a Vonovia share immediately while reading the real estate advertisements on Sunday morning will have to be patient. Deutsche Börse has announced that it will immediately introduce 24/7 trading for DAX 40 shares on its subsidiary platform 360X.
But now the banks have to follow suit. To date, no bank offers private individuals 24/7 trading via 360X. But the financial institutions are needed: private individuals cannot trade on the Deutsche Börse or on the 360X platform.
“360X is in discussions with various brokers,” says a spokesman for Deutsche Börse when asked by tagesschau.de. He expects the discussions to become more concrete in the near future. "We as Deutsche Börse wanted to say: We are ready. We make this possible." In other words: Deutsche Börse has presented the proposal, banks and brokers are now asked to offer the new option to their customers.
Why are only the DAX 40 stocks offered?
These are the most sought-after securities on the German stock exchange. This is where there is the greatest demand and therefore the largest expected trading volume. “We want to observe how this offer is accepted. In principle, we are also open to an expansion and will keep an eye on it,” says the Deutsche Börse spokesman.
Nevertheless, other assets can already be traded via 360X - such as tokenized securities from valuable US companies such as Nvidia and Tesla.
Is this the end of day trading?
That is unlikely as of now. And the spokesman for Deutsche Börse also emphasizes this: "XETRA trading is the lighthouse and the other trading venues are also guided by this. We do not touch this lighthouse; the reference price for the DAX 40 stocks continues to be formed there."
