Bid-ask spread

Bid-ask spread

Difference between the best bid price and the best ask price for a security at a given time; published in the open order book on Xetra®

The bid/ask spread shows the extent to which available bid and ask offers vary: the lower the spread, the greater the consensus between participants with respect to the value of the share in question. The bid/ask spread is a widely used measure of the efficiency of the currency and capital markets, since narrow spreads represent a high degree of market liquidity and low transaction costs.

On the trading floor of the Frankfurt Stock Exchange, the bid/ask spreads used to be issued by the lead brokers. However, that is rarely the case today. Instead, non-binding estimates are published via the trading system Xontro, the price boards on the floor and data vendors.

In so-called "zero-spread trading" for private investors, i.e. in trading without the difference between bid and ask prices, the lead brokers execute orders at the midpoint of the estimates given. This price is guaranteed by the lead brokers for orders in DAX® shares up to 10,000 (in MDAX® shares up to 5,000 and in TecDAX® and SDAX® shares up to 3,000) per price calculation. These no-spread prices are published in real-time as so-called indicative prices on the website of Deutsche Börse.