Designated Sponsor

Specialist financial service provider that balances temporary imbalances between supply and demand in individual shares in the XETRA electronic trading system. The negotiability of a share is meant to be improved by placing bid and ask limits.

How a designated sponsor works

Designated sponsors operate exclusively in the Xetra® system, where they must be admitted as a trading participant. There can also be multiple designated sponsors for a given security. If the trading volume is too low, their job is to regularly buy or sell shares in the corresponding company for themselves. They thus offset temporary imbalances between supply and demand for less liquid stocks in continuous trading and ensure additional liquidity.

A designated sponsor is appointed by the company when it is listed or they operate on their own behalf.

Other activities

Through their intensive supervision of securities, the designated sponsor acquires expert knowledge that qualifies them to advise the issuer on matters relevant to the stock exchange and the capital markets.
Their activities can therefore also include:

participation in investor relations work (roadshows, conference calls and presentations);
the preparation of research reports, analyses and studies, especially on the securities supervised; or
assistance in the preparation of quarterly and annual reports Another activity is the reporting on their work as a designated sponsor, in particular on the development of their trading activities.