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Börse Express – INDEX-MONITOR / ROUNDUP: Deutsche Börse increases Dax to 40 members


Deutsche Börse worsened after the Wire Card scandal and the criticism of achieving a Delivery Hero in the Dax
their index rules. The most extensive changes are for the flagship – the leading German Dax index. This will be increased from 30 to 40 values, but stricter requirements will apply from next year. In addition, it will also be checked regularly twice a year instead of just once a year, as Deutsche Börse announced Tuesday in Frankfurt.

Market value, ie market capitalization, is the most important criterion. The previous second criterion for inclusion in an index, stock exchange turnover, no longer applies. Yes – and this also applies to the other indices in the Dax family, the MDax
, SDax and TecDax , replaced by a so-called minimum liquidity requirement.

The following applies to Germany’s first stock exchange alliance: For the first time, the Dax will be audited regularly in March of the new year, while the 10-member increase will take place six months later in September 2021. If you want to become a member, you must have been profitable for at least the last two financial years based on earnings before interest, taxes, depreciation and amortization (Ebitda).

A group such as food supplier Delivery Hero would not have become Dax’s successor to payment processor Wirecard, which went bankrupt after a balance sheet scandal, based on the new rules last August. Dispatch Hero will not be excluded again immediately. Because: Only Dax candidates have to show a positive action result for the past two years. While this rule is the only one to apply immediately, the others for the index reviews are to be applied in the first quarter, ie in March, or in the third quarter, ie September.

The MDax will then be reduced from 60 to 50 members at this time. In this index of medium-sized companies and also in the other Dax indices, the SDax small-cap index and the TecDax technology index, the profit condition does not apply.

However, for all companies in the various indices, the financial reporting obligations are tightened. You must publish quarterly reports and certified annual financial statements. Companies that fail to do so during a 30 day notice period will be removed from the index within two working days. Even if the grade is withdrawn after its publication – and after the deadline – its membership will be forfeited.

As a result of these requirements, companies will no longer have to be listed in the more stringently regulated Prime Standard stock exchange segment. Instead, all companies that have been admitted to the regulated market of the Frankfurt Stock Exchange have the opportunity to be included in the index.

With the stricter requirements, Deutsche Börse is drawing conclusions from the gaps in its old set of rules, after Wirecard was able to stay in the Dax for weeks and months despite the growing accounting scandal. The payment processor who worked for Commerzbank in September 2018 in the Dax, has allowed airplanes of 1.9 billion euros in June this year. The bankruptcy followed, but it wasn’t until late August that Deutsche Börse took Wirecard out of the Dax.

Another, slightly smaller, innovation for all companies that want to be Dax, MDax, SDax or TecDax is the obligation to an audit committee on the supervisory board, which must also be staffed. This has not yet been the case, for example in the Dax Merck KGaA group , with a waiting period until August 2022.

The proposal by Deutsche Börse that companies like Airbus should content that does business with “controversial weapons” cannot be included in the Dax. “For the most part, the rule changes are to be welcomed,” an index expert said in an initial response. This also applies to the removal of the proposed passage on companies dealing with so-called controversial weapons.

“That’s the purpose of the Dax 50 ESG,” the expert said. This index was introduced in the spring for environmentally conscious investors. It shows the price development of the 50 largest and most tradable stocks on the German market, which are assessed as being particularly sustainable based on ESG (environmental, social and corporate governance) criteria ./ck/mis/zb

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AXC0139 2020-11-24 / 10: 39

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