Deutsche Boerse Reviewing DAX Criteria, Members Could Rise to 40 From 30
05 October 2020 - 8:41PM
Dow Jones News
By Joshua Kirby
Deutsche Boerse AG said Monday it is considering making criteria
stricter for membership in its German indexes and expanding the
number of companies in the DAX blue-chip index to 40 from 30.
STOXX Ltd., the German stock market operator's index provider,
is launching a market consultation as part of a proposed reform to
align the DAX Selection Indexes--which comprise the DAX plus three
others--with international standards, Deutsche Boerse said.
The proposal follows a scandal earlier this year involving
former DAX constituent Wirecard AG, a fintech that filed for
insolvency after revealing that 1.9 billion euros ($2.2 billion) in
cash on its balance sheet had gone missing and probably didn't
exist.
As part of the extended criteria for entry, companies may have
to prove their profitability, as well as file quarterly reports and
audited annual reports in due time.
Non-compliance could be sanctioned with removal from the
indexes, the company said.
To align the indexes with international standards, member
companies would be obliged to list on the regulated market of the
Frankfurt Stock Exchange, and regular reviews would be held every
six months rather than annually. This would allow quicker changes
to the capital market landscape, Deutsche Boerse said.
A minimum liquidity requirement may also be introduced.
In addition, STOXX is considering changing the number of index
constituents, a move that would see the primary DAX index boosted
to 40 member companies from 30, and the MDAX mid-cap index shrink
to 50 members from 60.
Deutsche Boerse also said that companies with revenues of more
than 10% from controversial weapons could be excluded from the
indexes under the new criteria.
The market consultation is open until Nov. 4, the company
said.
Write to Joshua Kirby at joshua.kirby@dowjones.com
(END) Dow Jones Newswires
October 05, 2020 05:26 ET (09:26 GMT)
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