Deutsche Boerse Reviewing DAX Criteria, Members Could Rise to 40 From 30

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 [e-mail]

(END) Dow Jones Newswires

October 05, 2020 05:26 ET (09:26 GMT)

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