German blue-chip DAX expands and tightens rules

Jill Petzinger
·Germany Correspondent, Yahoo Finance UK
·2 min read
04 November 2020, Hessen, Frankfurt/Main: A trader sits in the trading room of the Frankfurt Stock Exchange in front of her monitors, which also show reports on the election of the US president. Photo: Frank Rumpenhorst/dpa (Photo by Frank Rumpenhorst/picture alliance via Getty Images)
A trader sits in the trading room of the Frankfurt Stock Exchange in front of her monitors. Photo: Frank Rumpenhorst/picture alliance via Getty Images

Germany’s blue-chip DAX (^GDAXI) index will add an extra ten companies to its current roster of 30 from September 2021.

However, in the wake of this year’s massive Wirecard scandal, the stock exchange operator will introduce a raft of new, stricter rules for members.

Earlier this year, payments company Wirecard was discovered to have been engaged in fraud on a massive scale, and collapsed owing creditors billions of euros.

The scandal was an embarrassment for the Germany’s financial regulator and the finance ministry, who were both accused of ignoring red flags when it came to the country’s fintech star.

READ MORE: EU watchdog criticises Germany for oversight failures in Wirecard scandal

Stock exchange operator Deutsche Börse said in a statement today that the “comprehensive changes in the index rules were decided to increase the quality of the Dax indices and to align them with international standards.”

The new rules include that companies must be able to demonstrate operating profit in the past two years, and must submit quarterly reports on time, either the three months after end of the financial year or 45 days after the end of the quarter. Failure to comply will result in immediate expulsion.

Burnt by Wirecard, the exchange operator will now require that companies have an audit committee on their supervisory boards.

As part of the overhaul, the secondary M-DAX index will be trimmed down to 50 members, from the current 60. The S-DAX stays the same, at 70 members.

Insolvency administrators are currently in the process of selling off Wirecard assets to try and claw back some money for its creditors. Most recently, Wirecard’s tech platform was bought by Spain’s Santander Bank (SAN.MC) for reportedly around €100m (£89m, $119m).

In the three months since insolvency proceedings started, Wirecard’s subsidiaries in Brazil, Romania and North America have been sold off.

Watch: What is inflation and why is it important?