The Executive Board of Deutsche Börse AG has resolved changes to the framework of the Guide to equity indices, in consultation with the Working Committee for Equity Indices, to take effect from 22 December 2008, the next regular adjustment date for the composition of the index constituents. The review of the indices is scheduled for 3 December, new rules will be taken into consideration accordingly.
The minimum free float, i.e. the number of shares in a company that are available for trading, owned by a large number of different shareholders other than the major shareholders, is to be increased in future. Until now, companies listed on the DAX, MDAX, SDAX and TecDAX have had to have a minimum free float of five percent. This threshold is to be raised to ten percent. Companies with more than 90 percent of their shares held by major shareholders will be removed from the index two trading days after the first public notification of a free float of less than ten percent. This will be accordingly communicated by Deutsche Börse AG. The increase in the threshold is a key step towards ensuring liquidity in the indices. The higher a company's free float, the higher the tradability of the share in most cases.
For determining the free float of an index title in ongoing acquisitions, all legally notifiable shares, which the absorbing company has itself secured over options, will in the future be consideredin this title.
The rules are to be expanded to include the free float adjustment for the DAX, MDAX, SDAX and TecDAX, in order to allow timely reactions to extraordinary events such as corporate actions, mergers or acquisitions and the resulting potential shortages of equities available for trading on the market. This means that in future, a company's free float will also be able to be adjusted in the index calculation between the regular quarterly dates, provided that the extraordinary event causes a change in the company's free float of more than ten percent of its share capital. In order to avoid excessively frequent adjustments in cases of acquisition, the free float is noted at the time of an initial tender offer and again in the closing reports at the end of the offering period. This enables the index to track the market activity more closely and transparently, as the changes are effected immediately with a two-day lead. Other changes to free float will continue to be implemented by Deutsche Börse on a quarterly basis only.
The regulation in the Guide to equity indices which was recently supplemented to include a volatility criteria remains unaffected by the new amendments.This states that a stock can be removed from the DAX, MDAX or SDAX selection indices if its weighting on the index, based on its current free float market capitalization, exceeds ten percent at the close of trading on one trading day and the annualized volatility of its performance for the past 30 trading days exceeds 250 percent. This regulation is also to be expanded as of today, to include the equity index TecDAX.
About Deutsche Börse Market Data & Analytics:
Market Data & Analytics calculates and publishes more than 2,500 indices in total. Deutsche Börse thus ranks among the world's major index providers.Market Data & Analytics also compiles, distributes and markets independent capital market information, such as price data, trading statistics and back office information for banks and financial institutions.
DAX®, MDAX®, SDAX®, and TecDAX® are registered trademarks of Deutsche Börse AG
The minimum free float, i.e. the number of shares in a company that are available for trading, owned by a large number of different shareholders other than the major shareholders, is to be increased in future. Until now, companies listed on the DAX, MDAX, SDAX and TecDAX have had to have a minimum free float of five percent. This threshold is to be raised to ten percent. Companies with more than 90 percent of their shares held by major shareholders will be removed from the index two trading days after the first public notification of a free float of less than ten percent. This will be accordingly communicated by Deutsche Börse AG. The increase in the threshold is a key step towards ensuring liquidity in the indices. The higher a company's free float, the higher the tradability of the share in most cases.
For determining the free float of an index title in ongoing acquisitions, all legally notifiable shares, which the absorbing company has itself secured over options, will in the future be consideredin this title.
The rules are to be expanded to include the free float adjustment for the DAX, MDAX, SDAX and TecDAX, in order to allow timely reactions to extraordinary events such as corporate actions, mergers or acquisitions and the resulting potential shortages of equities available for trading on the market. This means that in future, a company's free float will also be able to be adjusted in the index calculation between the regular quarterly dates, provided that the extraordinary event causes a change in the company's free float of more than ten percent of its share capital. In order to avoid excessively frequent adjustments in cases of acquisition, the free float is noted at the time of an initial tender offer and again in the closing reports at the end of the offering period. This enables the index to track the market activity more closely and transparently, as the changes are effected immediately with a two-day lead. Other changes to free float will continue to be implemented by Deutsche Börse on a quarterly basis only.
The regulation in the Guide to equity indices which was recently supplemented to include a volatility criteria remains unaffected by the new amendments.This states that a stock can be removed from the DAX, MDAX or SDAX selection indices if its weighting on the index, based on its current free float market capitalization, exceeds ten percent at the close of trading on one trading day and the annualized volatility of its performance for the past 30 trading days exceeds 250 percent. This regulation is also to be expanded as of today, to include the equity index TecDAX.
About Deutsche Börse Market Data & Analytics:
Market Data & Analytics calculates and publishes more than 2,500 indices in total. Deutsche Börse thus ranks among the world's major index providers.Market Data & Analytics also compiles, distributes and markets independent capital market information, such as price data, trading statistics and back office information for banks and financial institutions.
DAX®, MDAX®, SDAX®, and TecDAX® are registered trademarks of Deutsche Börse AG
