At present, for a company to be included in the DAX the following prerequisites apply: admission to the Prime Standard, free float of at least 5 percent, continuous trading on Xetra and based in Germany (registered office). With effect from October, the criteria relating to the registered office is to be broadened. Companies will qualify for the index if their operating headquarters is in Germany or if the Frankfurt Stock Exchange represents their primary trading venue. Operating headquarters is defined as the location of management or company administration, in part or in full. This must be publicly identified by the company. The primary trading venue requirement is met if at least 33 percent of aggregate turnover for each of the last three months took place on the Frankfurt Stock Exchange, including Xetra.
This new rule will also be applied to the MDAX, SDAX and TecDAX indices, which are currently open to international companies. Thus, Deutsche Börse is creating a more uniform set of rules for its equity indices. In order to ensure a smooth transition, companies included in the MDAX, SDAX and TecDAX when the new rule takes effect and who fail to meet the criteria will not be removed from the index before December 2008 at the earliest.
Deutsche Börse will lower the cap limit for DAX companies to 10 percent from the September quarterly chaining date. Currently the cap limit for companies included in the DAX is 15 percent, for all other selection indices a cap limit of 10 percent is already used. E.on with a weight of 10.9 percent is the only company currently in the DAX that exceeds the planned new cap limit.
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