Other recent changes to the DAX index
Since the announcement that the DAX30 index will become the DAX40 index, Deutsche Borse has implemented further regulatory changes for the inclusion of blue chip companies in the index. These changes have been rolled out since December 2020 and include requirements such as financial reports for the past two years reflecting positive EBITDA (earnings before interest, taxes, depreciation and amortization), stricter financial reporting requirements and penalties introduced in the event of noncompliance. .
Why are changes being implemented on the DAX?
Increasing the number of stocks that make up the DAX is expected to provide more liquidity to a broader set of stocks and should create a better and more diverse representation of the wider German economy.
How will the DAX change affect traders?
The DAX30 will be renamed to DAX40. On the IG platform, Germany 30 will be renamed Germany 40. Index traders will be able to trade it the same way as before, and the initial change in spot and futures prices is expected to be marginal.
The new diversity created by having more stocks in the index should dilute the impact of large and sudden movements of individual stocks on the price of the index. Traders looking to use the DAX to hedge the underlying portfolio might see a higher correlation with more stocks than before.