Qontigo, the provider of Stoxx indices, has established numerous rule changes to the DAX indices following a proposal in October including the decision to expand the number of constituents from 30 to 40.

The changes to the flagship German index come following the Wirecard scandal which saw the DAX 30 constituent go into insolvency after announcing €1.9bn was missing in June.

The proposals received feedback from more than 600 participants varying from financial institutions, corporates and private respondents.

The changes made to DAX indices include the expansion in the number of constituents in the indices, new financial reporting and stable financial track records.

The index will be expanded by 10 stocks while the MDAX index will be reduced from 60 to 50 constituents, effective September 2021.

For DAX candidates to be included in the index, they must have a positive EBITDA in their two most recent annual financial statements, effective December.

Furthermore, constituents must also publish audited annual financial reports and quarterly statements as of March 2021 or risk being excluded if they do not comply after a 30-day warning period.

The board, however, did reject the proposal of companies being excluded if they have involvement in controversial weapons.

Vanguard drops DAX index on Germany ETF three months after Wirecard scandal

Stephan Flägel (pictured), global head of benchmarks and indices at Qontigo, commented: “We saw very mixed opinions on the topics sustainability and ESG, outside of our proposals that concerned governance.

“We will continue our dialogue with market participants while sustainable investment is and will remain one of the most important trends in the financial markets and will fundamentally change investment behaviour in the coming years.”