New DAX index to ‘minimise overnight risk’

Deutsche Börse has added a new index to its stable of indices, which it say will enable customers to use just one index as a reference point for those of their products that are linked to the performance of DAX during the trading day for the DAX derivatives market.

Until now issuers previously had to use both the DAX and XDAX indices, but the new “XDAXDAX” index will enable customers to use just one index as a base for products that are linked to the performance of the DAX during the normal DAX trading day for the derivatives market, which is to say  from 8am to 10pm CET, Deutsche Börse said.

The XDAX is an indicator that shows the performance of DAX outside Xetra trading hours, when other markets, such as the US market are still trading.  The prices of DAX futures traded on the Eurex derivatives exchange and the European Central Bank’s Euribor interest rates are used in its calculation. Because the XDAX provides full coverage of US trading hours, it helps investors to minimise their risk of overnight losses.

“The XDAXDAX…is a logical addition to the current DAX index family, and combines the concepts of the DAX and the XDAX  indices under a single identifier,” CEO of STOXX Ltd Hartmut Graf said.

The DAX index measures the performance of the 30 largest and most liquid companies on the German stock market, and is said to represent around 80% of the market capitalisation of Germany’s listed companies.  It is based on Xetra trading data, and is calculated daily.

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