After Wirecard, DAX may be expanded to 40 companies

Germany's blue-chip DAX index should expand to 40 from 30 companies with tougher membership criteria, exchange operator Deutsche Boerse said on Monday while outlining proposed reforms in the wake of the Wirecard accounting scandal.

In a set of proposals published on its website, Deutsche Boerse also suggested index bans for companies that fail to submit quarterly figures on time.

“It is no secret that I personally would welcome the expansion of the DA X 30 to aDA X 40,” Deutsche Bo er se Chief Executive The odor Wei mer said in an emailed statement.

Since its founding in 1988, the DAX has been Germany' s answer to the Dow Jones Industrial Average in New York and the F TSE in London, with 30 members forming the corporate elite in one of the world's largest economies.

Most of the index's founding members have since dropped out.

The most recent departure was payments company Wirecard, which in a blow to G ermany's capital markets, filed for ins olvency just two years after its promotion to the index. The payments company owed creditors billions in what auditor EY described as a sophisticated global fraud.

Weimer has since changed rule s to allow for a quicker expulsion of companies in the wake of the scandal. The rules proposed on Monday would make proven profitability a requirement for joining the DAX.

The proposal also suggested reducing the number of constituents in the mid-cap index to 50 from 60. Companies where sales of controversial weapons make up more than 10% of revenue should also be excluded from the DAX selection indices, which include the DAX, MDAX, TECDAX and SDAX, Deutsche Boerse said.