While many active funds have now sold Wirecard shares, according to the current state of affairs, they will probably still be included in Dax-ETF until September. According to the regulations of the German Stock Exchange, membership of the indexes of the Dax family (Dax, MDax, SDax, TecDax), the drastic price drop alone does not justify an early withdrawal from the most important index for German stocks.
The composition will be checked regularly the next time on September 3, a spokesman for the German stock exchange said on Monday at Personal-Financial.com’s request. The decisive factor is then the “volume-weighted average price of the last 20 trading days” – that is, sales times prices in August. The Dax relegation would then only take effect on September 21. Then the shares also fly out of the passive products.
According to the current state of affairs, Wirecard will then have to leave the Dax in September. On Monday – before the bankruptcy application – the company was still worth 3.19 billion euros on the stock exchange, so that with a current free float of around 90 percent, the relevant free float market capitalization is 2.87 billion euros. This corresponds to one of the smaller MDax values. For comparison: the two currently smallest Dax values Covestro and MTU Aero Engines have a free float market capitalization of EUR 8.8 and 7.1 billion, respectively.
Right in the SDax?
It is also possible that Wirecard slips directly into the SDax. This would be an unprecedented descent. This will also depend on the trading volume in August. At the beginning of June, when Deutsche Börse last published its index ranking, Wirecard stock was the fourth most traded value in the Dax. It is doubtful whether this will still be the case in August. The strong price slump in the past few days indicates that there are hardly any willing buyers to face the sellers, so rather little sales are made with the papers. And by August, interest in the title could even have completely evaporated – except for hard-nosed speculators.
Even the application for bankruptcy will fundamentally not change this situation. The stock exchange regulations on the Dax indices, which was updated on Friday, are listed in section 5.1. Criteria for kicking out. In the updated form, the rules for the insolvency case were specified, a few days earlier this had already been done with the rules on governance. In short, only the application to open bankruptcy proceedings is not sufficient for immediate dismissal from the Dax, which would then be done during the quarterly review. The regulations state: “Companies for which insolvency proceedings are rejected due to lack of funds or who are in liquidation are immediately removed from the corresponding selection indices. The companies will be removed at their last known price or EUR 0.001 if the security is not available for trading at the time of the announcement. “And further:” On the other hand, companies that have filed for insolvency proceedings will only become effective in the course of next quarterly review of index composition removed from selection indices. This also applies after insolvency proceedings have been opened. “
Criteria for an immediate exclusion would be the voluntary abandonment of membership in the Prime Standard of the exchange (why should Wirecard do this?) Or an acquisition and as a result a drastic reduction in the free float to less than ten percent. It can be doubted whether there is a buyer for a large part of the Wirecard shares in the current situation with many unanswered questions.
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