Eurex, Deutsche Börse’s international derivatives exchange, is to expand its derivatives offering by adding equity index derivatives to its DivDAX index. Futures and options will be available on DivDAX from 14 April.
The DivDAX index comprises the 15 DAX constituents with the highest dividend yield. The index was introduced by Deutsche Börse in March 2005. The composition of DivDAX is reviewed once a year in September, based on the latest paid dividends. Components are capped at 10%. The index is weighted according to market capitalisation.
Deutsche Börse says DivDAX returns have outperformed those of DAX in each of the last eight years. The contract size of the DivDAX futures is around six times smaller than the DAX futures. The company believes this makes the index particularly interesting to retail investors and hedgers of retail structures.
“Our new futures and options on DivDAX offer issuers of structured products a perfect opportunity to hedge their exposure,” said Peter Reitz, Eurex board member, in a statement. “It will complement our listed dividend derivatives right in time for the upcoming dividend season.”
The DivDAX futures and options will be cash settled. The futures expire in March, June, September and December, while the options have a maximum term of 24 months.
Eurex also launched five further German equity options on stocks from the MDAX index on 25 March. The new options are based on the following underlyings: Bilfinger Berger, Fraport, Klöckner & Co, SGL Carbon and Wacker Chemie.