German trading venue, Deutsche Börse, has augmented its DAXplus strategy index-offering suite, culminating in the launch of four new tradable indices, including expansion of its ShortDAX and LevDAX, according to a Deutsche Borse statement.
Deutsche Börse boasts an existing offering of ShortDAX indices, with the most recent expansion being seen in the form of its ShortDAX x9 and ShortDAX x10 indices. These new options allow market participants to have exposure into falling share prices, which in essence is pegged to the inverse of the performance of the DAX.
More specifically, the ShortDAX indices are contingent upon leverage factors, which are denoted by the “x” in the index name, i.e. 9, 10, etc. For example, in the scenario of the DAX falling by 5%, the ShortDAX x9 rises by 45% respectively, and vice versa.
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Furthermore, the ShortDAX indices also contain interest payments resulting from investment strategies in proportion to their respective overnight rate. This means that interest accumulate in the same amount for the investment volume as well as for the funds received from short selling.
Given the need for risk management, all leveraged indices also possess a protective countermeasure in order to prevent a total loss. Should an index suffer more than 50% at a certain time on any single day, the leverage factor will be adjusted accordingly. The calculation itself will be based on the most immediate DAX level previously defined.
Last week, Deutsche Börse made headlines when it reported its monthly figures for its cash markets in March 2015, yielding a figure of $175.0 billion (€162.6 billion) of order book turnover on Xetra, Börse Frankfurt and Tradegate Exchange.