At this week's latest roundup we look at the most recent product and index launches across the world.

STOXX has licensed a new ESG benchmark for the German equity market to DZ Bank. The DAX 30 ESG index was designed to expand the options for ESG investing in German equities and will form the basis for several discount certificates that will be listed on the Frankfurt Stock Exchange.

This new ISS ESG supported version of the DAX complements our existing range of ESG versions linked to the DAX - Serkan Batir, STOXX

The index is comprised of the 30 stocks with the best ESG performance score determined by reference to the ISS ESG Corporate Rating and drawing from the largest companies listed on the Frankfurt Stock Exchange, following initial exclusionary ESG screening.

'The index employs the ISS ESG Corporate Rating which enables investors to assess the companies’ exposure to ESG factors and risks,' said Serkan Batir (pictured), global head for product development and benchmarks at STOXX. 'This new ISS ESG supported version of the DAX complements our existing range of ESG versions linked to the DAX (…) [and] meets the increased demand for bespoke indexing on sustainability.'

The starting universe for the index is the HDAX, which consists of the DAX, MDAX and TecDAX and currently comprises 101 stocks. Companies that fail the ISS ESG Norms Based Screening assessment are ineligible for inclusion. Exclusion filters are also applied for involvement in the following areas: controversial weapons, tobacco, thermal coal, unconventional oil & gas, civilian firearms, nuclear power and military equipment.

Among the remaining companies, the 60 most valuable companies are pre-selected based on free-float market capitalization. Finally, 30 companies are selected to be included in the DAX 30 ESG according to the highest ESG performance scores under the ISS ESG Corporate Rating.

'The new index combines Germany as an investment region with the consideration of sustainability aspects. This will enable us to close an existing gap in the product range with an attractive underlying asset, especially for underwritten products,' said Kim Yvette Remmert, responsible product manager at DZ Bank.

Together with the DAX 30 ESG, the idDAX 30 ESG Decrement 4% Index was launched to be used as an underlying index or further DZ BANK certificates from mid-February onwards. The index tracks the performance of the DAX 30 ESG Net Return Index with a constant markdown of four percent per annum.

STOXX rolls out Ucits-aligned range, 10% stock weight caps

STOXX has introduced a family of Ucits-capped DAX indices that comply with single-stock weight limits in the European Union directive including the DAX Ucits Capped, HDAX Ucits Capped and CDAX Ucits Capped.

'With the launch of the DAX Ucits series, we are reacting to market needs by providing a solution that especially buy-side clients can benefit from,' said Batir.

Additionally, the index provider has launched the DAX Selection Indices with a maximum component weight of 10% including the DAX 10% Capped, MDAX 10% Capped, SDAX 10% Capped and TecDAX 10% Capped.

The expanded offering was designed to help asset managers comply with established fund regulations and broaden their choice of suitable benchmark indices. As of March 18, 2024, the DAX Selection Indices’ (DAX, MDAX, SDAX and TecDAX) weight cap for individual constituents was raised from 10% to 15%.

Solactive expands single stock range…

Solactive has announced a collaboration with UK exchange traded products (ETPs) provider Leverage Shares to develop both fixed basket and single stock indices that will underpin Leverage Shares' new suite of long and short leveraged ETPs launching on the London Stock Exchange (LSE).

Solactive will calculate the indices with Leverage Shares providing geared market exposure through various asset classes and long/short strategies.

The ETPs tracking the new Solactive Indices include a 5x long and a -3x short ETPs tracking the Solactive Magnificent 7 Index; a 3x long and a -3x short ETPs tracking the Solactive US Artificial Intelligence Index; a 3x long ETP linked to the Solactive 3x Long IONQ Index; and a 2x long ETP linked to the Solactive 2x Long SMCI Index.

The ETPs list on 26th of March on the London Stock Exchange.

… develops ESG play with UBS

The German index provider has also announced a collaboration with UBS Asset Management for the launch of the new UBS (Irl) ETF – EUR Ultra-Short Bond ESG UCITS ETF, tracking the Solactive EUR Ultra-Short Diversified Bond ESG Index.

This new index provides exposure to short-term debt securities denominated in Euro, including bonds, bills, commercial papers and certificate of deposits from sovereign, supranational and agency issuers in the Economic and Monetary Union (EMU).

The Solactive EUR Ultra-Short Diversified Bond ESG Index is designed to meet demand for sustainable fixed income investments by combining short duration with responsible investment principles. The index selects debt securities from sovereign, supranational, and agency issuers with a minimum amount outstanding of €100 million and a maximum maturity of six months. For the government debt portion, constituents are weighted based on market value. For agency and supranational debt part, constituents are equally weighted per issuer.

The ETF is available on the Borsa Italiana and Xetra.

'ESG integration in core fixed income strategies is an important trend, and this Index allows transparent implementation at the benchmark level,” said Timo Pfeiffer (right), chief markets officer at Solactive.

Cboe introduces margin rules for overwriting strategies

Cboe Global Markets has launched an enhanced margin treatment for cash-settled index options aimed at providing greater capital efficiencies for traders.

The new margin relief rule offers enhanced margin treatment when writing or selling a cash-settled index option in a margin account against an exchange-traded fund (ETF) that is based on the same underlying index.

In the same way an investor can write an equity call option while holding a long position in the underlying security (i.e., a "covered" call), the rule change allows for writing of index options in a similar manner. An investor, for instance, could write a call option on the Mini S&P 500 Index option (XSP) while having a long position in a corresponding ETF such as the iShares Core S&P 500 ETF (IVV), SPDR S&P 500 ETF Trust (SPY), or Vanguard S&P 500 ETF (VOO) to potentially enhance returns on their ETF.

Given the similar risk/return profiles of writing an index call option (e.g., XSP) against a long ETF position (e.g., IVV, SPY, VOO) vs. writing a covered call, Cboe's rule now treats these index options as protected for margin purposes – and not subject to uncovered option margin requirements.

'Index options can be an excellent trading and hedging tool, offering many unique advantages over existing alternatives,' said Catherine Clay (right), head of global derivatives at Cboe Global Markets. 'For investors with ETF positions, index options allow them to overwrite long positions with the ease of cash settlement, while potentially mitigating risks of early exercise and capitalizing on potential tax advantages.'

Cboe's rule applies to any index call or put option written against a position in a non-leveraged index mutual fund or non-leveraged ETF that is based on the same index underlying the index option and held in the same margin account.

DelphX expands reach of credit rating security product

US provider of structured products for the fixed income market DelphX Capital Markets has entered into an agreement with Castle Placement to accelerate the market exposure and use of the DelphX Credit Rating Security (CRS) product.

Under the agreement, Castle will provide a variety of services to support the launch of the CRS product and facilitation of trades, including additional due diligence and vetting of procedures and guidelines to promote faster adoption.

DelphX is seeking to leverage Castle's network of relationships to assist with the discovery, negotiation, pricing and execution of transactions with respect to both collateralized put options (CPOs) and collateralized reference notes (CRNs) and may act as a placement agent for certain transactions.

The agreement provides for revenue sharing on all CRS transactions sourced through Castle.

'Because our CRS product requires two sides for every trade (a CPO & CRN), having access to such a large pool of potential users can lead to far greater transaction volume,' said DelphX CEO Patrick Wood (right). 'The timing could not be better, as Castle has the network and experience to accelerate our product introduction cycle at a time when the market is highly receptive to rating change protection.'

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