What is STOXX?

STOXX, a subsidiary of Deutsche-Borse Group (stock symbol:DBOEF), is a leading provider of market indexes that are representative of European and global markets.

Key Takeaways

  • STOXX, a subsidiary of Deutsche-Borse Group (stock symbol:DBOEF), is a leading provider of market indexes that are representative of European and global markets.
  • The most popular STOXX index is the Euro Stoxx 50 index, Europe's leading blue chip index, covering 50 stocks from 11 eurozone countries.
  • STOXX indices are used not only as the underlying instrument for financial products, such as ETFs, futures and options, and structured products, but also for risk and performance measurement.

Understanding STOXX

Indices provided by STOXX cover a wide range of equity market segments, including the broad market, blue chips, individual sectors, and global indexes. While global indexes are also included, the majority of STOXX indices place an emphasis on the European market.

The most popular such index is the Euro Stoxx 50 index, Europe's leading blue chip index, covering 50 stocks from 11 eurozone countries: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. The Euro Stoxx 50 Index is licensed to financial institutions to serve as an underlying for a wide range of investments like futures, options, and exchange traded funds (ETF). Other popular indexes include the Stoxx Europe 600 and the Stoxx Global 1800.

The STOXX indices were created out of a joint venture between Dow Jones, Deutsche-Borse AG, and the SIX Group (formerly SWX Group) in 1997 and launched their first products in 1998. The Stoxx indexes have since become quite popular and are tradable on the futures and options market, and are also used as benchmarks for funds that trade in the European and global markets.

STOXX indices are licensed to more than 500 companies globally, which include the world’s largest financial products issuers, capital owners, and asset managers. STOXX indices are used not only as the underlying instrument for financial products, such as ETFs, futures and options, and structured products, but also for risk and performance measurement. In addition, STOXX Ltd. is the marketing agent for DAX indices in Germany and the SIX index in Switzerland. STOXX has benefited from the recent upswing in interest in passive investing of indexed funds, where several of their indexes are employed as the benchmarks to be replicated.

The Euro Stoxx 50 Index

The most popular of their many index offerings—and which may now be the most popular European stock market index overall—is the blue chip Euro Stoxx 50, which provides a way for investors to track and invest in the largest 50 countries in the eurozone. The components of the index are selected by ranking each company in the 19 Euro Stoxx "Super-sector" indexes by free-float adjusted market capitalization.

The 40 largest companies that participate in these 19 indexes are automatically chosen as components of the Euro Stoxx 50 index, while the remaining 10 are selected by a committee from among the 41st to 60th ranked companies, with preference given to existing components in order to reduce turnover. The index is reviewed in September of each year, but there are criteria that can turn over components sooner, such as a bankruptcy, merger, or otherwise slipping from the ranks of the top 75 in terms of overall market capitalization.