In recent years, one of the most significant setbacks for the financial hub of Frankfurt was undoubtedly the departure of gas manufacturer Linde from the German stock exchange. 'It's bitter, it hurts,' said exchange CEO Theodor Weimer in retrospect, acknowledging that the market operator had failed to keep the then €150 billion heavyweight in Frankfurt.

Surprisingly, it took a long time for the exchange to address one of the central reasons for this delisting, namely the cap limit in the DAX. By capping the weighting of heavyweight stocks in the index at a maximum of 10%, investors following the index are indirectly forced to repeatedly sell shares of growing giants since their index weight is trimmed if it exceeds the 10% threshold – and index trackers must follow suit. In the past ten years, this has happened a whopping 38 times with four companies. It's understandable that this index requirement infuriated Linde's management and was a reason for the company's shift away from the trading floor in Frankfurt. It could also make companies like SAP, Allianz, Siemens, or Deutsche Telekom rethink their strategies in the medium term.

In the last survey among market participants in the spring of 2022, those advocating for retaining the low cap limit (in international comparison) prevailed – including funds obligated to diversify widely due to regulatory requirements for retail investor products. However, Linde's departure has reignited the debate at the financial hub, questioning whether the exchange should risk losing more global corporations and diminishing in significance just to accommodate these interests.

Now, the exchange responds with a new consultation to Linde's departure and the ensuing debate. Once again, the proposal to raise the cap limit to 15% is on the table. While it might sound like a cosmetic modification, it would likely, according to model calculations, prevent any listed company from reaching the threshold in the foreseeable future. The exchange's decision to initiate another consultation is appropriate. However, it is also long overdue.