Under the ISS STOXX umbrella will sit the STOXX index businesses (which includes STOXX and DAX indices), as well as ISS’ four existing business lines: ISS Governance, ISS ESG, ISS Corporate Solutions, and ISS Market Intelligence. Combining ISS’ robust and varied ESG and governance datasets with STOXX’s deep expertise in benchmark and custom index construction, as well as index production and operations, will allow ISS STOXX to compete effectively and on a global basis with all index providers.

“As we continue to expand our core offerings, STOXX will provide an additional pillar to accelerate the growth of our company through increased scale and diversified opportunities. We will now also be positioned to provide clients greater and more innovative insights for portfolio construction, passive and custom index creation, and portfolio tracking as part of an integrated solution set.”

ISS STOXX CEO, Gary Retelny

ISS STOXX, which is majority owned by Deutsche Börse Group, will be comprised of more than 3,400 professionals operating across 33 global locations in 19 countries. Its approximately 6,400 clients include many of the world’s leading institutional investors who turn to ISS STOXX for its objective and varied offerings, as well as companies focused on ESG, cyber, and governance risk mitigation as a shareholder value enhancing measure. Clients rely on ISS STOXX’s expertise to help them make informed decisions to benefit their stakeholders.

Learn more about ISS STOXX here.

About ISS STOXX
ISS STOXX GmbH, through its group companies, is a leading provider of comprehensive and data-centric research and technology solutions that help capital market participants identify investment opportunities, detect qualitative and quantitative portfolio company risks, and meet evolving regulatory requirements. With roots dating back to 1985, we today deliver world-class benchmark and custom indices across asset classes and geographies and serve as a premier source of independent corporate governance, sustainability, cyber risk, and fund intelligence research, data, and related offerings. Our products and services give clients the scale and leverage they need to grow their business more effectively and efficiently. ISS STOXX, which is majority owned by Deutsche Börse Group, is comprised of more than 3,400 professionals operating across 33 global locations in 19 countries. Its approximately 6,400 clients include many of the world’s leading institutional investors who turn to ISS STOXX for its objective and varied offerings, as well as companies focused on ESG, cyber, and governance risk mitigation as a shareholder value enhancing measure. Clients rely on ISS STOXX’s expertise to help them make informed decisions to benefit their stakeholders.

Eurex’s and STOXX’s success stories have been intertwined since their inception, with both companies starting operations in 1998 and the iconic EURO STOXX 50^® index playing a key role in their strategic positioning and business growth. 

In the past 25 years, the collaboration between the two firms has yielded some of the world’s most innovative and popular trading solutions, coinciding with a changing investment landscape and an ever-more sophisticated trading community. The latest joint product, daily options on the EURO STOXX 50, was launched only in August 2023. 

As this deep-rooted partnership reaches its 25^th anniversary, we caught up with Michael Peters, CEO at Eurex, and Axel Lomholt, General Manager at STOXX, to discuss their expectations on index themes and growth areas. 

^{Michael Peters}

^{Axel Lomholt}

Michael, first of all, congratulations on the launch of the EURO STOXX 50 index Daily Options

Michael: “This launch represents an initial step in establishing a range of shorter-dated options. As a first step, Eurex and the clients established the necessary infrastructure. Acceptance post-launch has been impressive with regards to both volume and the diverse client base involved. In its first month of trading, almost 340,000 contracts exchanged hands, with nearly 50 market participants taking part. This is a strong signal of the huge appetite for flexible trading and risk-management solutions as investors seek to react quickly and precisely to specific market events.”

Axel, what do these new options bring to the EURO STOXX 50 trading ecosystem? 

Axel: “The product ecosystem around the EURO STOXX 50 constitutes a world-leading case in trading solutions. Through them, traders and investors of all sizes can access the European equity market in a liquid, transparent and price-efficient way, whatever their ultimate trading strategy may be. This ecosystem continues to grow in size and capabilities. More market participants can trade the EURO STOXX 50 benchmark and its ESG, dividends and volatility strategies, for example, through a growing list of exchange-traded derivatives, ETFs and structured products. At STOXX, we have a client-first focus, we are flexible, and we have an open architecture when it comes to integrating external data. All that enables us to partner with a variety of clients such as exchanges like Eurex as well as with asset owners, money managers and issuers, to come up with the best tailored solution.”

Please tell us a bit about the synergy and strong success story between Eurex and STOXX 

Michael: “The STOXX brand is inherently linked to the growth of Eurex as an exchange, and the EURO STOXX 50 is the European benchmark of choice for our international client base. Options and futures on the benchmark were among the first contracts listed on the newly established Eurex in 1998. Today, the numbers speak for themselves. Through September, nearly 190 million EURO STOXX 50 futures contracts traded this year on our exchange, accounting for more than half of our entire equity index futures segment’s volume. Options on the index represent about 60% of the volume in our equity index options segment. 

Both Eurex and the EURO STOXX 50 are placed at the heart of Europe, and they are the first choice when investors gain exposure to our region. The menu of joint solutions with STOXX has expanded significantly since 1998 — such as European sector index and volatility futures, to mention only a few — but futures and options on the Eurozone blue-chip benchmark remain our most popular products.”
 
Axel: “The launch of STOXX, EURO STOXX 50 and Eurex operations in 1998 was an important moment in the history of the integration of European markets, one that even preceded the introduction of the euro by a few months. I was involved in European financial markets at the time, as was Michael, and I remember fondly the birth of a flagship benchmark that would come to represent the fortunes of the continent’s economy and companies. Since then, the shared journey with Eurex has gone from strength to strength — to the benefit of market participants and stakeholders.”   

Michael, you mentioned the growing suite of joint solutions with STOXX. That seems to have gathered much pace in the last few years. Can you mention some of the highlights there?

Michael: “The last few years have brought tremendous innovation, and many of our “first” product milestones are linked to STOXX. Together, we launched Europe’s first ESG futures in 2019, with contracts on the STOXX^® Europe 600 ESG-X index. As of September, over 1.3 million contracts have traded in 2023. We have also expanded that suite to cover the US market. We’ve seen only the first phase in the development of ESG, and this is a segment that will continue to gain in importance. 

Elsewhere, increasing appetite for factor-based and thematic strategies have also allowed us to break new ground. In March 2021, we expanded our equity index segment with new factor-based futures tracking the STOXX Industry Neutral Ax Factor indices and covering the Value, Momentum, Low Risk, Quality and Size factors.

As you can see, we work well together. I think design flexibility is a common trait of STOXX and Eurex, and thousands of clients rely upon us every day for our rules and transparency. That’s not surprising – we were, after all, born together and under a same parent, Deutsche Boerse Group. I expect much more of this teamwork in the future.”

This 25^th anniversary celebration comes at a time of heightened uncertainty in financial markets. How does that affect your companies’ business? 

Michael: “We have a particular responsibility during times of uncertainty and market volatility because we can provide safe and functioning markets in which participants can transfer risk. High inflation, a shifting global interest-rate environment, and even war in Europe. But throughout huge price swings, the Eurex platforms have proved to be a pillar of stability for financial markets. Of course, our trading business isn’t correlated to the economic cycle, and indeed we can see increasing volumes at times of risk aversion.”  

Axel: “It’s interesting, because some of the most productive moments in terms of design and new launches have coincided with the less prosperous or more uncertain economic background of the past few years. We continue to see sustained demand for our indices, because investors more and more want targeted and tailored solutions, and advances in technology and data gathering have opened the doors for new possibilities. Additionally, I think that larger than any cyclical downturn, looms the structural active-to-passive shift that has benefitted the indexing industry for years now.”

What do you see going forward in your industries and in the market landscape?

Michael: “For us at Eurex, futurization will continue to be a major driver. The successful transition from OTC-traded swap markets to standardized derivatives, traded and cleared in a regulated environment, will provide the benefits of capital efficiency and appropriate risk management. In addition, we intend to expand the concept of daily options to the DAX family. 

We expect sustainability and factor products to keep outpacing growth in more traditional segments and see the strong trend in thematics carrying on. The shift to systematic and so-called passive strategies continues unabated, but we are also facilitating trading to active investors with new solutions that allow them to manage and hedge their portfolios, no matter their focus or tilt.

Despite a global pandemic and an economic slowdown, trading in derivatives has grown. As Axel has mentioned, our collaboration with partners such as STOXX has allowed us to innovate even in difficult market environments. I expect more of this in coming years. 

Finally, I’d like to say that we live in a time of great change. Political, technological, social and, of course, climate change. All these are big challenges but also great opportunities. The exchange operators and clearing houses will offer the needed risk-management functions and tools, and provide stable markets. Working on the principles of integrity and trust.”
 
Axel: “I fully agree. Both our and Eurex’s growth has come alongside the multi-decade boom in index investing, itself underpinned by the multiple benefits of low cost, transparent methodologies, and rules, as well as intra-day pricing and trading. But our companies are also at the center of breakneck technological change. Thanks to the spread of alternative data, and the consequential growth in systematic and quantitative investing, STOXX is not just an index provider, but an intelligent investments hub. Innovation broadens our possibilities; it pushes us to think outside the box and to come up with smart ideas that may have been unimaginable a few years ago. 

If the pace of change since 1998 is any guide, the next 25 years promise to bring even more transformation to the indexing and derivatives space.”

The brand name Qontigo means ‘with you’, and conveys a spirit of continuous innovation and partnership with our clients. The Chinese name 旷势 (Kuangshi) has its roots in STOXX 势拓 (Shituo) and reflects our ambition to broaden this scope of providing the best services and products to our clients, as well as to generate momentum in our partnerships. 

As our business continues to grow in China, we believe it is important to have a brand and identity that resonates locally. This is in line with the customer-centric mindset highlighted in Qontigo’s strategic pillars.

While we are known globally for our leading European equity indices such as the EURO STOXX 50, STOXX Europe 600 and DAX, as well as for our regional, factor-based, thematic, and sustainability index solutions, our new Chinese logo and name demonstrate our commitment to our clients and our business in the region.

Other regional momentum includes our Axioma China Risk Model, which was first released in 2012 and has been updated regularly since then. Additionally, over the past few months, we launched an ESG-related product for the Postal Savings Bank of China and STOXX^® China A 900 Large ESG Index. We look forward to more such launches and partnerships in the future.

Degroote reports to Marc Dorfman, Global Head of Sales at Qontigo, and will be based in London.

“Stephane’s wide-ranging experience in engaging directly with ETF issuers and their end clients makes him ideally placed to further develop our client relationships in this important growth market segment.  Qontigo’s dynamic and forward-looking offering for ETF issuers is a cornerstone of our strategic vision, and we are confident that Stephane’s extensive knowledge of this space will help drive deep strategic partnerships with firms globally.”

Marc Dorfman, Global Head of Sales at Qontigo

“Qontigo’s ability to create highly targeted indices to meet specific investment objectives truly sets our capabilities apart in the market. In taking on this new role, I look forward to delivering this compelling value proposition to existing clients and new ETF issuers in order to help them differentiate their offerings in a competitive marketplace and to empower them to better serve the evolving needs of end investors.”

Stephane Degroote, Global Head of Investable Products Sales

Degroote joins Qontigo after nearly 12 years at FTSE Russell where he started as Regional Director for the EMEA region at Russell Investments. He then spent 5 years as Head of ETFs & Derivatives for EMEA and, most recently, was the EMEA Head of the Index Investment Group, focused on all index-linked investment products including ETFs, Index Funds, Structured Products, Derivatives and Asset Owner mandates.

With nearly 20 years’ experience in financial services, Degroote also held roles as EMEA Sales Director at FactSet and Head of Equity Derivatives Sales at Markit Group.

*As of July 2022

“Serkan brings tremendous indexing experience and market knowledge to Qontigo. In this key new role, he will help to shape Qontigo’s indexing strategy in the German market, expand the range of DAX’s ESG offerings overall, and lead the management and strategic development of the DAX business on a day-to-day basis.”

Axel Lomholt, Chief Product Officer, Qontigo

At BlackRock, Batir most recently served as both Head of Portfolio Management for EEGA (Eastern Europe, Germany and Austria) and Switzerland, and as Head of Product Management, Germany. He joined the company in 2008 as a Senior Portfolio Manager. His responsibilities included overall trading and management responsibility for German and Swiss domiciled index funds in various asset classes, including equities, fixed income and physical and synthetic commodities.

Batir was previously with UniCredit Bank AG – London for three years, as an equity derivatives trader in the firm’s proprietary quantitative trading hedge fund. He began his career at HypoVereinsbank, a member of UniCredit, as a Junior Trader in 2001.

Batir holds a degree in International Relations from Eastern Mediterranean University, a graduate degree in Strategy and Innovation from the University of Oxford-Said Business School, and a certificate in Algorithmic Trading from the University of Oxford Executive Programme.

Lomholt, who joins Qontigo after nearly nine years in senior management roles at Vanguard Investments, reports to Neal Pawar, Chief Operating Officer of Qontigo.

“Axel brings experience, ambition and a track record of innovation and performance that are a perfect fit for Qontigo. The profound benefits of the union of indexing and quantitative analytics—the premise for the creation of Qontigo—continue to generate growing enthusiasm among clients, and we look forward to Axel driving our growth of our indexing solutions to meet the investment and sustainability goals of investors and asset owners worldwide.”

Neal Pawar, Chief Operating Officer, Qontigo

At Vanguard, Lomholt most recently served as Head of Product and Program Management for Asia, where he led a number of large-scale business initiatives across the region. Earlier at Vanguard, he served as Interim Chief Executive Officer, Asia. Prior to joining Vanguard’s Asia business, Lomholt served in two global roles; namely, Head of Product for International and then Head of ETFs for Vanguard outside of the US.

He previously spent three years with Barclays Global Investors (BGI), followed by three with BlackRock, which acquired BGI in 2010, holding key leadership roles in the iShares business in EMEA and APAC. Before that, Lomholt served in portfolio management leadership roles with Gulf International Bank Ltd. and HSBC Global Asset Management.

Lomholt holds a BSc Finance from Bayes Business School, an MSc Finance from Reading University, and completed the Global Leadership Executive Program at Harvard Business School.

The NZFSPA is a global group of financial service providers committed to supporting the goal of global net zero greenhouse gas emissions by 2050 or sooner, in line with the ambition to limit the global temperature increase to 1.5°C above pre-industrial levels. With 23 leading providers committed to the alliance, NZFSPA acknowledges the important role that financial service providers have in helping to deliver the goals of the Paris Agreement and accelerating the transition to a low carbon economy.

“Qontigo is committed to creating an efficient and effective pathway for clients as they make the transition toward net zero targets. As an index provider, we intend to act as a catalyst for this transformation by partnering with our clients to deliver sustainable investment solutions that drive capital flows toward investments compatible with net zero. In addition, as part of the NZFSPA, we look forward to partnering with the Net Zero Asset Owner Alliance, the Net Zero Asset Managers Initiative, and the Paris Aligned Investment Initiative to work collaboratively toward our shared goals.”

Sebastian Ceria, Chief Executive Officer, Qontigo

Qontigo maintains a close dialogue with clients on sustainability topics, providing support and education along with a wide range of solutions to integrate sustainability objectives. An open architecture approach is at the core of Qontigo’s ESG and climate-specific innovations, including working with leading data providers, such as ISS, Sustainalytics, and Clarity AI. Qontigo is also the exclusive data distribution partner of the SDI Asset Owner Platform and has recently joined MIT Sloan’s Aggregate Confusion Project, an initiative to improve ESG measurement in the financial sector.

“I am pleased to welcome Mohan to our team. Since the launch of Qontigo almost two years ago, we have seen steadily strengthening demand for our solutions, created by leveraging Qontigo’s advanced indexing and analytics capabilities. Those unique capabilities, combined with Mohan’s proven ability to deliver innovation, value and growth, will help us to accelerate the fulfillment of our vision and value proposition by meeting—and exceeding—the enterprise-level needs of our highly demanding strategic accounts.”

Brian Rosenberg, Chief Revenue Officer of Qontigo

Prior to his most recent roles as Global Head of Partnerships and Head of Services and Solutions, he led Analytics Client Coverage in the Americas for MSCI and RiskMetrics Group.

From: Rodolphe Bocquet, Qontigo Global Head of Sustainable Investment
Re: Public Input on Climate Change Disclosures

On behalf of Qontigo, I extend our appreciation for the opportunity to respond to the SEC’s request for public comment on climate change disclosures. Created in 2019 through the combination of Axioma, DAX and STOXX, Qontigo is part of Deutsche Börse Group, headquartered in Eschborn, with key locations in New York, Zug and London. A core element of our mission is to provide index, analytics and risk solutions to drive targeted sustainable returns.

We believe that the global shift toward sustainable investing represents a profound and transformative change in financial management and laud the SEC’s initiative to seek public input on this matter of great significance to the global economy, society, and financial services industry. Based on the questions provided for consideration in the request, Qontigo’s suggestions and recommendations are as follows.

Regulating Climate Change Disclosures

In the interest of scalability, preventing greenwashing, and minimizing cost burdens, climate disclosures should be mandatory and consistent across markets, sectors, asset categories, issuers, and economic activities. The framework and guidance should be clear, comparable, and easy to understand from the investors’ perspective.

The recent developments in climate-related regulations across different markets have highlighted significant issues around divergent standards and hence a potential risk of capital misallocation. Given the international nature of the investment space, we recommend that any climate disclosure framework being considered in the US align with the EU Sustainable Finance Disclosure Regulation and the EU Taxonomy Regulation. We also recommend that rule-makers consider the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), as it is a framework already being utilized by more than 1,500 organizations across the world.

Regarding where such disclosures should be provided, we believe they should be integrated within mainstream financial filings, e.g. in annual reports and sector-specific pre-contractual disclosure documents.

In addition to mandating climate-related disclosures, regulators should create a strong foundation of governance and accountability mechanisms to ensure that the information being provided to investment decision-makers is accurate and reliable. We believe that some assurance or third-party verification should be required.

Information Required

To conduct a comprehensive analysis of the climate performance of their portfolio companies, investors will require disclosure to consider several climate-related metrics that are comparable across sectors, including, but not limited to, greenhouse gas emissions, reduction targets, climate risk governance, and climate risk exposure. For robust decision-making, investors must be able to consider climate information that is forward-looking and calculated based on actual physical output. For example, several existing methodologies for evaluating corporate climate performance, including those based on regulatory requirements, use enterprise value or the revenue of a firm to calculate greenhouse gas emissions intensity. These metrics can be volatile and potentially inflated, thereby leading to both capital misallocation from a carbon risk point of view and strong rebalancing risks among sectors.

Industry-level Considerations

Different industries have different rates at which they should decarbonize, given the different levels of GHG intensity and carbon budget. However, when it comes to reporting, climate-related disclosures must be comparable across sectors to be decision-useful. This is where a collaborative approach to climate-reporting standards, including different industry and civil society organizations, would prove to be effective. If the SEC were to involve industry participants to develop disclosure standards mutually agreed by them, there should at least be minimum standards to ensure a minimum level of ambition.

Relevant Frameworks and Standard Setting

Climate disclosure standards should leverage existing frameworks, such as the Task Force on Climate-Related Financial Disclosure recommendations and the Climate Action 100+ Net-Zero Benchmark. These frameworks were developed and have evolved over several years with support from experts across the investment, regulatory, and non-profit communities. Because these frameworks align with the globally accepted Paris Agreement—and are already widely adopted, used, and endorsed by various corporations and investors—an aligned regulation would have a higher possibility of quick adoption.

While standards need to evolve with time, ad hoc or frequent changes in requirements can generate significant costs and further blur the visibility and transparency over product methodologies.

International Alignment

The advantages of developing a single set of global standards for climate disclosures applicable to companies around the world would be immense, as financial market participants regularly offer products in several jurisdictions. A globally aligned framework would greatly benefit investors looking to use climate disclosures as the basis to fulfill suitability requirements and to design sustainable products across various markets.

Establishing a minimum global set of standards as a baseline that individual jurisdictions could build upon would be advantageous, as there will always be regional political preferences. By giving jurisdictions the option to add disclosure requirements, an agreement on such baseline standards could be easier to achieve.

It must be noted that this approach could, however, lead to a variety of diverging requirements worldwide, unless there is reciprocal recognition of the standards issued by the respective standard setters. Therefore, for international alignment to be effective, we recommend collaboration with global standard setters, such the International Organization Securities Commissions, Bank for International Settlements, and Financial Stability Board.

Additionally, if the SEC were to endorse or incorporate a global standard, we would recommend that it be made mandatory. There currently exist several voluntary environmental, social, and governance (ESG) disclosure frameworks developed by both private players and regulators. While this has increased information availability on ESG issues, it has led to a lack of comparability and cost inefficiencies for investors, in addition to confusion about what “best of breed” data is.

Disclosure Reliability and Assurance

To create regulation that goes as far as it can on disclosure, “comply and explain” can only be the first step, as it gives companies the option not to comply.

Additionally, we believe that third-party assurance standards can significantly increase investor confidence in the data and process-based information being reported. Assurance practices, such as internal control processes, audits for data and processes, and third-party verification, can help reduce potential manipulation and greenwashing by the reporting entities. The Public Company Accounting Oversight Board (PCAOB), with its high level of expertise and reach, is a body well-placed to develop mandatory assurance and verification practices for climate-related standards.

I thank you once again on behalf of Qontigo for the opportunity to engage with you on this enormously important issue. We hope our recommendations will be taken into consideration for rulemaking around climate disclosures, we look forward to seeing the results of this public consultation, and we remain eager to contribute to ongoing discussions.

You can view all submitted comments on the SEC’s website.