This is how LIXX creates indices on stocks, funds, options, crypto-assets and other underlying assets
31. January 2023 | Medienmitteilung

This is how LIXX creates indices on stocks, funds, options, crypto-assets and other underlying assets

The purpose of indices is to reflect the evolution of specific markets. As early as 1884, Charles Dow and Edward Jones, the founders of the Wall Street Journal, began calculating an index of the most significant US company shares. The index, referred to as “Dow Jones”, established the basis for all stock indexes worldwide and remains one of the most significant measures of the performance of securities today.

In fact, it is feasible to create indices not only on the basis of listed shares, but also to calculate the performance of other assets, such as currencies and commodities, as well as funds, options or various derivatives.

LIXX Innovation, established in 2017, offers the design, production of legal documentation, technical configuration and the launch of any sort of index. Several participants in the financial markets may take the initiative to establish an index. In this way, LIXX acts as a full-service provider. The company has been registered as an administrator of EU benchmarks with ESMA since 2018.

LIXX provides unique index solutions to asset managers, investment banks and family offices. The package includes actual indexing, EU benchmark administration and the creation of customised solutions. This enables LIXX clients to submit investment strategies and render them investable.

The formula for determining an index is straightforward: The index value is derived from the prices and weightings of the underlying securities it represents. In the direct computation, the current prices of the underlying values are multiplied by their index components. This determines the value and, hence, the index weighting of each underlying security. The index value is then the total of these values.

Additional elements, such as those for risk limitation, may be included in the index calculation. LIXX has already created indexes based on crypto assets, with weightings that are automatically adjusted based on price movements.

Index certificates allow private investors in particular to participate in the price performance of an index’s constituent assets without having to acquire these assets directly. This sort of certificate is one of the structured financial products issued by banks or organisations that meet the applicable legal framework requirements.