Dramatic changes were made to the benchmark and domestic indices used by most investors last year, say analysts at Deutsche Bank. “Index providers have effectively converged in terms of general methodology and this has influenced the local indices as well,” the bank says in a report.
Looking ahead at the various competing index providers, MSCI is likely to retain its dominance of the institutional benchmarking market, the analysts predict. They put this probable success down to the provider’s move to free float and the expansion of stocks within the indices, which has answered many criticisms.
The most interesting development area for FTSE, in the analysts’ view, has been its ability to forge relationships, thereby winning new users for its indices and methodology.
STOXX, which has taken little time to create a dominant position in the market for European traded indices, is likely to maintain its high profile due to the strength of its brand name, the bank says. Provider Standard & Poor’s, however, has not made a significant impact on Europe as yet. It needs to convince investors of its long-term strategy of a derivatives-based approach to trading a global benchmark, says Deutsche.