Nasdaq has launched a new index to track the performance of the banks that have been singled out as being global systemically important banks (G-SIBs) by the Financial Stability Board (FSB) and Basel Committee on Banking Supervision, the exchange operator said Monday.

The KBW Nasdaq Global Bank Index represents the first new product launched as part of a collaboration between Nasdaq and New York-based specialist investment bank Keefe Bruyette & Woods (KBW), which was announced earlier this year.

“Global banks trade together, significantly different than their domestic peers and until now, there hasn’t been an index available in the marketplace that exclusively tracks this specific universe,” said Fred Cannon, global director of research at KBW.

“The GBKX is a substantial benchmark index, as our research shows G-SIBs trade at a lower valuation than domestic banks, even when adjusting for profitability. This is due to the unique global regulatory structure that G-SIBs operate under that exposes them to additional risks and capital requirements which domestic banks are not restricted by.”

The new index, which is equally weighted, and denominated in U.S. dollars, currently includes 28 banks and will be rebalanced quarterly. Membership in the index will be updated annually in December, after the FSB and the Basel Committee update their list of G-SIBs each November.

In addition to the main index, the firms are also launching two total return versions — the KBW Nasdaq Global Bank Total Return Index and KBW Nasdaq Global Bank Net Total Return Index.

At this point, the 28 banks in the index represents 45% of the global investable banking universe and accounts for approximately US$3 trillion in total market cap, the firms report. So far, none of the Canadian banks have been designated G-SIBs by the FSB.

“The KBW Nasdaq Global Bank Index is an incredibly important benchmark for market participants who are interested in monitoring the health of international financial institutions,” said Salil Donde, executive vice president, Nasdaq Global Information Services. “This is the first of many new and innovative products to be developed as a result of our strategic partnership with KBW.”