Frankfurt - The Frankfurt Stock Exchanged altered its rules Friday to prevent its three main indexes ever being distorted again by a crisis like this week's short squeeze on Volkswagen.

Stock in the German carmaker tripled on Monday and Tuesday to 1,000 euros a share after luxury car company Porsche revealed it owned or had options on 74 per cent of the stock. In August the stock had hovered near 200 euros.

Deutsche Boerse, the company running the exchange, this week ordered Volkswagen's market capitalization weighting reduced from 27 to 10 per cent in the 30-share DAX.

Beefing up that rule Friday, it said a stock would be dropped completely from the index if its capitalization exceeded 10 per cent of the DAX at the close of a day's trading or if its 30-day volatility exceeded 250 per cent.

That would imply reducing the index to 29 shares, taking pressure off index-tracker investment funds which attempt to mimic the changes in the index. The rules also apply to two other indexes, the MDAX and SDAX.

Normally the indexes are only reshuffled on certain fixed dates every few months.

The rule change came after protests from funds that the situation was unfair. There have also been calls for German law to be changed so that companies such as Porsche would have to disclose their positions earlier.

The shortage of Volkswagen stock drove hedge funds to desperately buy the shares this week almost regardless of price. Porsche said later it would release some options to ease the price.

On one day, when most other stocks plunged, Volkswagen rose and the DAX as a result closed 10 per cent higher. (dpa)