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26/10/2020
Tadawul Announces Enhancements to Negotiated Deals and Fluctuation Limits Mechanism for Newly Listed Securities on the Main Market and All Listed Securities on Nomu-Parallel Market on an Ongoing Basis
The Saudi Stock Exchange (Tadawul) today announces enhancements to the requirements governing Negotiated Deals and the Fluctuation Limits mechanism effective from 8 November 2020 on the Main Market and Nomu-Parallel Market. The enhancements to the Fluctuation Limits will be applied only on the first three days of trading newly listed security in the Main Market and on an ongoing basis for all listed securities in Nomu-Parallel Market.
Negotiated Deals
The changes to the minimum size requirement for Negotiated Deals will be based on each listed security’s characteristics.
The new procedures stipulate that equities or REITs listed on the Main Market will be grouped into four tiers where every tier will have its own minimum size requirement, defined as below:
The new procedures stipulate that equities or REITs listed on the Main Market will be grouped into four tiers where every tier will have its own minimum size requirement, defined as below:
|
Tier |
Minimum size requirement for the negotiated deal (SAR) |
The range (in SAR) for the average daily trading value for the previous six months |
|
Tier One |
5,000,000 |
More than or equal to 50 million |
|
Tier Two |
3,000,000 |
More than or equal to 5 million, and less than 50 million |
|
Tier Three |
1,000,000 |
More than or equal to 1 million, and less than 5 million (or newly listed equities and REITs) |
|
Tier Four |
300,000 |
Less than 1 million |
The list of equities and REITs in each tier will be updated at the end of Q2 and Q4 of each year to reflect changes in market activity. Upon launching these enhancements, the classification of securities into tiers will be based on the average daily traded value for the first six months of 2020 (January 1st – June 30th), reclassification of securities into tiers will based on the average daily traded value for the previous six months from January 2021 onwards on a semi-annual basis.
For Nomu – Parallel Market, the minimum size requirement will be SAR 300,000 for all listed securities regardless of the Average Daily Traded Value. Further, companies transitioning from Nomu to the Main Market will be treated as newly listed companies, with a minimum size requirement of SAR 1 million for at least the first six months after transition.
Fluctuation Limits
The changes in the Main Market include the following:
• Daily Price Fluctuation Limits to be expanded from +/- 10% to +/- 30%,
• The introduction of Static Price Fluctuation Limit, which, once the price of a security reaches 10% upwards or downwards, triggers a volatility auction, and a new static limit is set based on the volatility auction reference price.
• Introduction of a 5-minute volatility auction, which is an auction that is triggered whenever a static limit is reached, and could happen several times during trading, resulting in the formation of a static price limit based on the new reference price
The changes in the Main Market include the following:
• Daily Price Fluctuation Limits to be expanded from +/- 10% to +/- 30%,
• The introduction of Static Price Fluctuation Limit, which, once the price of a security reaches 10% upwards or downwards, triggers a volatility auction, and a new static limit is set based on the volatility auction reference price.
• Introduction of a 5-minute volatility auction, which is an auction that is triggered whenever a static limit is reached, and could happen several times during trading, resulting in the formation of a static price limit based on the new reference price
These changes will be applied in the Main Market only for the first three days of trading a newly listed Equities, Real Estate Investment Traded Funds and Closed-ended Investment Traded Funds, and from the fourth trading day onwards, the Daily Price Fluctuation Limits will revert back to +/- 10% and the Static Price Fluctuation Limits will no longer apply.
For the Nomu-Parallel Market, the changes will include the following:
• Daily Price Fluctuation Limits to be expanded from +/- 20% to +/- 30%,
• The introduction of Static Price Fluctuation Limit, which, once the price of a security reaches 10% upwards or downwards, triggers a volatility auction, and a new static limit is set based on the volatility auction reference price.
• Introduction of a 5-minute volatility auction, which is an auction that is triggered whenever a static limit is reached, and could happen several times during trading, resulting in the formation of a static price limit based on the new reference price
• The introduction of Static Price Fluctuation Limit, which, once the price of a security reaches 10% upwards or downwards, triggers a volatility auction, and a new static limit is set based on the volatility auction reference price.
• Introduction of a 5-minute volatility auction, which is an auction that is triggered whenever a static limit is reached, and could happen several times during trading, resulting in the formation of a static price limit based on the new reference price
These changes will be applied in Nomu-Parallel Market on an ongoing basis for all listed securities.
Tadawul will also introduce extensions to the opening and closing auctions, when a security’s price is at the upper or lower limit (+/- 10%) of the theoretical price or if the theoretical opening and/or closing price is not formed.
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