Announcement Regarding Implementing a New Mechanism for Opening and Closing Price Calculation
In its pursue to protect investors and enhance market efficiency in line with global best practices, the Saudi Stock Exchange (Tadawul) will implement the auction mechanism to calculate the closing price instead of the current Volume Weighted Average Price (VWAP), in addition to enhancing the current mechanism to calculate the opening price; effective from Sunday 12/9/1439 corresponding to 27/5/2018 for both the Main Market and Nomu – Parallel Market.
Calculating the closing price through an auction mechanism will provide the most accurate price formation for listed equities, thus, enabling investors to determine the price of securities through participating in the auction by placing bid and ask orders. Accordingly, a new session will be added after the trading session starting at 3:00 pm and ending at 3:10 pm.
Moreover, enhancements to the opening price mechanism will give investors transparency in the visibility of placed orders (Market Orders) which will be displayed at the top of the order book at best offer and best bid.
With this change, auction mechanism will be the standard used to determine both the opening and closing prices for both equity markets.
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