Saudi stock exchange to triple daily trading limits for new listings

Starting November 8, newly listed stocks, will be allowed to rise or fall 30% on their first three days of trading

  
An investor walks past a screen displaying stock information at the Saudi Stock Exchange (Tadawul) in Riyadh, Saudi Arabia June 29, 2016.Image used for illustrative purpose.

An investor walks past a screen displaying stock information at the Saudi Stock Exchange (Tadawul) in Riyadh, Saudi Arabia June 29, 2016.Image used for illustrative purpose.

REUTERS/Faisal Al Nasser

In an announcement regarding the enhancements to the requirements governing negotiated deals and the fluctuation limits mechanism on the main market and Nomu-Parallel Market, Saudi Arabia’s stock market Tadawul said it will triple the daily trading limits for companies making their debut from November 8.

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.

Starting Nov. 8, newly listed stocks, will be allowed to rise or fall 30 percent on their first three days of trading, up from the current 10 percent limit. The daily limits will revert to 10 percent from the fourth day, Tadawul said in a statement.

For the Nomu-Parallel Market, the changes will include the following:

1) Daily Price Fluctuation Limits to be expanded from +/- 20% to +/- 30%,

2)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.

3) 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.

(Writing by Seban Scaria; editing by Daniel Luiz)

(seban.scaria@refinitiv.com)

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