Tadawul applies changes to opening and closing price mechanism

The Saudi Stock Exchange (Tadawul) will implement changes to its opening and closing price mechanism as of today, May 27, Mohammed Al Rumaih, chief sales and marketing officer at Tadawul, told Argaam. 

Changes to the methodology for determining opening and closing prices apply to both the Main Market and Nomu - Parallel Market.

These include moving from a Volume Weighted Average Price (VWAP) to an auction method for determining closing prices, and enhancing the opening price auction in line with practices adopted by most other major markets.
 
The previous VWAP methodology for determining closing prices has been replaced by a 10-minute auction after the end of continuous trading (3 pm local time in Riyadh), during which investors determine the price of securities through participating in the auction by placing bid and ask orders.

Opening prices will continue to be determined by auction, but market orders will be displayed unpriced at the top of the order book during the auction period, and a single index opening value will be published after all order books have uncrossed.

Both the market open and market close times will be randomized within 30 seconds after official open (10am local time in Riyadh) and close (3:10pm local time in Riyadh) times to further enhance investor protection and market soundness.

The planned changes to the opening and closing price mechanism were first announced by Tadawul on Jan. 10, 2018 as part of a series of measures to improve market access and efficiency, enhance liquidity, bolster investor security, mitigate risk and further align market practices with global best practices.