Tadawul enhances negotiated deal, fluctuation limit requirements

The Saudi Stock Exchange (Tadawul) announced today, Oct. 26 enhancing the requirements of negotiated deals and fluctuation limits, to be effective as of Nov, 8, 2020 on the main market and Nomu market.

The fluctuation limit enhancements will apply to newly listed securities only in the first three days of trading on the main market, but will always apply for all securities listed on Nomu.

As for the negotiated deals, the changes to the minimum value of negotiated deals will be based on each listed security.

According to the new enhancements, the equities or REITs listed on Tadawul will be grouped into four tiers, where every tier will have its own minimum size requirement, as follows:

The list of equities and REITs in each tier will be updated at the end of Q2 and Q4 of every year to reflect changes in the market activity.

When these enhancements come into effect, the classification of securities into tiers will be based on the average daily traded value for the first six months of 2020. Meanwhile, the reclassification of securities into tiers will based on the average daily traded value for the previous six months, starting from January 2021 onwards on a semi-annual basis.

For Nomu, the minimum size requirement will be SAR 300,000 for all listed securities regardless of the average daily traded value.

Furthermore, 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 five-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 apply only to newly-listed equities on the main market in the first three days of trading a, REITs and closed-ended investment traded funds. As of 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 Nomu, 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 five-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 apply to Nomu on an ongoing basis for all listed securities.

Tadawul will also introduce extensions to the opening and closing auctions, when a security 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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