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Frequently Asked Questions

At what time will the closing price (VWAP) be disseminated ?

The closing price will be disseminated in the Market Post-Trade state at (03:00:00 PM).

What is the difference between the Last Normal Price and the Value Weighted Average Price (VWAP)?

The Last Normal Price is determined by a trade exceeds SR15,000, whereas the VWAP takes the average price for the last 15 minutes.

Is the (VWAP) methodology applied to all listed market securities?

It is only applied on the equity market.

Where are the closing prices displayed on Tadawul website?

The closing prices are displayed on the following pages:

  1. Companies Detail Quote
  2. Historical Data (Performance Summary)
  3. Detail Quote Non Adjusted
  4. Last 6 traded days 

The closing prices are displayed on the following reports:

  1. Detailed Daily Report
  2. Daily Report
  3. Weekly Report
  4. Monthly Report
  5. Quarterly Report
  6. Annual Report
  7. Daily Financial Indicators

What are Exchange Traded Funds, how and when they started?

ETFs are investment funds divided into equal units that are traded on the exchange during trading time. ETFs enjoy advantages of both mutual funds and stocks at the same time without any major disadvantages.

ETFs entered global markets for the first time in 1989 through the Canadian market followed by the U.S. in 1993. Since then ETF have enjoyed rapid growth, the ETF asset under management (AUM) have increased from $72 billion in 2001 to $700 billion by the end of 2009 in the U.S. market alone.

How can investors buy the Exchange Traded Funds ETFs?

Investors can buy and sell ETF units throughout the exchange trading time. The units can also be created / redeemed through the market maker or any other authorized party.

Is there any upper or lower limits on the number of the Exchange Traded Funds( ETFs) units that an investor can buy or sell?

Minimum ETF units that an investor can purchase over the exchange is one unit, whereas creation of ETF units would be as per ETF terms and conditions.

What are the differences between Exchange Traded Funds( ETFs) and mutual funds?

CATEGORY ETFS MUTUAL FUNDS
Transparency More Less
Flexibility More Less
Cost Less More
Diversification More More

 

What are the benefits of investing in the Exchange Traded Funds ETFs?

In general, the investors could gain from the increase in the value of the underlying assets of the ETF in addition to any dividends paid.

Is there a relationship between the Exchange Traded Funds( ETFs) performance and the performance of the underlying stocks of the ETF?

Yes, there is a direct relationship between the performances of the ETF NAV and the value of underlying assets. Whenever the underlying stocks market value increases the ETF NAV increases.

Are there any commissions or other administrative expenses borne by the buyer or seller of these units?

The cost of buying and selling the Exchange Traded Funds( ETFs) units is 12 basis points per trade value.

Do the Exchange Traded Funds( ETFs) investors get dividends in-kind or in cash?

This is decided according to the policy of ETF as disclosed in the prospectus.

Based on which price is the next day’s fluctuation calculated?

It is calculated based on the previous day’s closing price (VWAP)

Does the unit price of the Exchange Traded Funds( ETFs) equal the stock prices of the underlying constituent of the ETF?

One must clearly distinguish between the trading price of the ETF units which is subject to supply and demand and the value of net assets (NAV) of the unit which represents the market value of assets consisting of the ETF unit. Often buying and selling of ETF units happen at a price very close to the value of net assets.

Would the Exchange Traded Funds( ETFs) prospectus be available before the ETF starts trading on the primary and secondary markets?

Yes it will be available, The Fund Manager, as per Capital Market Authority regulations particularly ETF regulations, is obliged to provide the ETF prospectus and the terms and conditions an adequate period ahead of the ETF trading.

What are the risks that investors may face by investing in the Exchange Traded Funds( ETFs)?

The risks that investors may face by investing in ETF are the same as that of investing in securities. However, due to benefits of diversification, risks of investing in ETF may be less.

Are the Exchange Traded Funds( ETFs) limited to stocks only?

No, ETFs are not limited to the stocks only they may also include other instruments or commodities such as gold and silver. However, in the initial phase of this product, ETFs will be limited to Saudi equities only.

Who will be the provider of the Exchange Traded Funds( ETFs)?

Authorized participants having Asset Management license issued by the Capital Market Authority.

Are there any limits to the ownership of the Exchange Traded Funds( ETFs)?

No, it is subject to ETF  available volume in the stock market.

Would all categories and nationalities be allowed to invest in the Exchange Traded Funds( ETFs)?

Yes, ETFs will be available to all categories of investors who are registered to trade in the exchange. 

Would the Exchange Traded Funds( ETFs) owners have the right to attend assemblies and vote?

ETFs are managed completely and directly by the fund manager and subject to the Investment Fund Regulations issued by the Capital Market Authority (CMA), therefore no general assembly is arranged for these funds.

Would the transfer process be available between the customer's portfolios?

Yes, with the same terms and conditions of the transfer of shares.

How would the Exchange Traded Funds( ETFs) units be priced in the secondary market?

The ETF will be priced at NAV upon listing on the secondary market, then going forward ETF unit price will be determined by the market forces (supply and demand). 

How is “the change price” of a stock calculated?

There are 2 states:

  1. Market Open (from 10:00:00 AM to 03:00:00 PM): the change is calculated based on the last price and the previous day’s closing price (VWAP).
  2. Market Post-Trade (03:00:00 PM) : the change is calculated based on today’s closing price (VWAP), and the previous day’s closing price (VWAP).

When does the Exchange Traded Funds( ETFs) expire and be delisted from the market?

Upon redemption of all ETF units by the Fund Manager.

Can an authorized participant issue more than one the Exchange Traded Funds( ETFs) at a time or at different times?

Yes, an authorized participant can issue more than one ETF, at the same time, based on different styles or strategies.

Can an authorized participant issue ETFs consisting of local and international shares?

Yes, after the approval of Capital Market Authority (CMA).

What are the most popular international markets for the Exchange Traded Funds( ETFs)?

ETFs are generally traded in the international markets however ETFs are traded more actively in the United States, Canada and Germany. 

What are the procedures to open a Depository Center Account for a qualified foreign investor (QFI)?

A QFI can open a Depository Center account through the Exchange member after completing the following requirements:

  • QFI details form.
  • A copy of the certificate of incorporation or commercial register or an equivalent document.
  • Registration/approval notification issued by the CMA pursuant to QFI rules.
  • Disclosure of the QFI’s affiliates investments in listed shares.

How should the Exchange member submit the Depository Center Account’s requirements?

The Exchange member should send the requirements to the Exchange in both printed and electronic froms. The electronic copies should be sent to the following email address: qfi@tadawul.com.sa

Where will foreign ownership information be available, and how often will it be updated?

Foreign ownership information will be available on Tadawul website, and it will be updated on daily basis after market close.

How will foreign ownership information be displayed on Tadawul’s website?

Under the QFI page, a foreign ownership limit section will have:

  • Maximum ownership percentage per issuer and existing ownership percentage per issuer by all QFI’s.
  • Maximum ownership percentage per issuer and existing ownership percentage per issuer by all foreign investors.
  • Total ownership of QFI’s and swaps as a percentage of total market value.

Under each issuer’s web page, the “Major shareholders Foreigners” ownership section will contain:

  • Maximum ownership percentage for the issuer and existing ownership percentage for the issuer by all QFI’s.
  • Maximum ownership percentage per issuer and existing ownership percentage per issuer for all foreign investors.

How will investment limits in listed companies be disclosed?

Investment limitations set forth in the articles of association or by-laws of the listed companies or any instructions issued by the supervisory or regulatory authorities to which these companies are subject, will be available under each issuer’s profile page; under the label “investment limits”.

How can securities in a swap account be transferred to the Depository Center account of( QFIs)?

To transfer holdings under a swap account to a QFI, the following requirements should be met:

  • CMA’s approval.
  • Filling out the Securities Depository Center transfer form.
  • A certified copy of the certificate of incorporation, and the commercial register or an equivalent document.

What is the closing price in case no trades occurred in the last 15 minutes?

In this case, the closing price is the last normal price before the last 15 minutes.

What are the transfer fees?

SAR 20 per issuance transferred.

What is Tadawulaty?

Tadawulaty is a service offered by Tadawul and includes a bundle of services for investors:
Consolidated Reporting, Electronic Voting, Dividends Entitlement Reports, Expected Dividends Notifications, Shares Certificate Search, and Tender Offers.
You can access Tadawulaty through your member’s website, or at www.tadawulaty.com.sa.

What is the role of the custodian?

The custodian is the investor’s settlement and asset servicing agent in the market. It is used by the investor to support and manage pre and post trading activities in the market. The custodian will be assigned by the investor in the market for the following services:

  • Settlement: guaranteeing the settlement of all investor’s trades in the market. Responsible for receiving/delivering cash/securities.
  • Safekeeping: safeguarding investor’s assets.
  • Corporate actions: administers corporate actions on securities held such as securities dividends, tender offer, rights issue, etc.
  • Cash Management: maintains cash bank accounts, deposits, withdrawals and other cash transactions.
  • Reporting: provides the investor with information and analysis of the positions and performance of his/her portfolios.

Is the Independent Custody service mandatory for investors?

It is not mandatory, the service is optional and investors may choose to use the current custody model (combined brokerage and custody) instead.

Should the custodian transfer securities/cash to the executing member of the Exchange to place an order in the market?

No, The executing member only has “remote” access (without the ability to view the investor’s assets) to enter buy-sell orders on behalf of the investor. All executed trades will be reflected in the investors account held by the custodian. The executing member acts as an execution agent only and retains no investor balance on its own account as a result of any trade.

Who is responsible of collecting trading commissions?

Trading commissions will be collected by the executing broker.

What is the closing price in case no trades occurred during the day?

The closing price is the previous day’s closing price (VWAP).

If the closing price is not within the tick size bands, how can the order be entered outside the tick size bands?

The order should be entered within the tick size bands. For example:

  • The closing price= SAR 106.22
  • The order can be entered as: 106.00, 106.25,106.50 etc..

Does the negotiated deal trade affect the closing price (VWAP)?

The negotiated deal does not affect the closing price.

Does the (VWAP) methodology affect the indices calculation?

The indices are not affected by the VWAP, as they are calculated based on the last normal price method.