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Frequently Asked Questions

What are the fluctuation limits during the closing auction?

The closing auction fluctuation limits are the same fluctuation limits applied during the trading day (+/- 10%). They are calculated based on the reference price (previous day’s closing price).

 

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.

Who is responsible of collecting trading commissions?

Trading commissions will be collected by the executing broker.

What are the transfer fees?

SAR 20 per issuance transferred.

How is the opening price determined for Equities?

The opening price is determined through an opening auction. During the opening auction investors may place orders (bid/ask). The trading engine will determine an equilibrium price at which all possible matching orders are executed at the end of the auction (uncross). The execution price is the opening price.

When is the opening auction?

The opening auction starts at 9:30am and ends at 10:00am. The market opening is randomized on a daily basis between 10:00:00am and 10:00:30am.

How is the closing price determined for Equities?

The closing price is determined through a closing auction, similar to how the opening price is determined in the opening auction. 
The closing auction is a session after continuous trading where investors may place orders (bid/ask). The trading engine will determine an equilibrium price at which all possible matching orders are executed at the end of the auction (uncross). The execution price is the closing price and becomes the next day’s reference price.   
The closing price is calculated based on normal trades only (SAR15,000 and above). If there are no trades during the auction, then the closing price is the last traded price (LTP) during continuous trading. If there are no trades during the day, the closing price is the previous day’s closing price.

When is the closing auction?

The closing auction starts after continuous trading at 3:00pm and ends at 3:10pm. The market closing is randomized on a daily basis between 3:10:00pm and 3:10:30pm.

When will the closing price be determined?

The closing price will be determined during the closing auction and will be disseminated to the market at the end of the closing auction, at 3:10pm. The market closes randomly every day within 30 seconds after 3:10 PM, between 3:10:00 and 3:10:30 at maximum. 

Which securities apply a closing auction mechanism to determine the closing price?

The closing auction is applied to the Main Market and Nomu – Parallel Market as well as tradable rights.

What type of orders are permitted during the closing auction?

Permitted: Limit orders, market orders, hidden orders and session orders. 

Do negotiated deal trades affect the closing price?

Negotiated deals do not affect the closing price.

Does the closing auction affect indices calculation?

The closing price determined by the closing auction is the last traded price of the day; therefore, indices calculations are updated accordingly. 

 

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

If there are no trades during the day, the closing price is the previous day’s closing price.

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

If there are no trades during the auction, then the closing price is the last traded price (LTP) during continuous trading. 

 

What is the Global Industry Classification Standard (GICS)?

The Global Industry Classification Standard (GICS) was developed by Morgan Stanley Capital International (MSCI) and Standard and Poor’s (S&P) in 1999 in response to the global financial community’s need for a reliable, complete and standard industry classification system. The GICS methodology is widely accepted as the industry analysis framework for investment research, portfolio management and asset allocation. Its universal approach to industries worldwide has contributed to increased transparency and efficiency in the investment process. The GICS has become an industry model widely recognized by market participants worldwide.The GICS structure has four levels of detail: 11 sectors, 24 industry groups, more than 60 industries, and more than 150 sub-industries.

What does it mean that GICS is a "market-oriented" classification system? Why does that matter?

There are two approaches to industry classification: production-oriented and market-oriented. The emergence of the service era and the availability of global communications have changed the market focus from producers to consumers. In today’s economy, for example, drawing the line between goods and services is increasingly difficult and arbitrary, as almost all goods are sold with a service. Thus, the distinction between consumer goods and services has been replaced by the more market-oriented sectors of “Consumer Discretionary” and “Consumer Staples,” which both contain goods and services sub-industries.

Describe the hierarchical categories of the GICS.

The GICS structure currently has four levels of detail: 11 sectors, 24 industry groups, more than 60 industries, and more than 150 sub-industries. Since the classification is hierarchical, at each of the four levels a company can only belong to one grouping.

How companies are allocated to its relevant sectors?

Companies are allocated to Sub‐Industries according to the definition of its principal business activity that generate the majority of the company’s revenues. Sub‐Industries are grouped into Industries in such a way that general industrial and economic themes are common to all companies in the Industry. The Industries themselves are aggregated into Industry Groups, which in turn are aggregated into Sectors.

How will New Sector Indices be created?

New Tadawul Sector Indices will be created based on GICS  Level 2 (Industry Group). The base date will be 8th of January. Pre Open value for New Sector Indices will be 5000 points (Base Value), to allow for better performance comparability given one unified starting point. For more info availability, New Sectors Indices will have a calculated history for 1 year backwards. As they are new, Change and Change % for New Sector Indices will start being published on the 2nd day of the creation of these indices.

What will happen to Tadawul’s old Sector indices?

Old sector indices will be discontinued. However, historical values will still be available for any historical analysis.

Why is this global classification system important?

The GICS was developed and is maintained by two leading global index providers. It has been specifically designed to classify companies globally – in both developed and developing economies. The GICS is designed to meet the needs of the investment community for a classification system that reflects a company’s financial performance. GICS provides global coverage of over 44,000 + active, publicly traded companies.

How will Tadawul’s Equity Market look like after the GICS adoption?

Previously Tadawul equity market consisted of 16 Sectors. After the GICS adoption Tadawul equity market will be based on 20 Industry Groups, which is Level 2 (Industry Group) in GICS hierarchical classification system.

Will Tadawul equity market be mapped to all 4 GICS levels?

Yes, however, only sector (Level 1) and industry groups (Level 2) will be published on the website.

How frequently are companies reviewed for potential GICS changes and how often does a company's GICS classification generally change?

Companies are reviewed annually upon publishing their annual reports to ensure that a company’s allocation is still relevant to its main line of business. Companies are also under constant surveillance for corporate actions. In general, a company’s classification will change owing to either changes in revenue sources or due to a major corporate action that redefines a company's primary line of business.

Who uses the GICS and how pervasive is the GICS in the international investment community?

There has been significant adoption of the GICS standard across all major groups involved in the investment process, including: Asset Managers, Brokers (institutional and retail), Consultants, Research, and Stock Exchanges. Globally the Investment community uses the GICS across the full spectrum of equity market management – including asset management, sector research, portfolio strategy, peer analysis, and client account reporting. The use of the GICS enables market participants to identify and analyze companies using a common global standard.

Which particular advantages do strategists, analysts and investors draw upon in applying the GICS across their analysis and global benchmark selection?

The use of this global standard helps strategists, analysts and investors compare companies outside of their local markets.The GICS establishes a common standard that enables asset owners, asset managers and investment research specialists to make local and global comparisons by sectors. The standardized classification system permits foreign investors to look into local markets and local investors to look out at the rest of the world when comparing stocks within the same sector. The GICS defines peer groups tightly and avoids grouping unlike companies together.

How adaptable is the GICS structure over time to Economic Changes?

The four-level GICS structure reflects equities in today’s global investment environment, yet is flexible enough to capture tomorrow’s developments. As the global economy changes, sectors, industry group, industries and sub-industries can be added or divided.

What are the advantages of applying the new (T+2) settlement cycle?

  • Increasing levels of asset safety for investors, and providing enough time to verify transactions and deal with errors should they occur. 
  • Activating the role of market makers in the stock market.
  • Aligning the Saudi Stock Market with leading global settlement practices, which will open up new listing opportunities for the Saudi market among other global market indexes. 
  • Developing an investment environment that promotes institutional-level investments and meets necessary requirements for coping with any future changes. 
  • Allowing short selling on condition of borrowing equities.

What does the letter (T) stand for? and what does the added number refer to?

The letter (T) stands for the term (Trade); i.e. transaction. 
As for the added number, it refers to the duration required for completing the settlement of a transaction.

Which types of securities will the new settlement cycle apply to?

The new settlement cycle will apply to transactions of securities listed in the market of all types (stocks, sukuk, bonds, Exchange-Traded Funds (ETFs), tradable rights), in addition to over-the-counter transactions (OTC).

What is meant by the duration of securities settlement cycle?

It is the period that starts when the sell and buy orders are matched, and ends when securities and cash settlements are completed.

What is the duration for the new settlement cycle of securities’ transactions?

In the new settlement cycle, all types of securities’ transactions are completed after two business days following the transaction execution date; i.e. (T + 2).

Does the transition from (T + 0) to (T + 2) settlement have an impact on traders in the Saudi capital market?

No, there is no impact on traders. Buyers can sell securities directly upon executing transactions with no need to wait for completing the settlement of securities. 
Also, sellers gain purchasing power that enables them to buy new securities directly upon executing transactions with no need to wait for completing the settlement of securities.

What is short selling?

Short selling is the action of selling borrowed securities; provided that the investor returns them to the lender within an agreed upon period.

What is the purpose of short selling?

Short Selling aims to increase liquidity in the market and activate the role of the market maker. It also helps investors in short selling transactions to gain profits.

What is the settlement of securities?

It is the process of transferring securities of executed transactions from the seller’s investment portfolio to the buyer’s investment portfolio.

What is borrowing securities?

Borrowing securities is the temporary transfer of securities from its owner (lender) to an investor (borrower) with an obligation to return them back to their owner at a future agreed upon date. A borrower shall provide and maintain financial collateral as agreed with the lender and shall at all times be not less than 100% of the current market value of the borrowed securities. The value of the collateral provided may be amended at the discretion of The Capital Market Authority.

What is the settlement of cash?

It is the process of transferring the value of securities for executed transactions from the buyer’s investment account to the seller’s investment account.

When is a settlement of securities completed?

A settlement is complete when securities and cash settlements are complete.

How is a transaction executed?

A transaction is executed by matching the sell order with the buy order.

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.

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.

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.

Can orders be cancelled or amended during the closing auction?

Yes, orders can be cancelled or amended during the closing auction.

What will happen if the order is not matched during continuous trading?

The order will move to the closing auction.

Can orders be placed after the closing auction (after 3:10pm)?

No. Orders can only be cancelled or amended after the closing auction.

 

Where are the closing prices displayed on Tadawul’s website?

Companies Detail Quote
Historical Data (Performance Summary)
Detail Quote Non Adjusted
Last 6 traded days 
The closing prices are displayed in the following reports:
Daily Report
Weekly Report
Monthly Report
Quarterly Report
Annual Report
Daily Financial Indicators