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New trading system set for Bahrain exchange.

MANAMA: Bahrain Stock Exchange (BSE) plans to implement the new amendments in the trading system concerning the auctional pricing mechanism "ticks size" from June 14.

According to the new price ticks amendments announced recently by BSE, ticks size are categorised according to share price traded in Bahraini dinars to replace the current mechanism that considers one fils as a unified tick size for all shares.

Similarly, shares that are traded in US dollars are also divided into four categories instead of the current mechanism that considers half cent and one cent as ticks size for shares traded.

For the shares that are traded in Bahraini dinars, the first category consists of shares traded within the price range of one fils to 200 fils, where the tick size is one fils only.

The second category consists of shares traded within the price range of 202 fils to 500 fils, where the tick size is 2 fils.

The third category consists of shares traded within the price range of 505 fils to BD1, where the tick size is 5 fils.

The fourth category consists of shares traded at BD1.010 and above, where the tick size is 10 fils.

The shares traded in US dollar are also divided into four categories. The first category consists of shares traded within the price range of half cent to $1 where the tick size is half cent. The second category consists of shares traded within the price range of $1.01 to $2.50 where the tick size is one cent.

The third category consists of shares traded within the price range of $2.52 to $4.50 where the tick size is two cents. The fourth category consists of shares traded at $4.55 and above, where the tick size is five cents.

Head of trading and members' affairs Ebrahim Al Aradi said that BSE has already performed the required technical tests and procedures concerning implementing the new auctional pricing mechanism.

This mechanism is more capable and effective in enhancing the pricing mechanisms at BSE, thereby encouraging more liquidity to invest in shares due to the profit opportunities available for both current and potential investors entering the market.

Mr Al Aradi said, "Once the new mechanism is implemented, investors will have to take in consideration that bid and offer orders as well as the value of the price ticks should match the category of which the share is traded in.

"The electronic trading system has been programmed to reject all orders that do not match the amendments incurred on the price ticks."

Mr Al Aradi confirmed that the previous closing prices on the day prior to implementing the new auctional pricing mechanism will remain in the system without being changed, even if they did not match the new mechanism. This will continue until a transaction takes place on these shares that will change the closing price.

Setting the share's price ticks will be based on the category that will accept the bid and offer in the trading system.

With the new mechanism, investors will be able to move from one pricing category to another as long as the move is within the 10 per cent daily maximum limit allowed for the share price to fluctuate, he said.

He also confirmed that the share price fluctuation will be automatically identified and approximated to fit in the new mechanism provided that the fluctuation does not exceed 10pc up or down from the previous closing.

"Implementing the new ticks size will not affect BSE's main and sub-indices or the market capitalisation of companies listed on BSE. More information on the new auctional pricing mechanism is available on our website: www.bahrainstock.com," Mr Al Aradi said.

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Publication:Gulf Daily News (Manama, Bahrain)
Date:Jun 7, 2009
Words:632
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