Abu Dhabi Securities Exchange introduces new tick sizes for smaller stocks

Abu Dhabi Securities Exchange (ADX) has announced the start of trading with new tick sizes for the stocks of companies with a share price of less than Dhs1 ($0.27).

The announcement follows testing of internal systems and procedures in recent months including a detailed study conducted from January to mid-May.

ADX began operations with the new tick sizes on Sunday.

They are Dhs0.0001 for shares within the price range of Dhs0.1 to Dhs0.99 – Dhs0.01 for a price range of Dhs1 to Dhs9.99 – Dhs0.02 for a price range of Dhs10 to Dhs49.98 – Dhs0.05 for shares within the price range of Dhs50 to 99.95 and Dhs0.10 for shares at Dhs100 and above.

Prior to the upgrade, ADX had three tick size categories: Dhs0.01 for securities within the price range from Dhs 0.01 to Dhs10 and Dhs0.05 for the price range between Dhs10.05 and Dhs100 and Dhs0.10 for securities from Dhs100.10 and above.

The stock exchange’s CEO Rashed Al Blooshi said raising the tick size would boost market liquidity, increase trading among investors and encourage them to buy and sell shares.

“Introducing the upgrade on the tick size will further enhance the pricing model, as well as strengthen market liquidity by providing greater value to current and future investors,” he said.

At the time of the study, the 17 firms on the ADX with a share value of less than Dhs1 accounted for Dhs3bn ($816.7m), or 23 per cent of trading on the exchange.

The company said 70 per cent of brokerage firms were in favour of the changes.

A circular has been issued to all brokerages to amend their tick size for stocks of companies and update their internal order systems.

ADX launched technical short selling in October last year to boost liquidity.

Read: Abu Dhabi bourse starts technical short-selling to boost liquidity

The market capitalisation of companies listed on the exchange rose 6.5 per cent year-on-year in the first half of 2018 to reach Dhs485bn ($132bn).