BHB adopts smaller tick size framework

MANAMA: As part of efforts to enhance market liquidity, Bahrain Bourse (BHB) is implementing a new tick size framework which aims to unify all categories of listed financial instruments (excluding debt and T-bill securities) at BD0.001 and $0.001.

The new tick size framework has been designed to mitigate investors risk in the event of price drops and limit excessive disruption to the market.

The new tick size aims to revitalise companies with lower market capitalisation and help incentivise investors due to narrower market spreads.

Investors will also be able to place orders with smaller fractions, which will enable investors to mitigate risks.

Commenting, BHB director of trading operations Abdulla Janahi said, “The new tick size which came into effect last Sunday will allow the unification of the security tick size movements for all the securities traded in BHB’s market. The change of the tick size follows best practice on international trading venues and aligns our market with those standards to ensure its continued competitiveness.”

With the change of the tick size, prices of financial instruments traded on BHB will be determined with a greater precision. This would help narrow market spreads (the difference between the ask price and the bid price) and ensure a more precise market valuation of the instruments.

The change will be particularly relevant for companies with lower market capitalisation, for which a price change by BD0.001 (or $0.001 for companies traded in US dollars) represents a major percentage change in value.



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