Saudi bourse changes closing price calculation for shares

Move to limit excessive speculation and manipulation in the Gulf region’s largest stock market

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Saudi Arabia’s stock exchange introduced on Sunday a new method for calculating the closing prices of traded shares, to limit excessive speculation and manipulation in the Gulf Arab region’s largest stock market.

The Saudi government has been considering opening its bourse to direct investment by foreigners for years. No timetable has been announced, but market participants hope a series of slow changes to the regulatory framework, bringing it closer to international standards, will pave the way for the opening.

The closing price of a stock has in the past been the price of the last trade with a value exceeding 15,000 riyals ($4,000).

In future, the closing price will be the average of all trades in the final 15 minutes, weighted by the volume traded at each price.

“The new method is part of efforts to increase market efficiency and limit the possibility of closing prices of listed stocks being influenced,” the exchange said in a statement.

Last year Mohammed bin Abdulmajid Al al-Sheikh, head of the Capital Market Authority, said the regulator was trying to limit “high levels of speculation” in the stock market, where nearly 93 percent of daily trading was conducted by retail investors.

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