Abu Dhabi Securities Exchange (ADX) has announced the start of trading with the new tick size for stocks of companies with share price of less than AED 1.00 after successful testing of all internal systems, and technical and operational procedures relevant to operating tick sizes.

ADX began operations today with the new tick sizes which consist of five units: AED 0.0001 for shares within the price range of AED 0.1 to 0.99 AED; AED 0.01 for a price range of AED 1 to AED 9.99; AED 0.02 for a price range of AED 10 to AED 49.98, AED 0.05 for shares within the price range of AED 50 to 99.95, and AED 0.10 for shares at AED 100 and above.

Chief Executive of ADX, Rashed Al Blooshi, affirmed the Exchange’s commitment to developing its operations and launching strategic initiatives that contribute to the Abu Dhabi Economic Vision 2030. Upgrading the tick size will enhance liquidity, increase trading among investors, and encourage them to buy and sell shares within the legal and transparent framework ADX provides.

Al Blooshi said: "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."

ADX upgraded the tick size based on a detailed study conducted from the beginning of the year until mid-May of listed companies’ performance and market trading activity. At the time of the study, there were 17 companies listed on ADX with a share value of less than AED 1.00, with their value of trading reaching AED 3 billion, representing 23 percent of the total trading value on the Exchange (AED 13 billion) at the time of the said study. ADX also conducted a survey among brokers concerning the upgrade in tick size, which resulted with the finding that 70 percent of brokerage firms were in favor of the upgrade.

ADX carried out numerous tests for its internal systems to ensure that all technical and operational procedures were aligned with the upgraded tick size. Tests included measuring the systems that take orders, the validity of the information received, as well as examining the internal reports and levels of change. In addition, ADX updated all the reports and systems that may be affected by these changes, specifically on the Exchange’s website.

Al Blooshi stressed ADX's commitment to the Abu Dhabi plan in developing the investment climate of the Emirate to attract investment, and creating a flexible and competitive environment for business. Al Blooshi added: "ADX continues to strive to provide innovative products and services based on global best practices in disclosure, transparency, and corporate governance."

ADX has issued a circular to brokerage firms to amend the tick size for stocks of companies with a share price of less than AED 1.00. Furthermore, the Exchange requested of brokerage firms and data providers to ensure they update their internal systems that take orders, calculate commissions, and produce customer statements in order to start operating the new tick sizes starting September 2, 2018.

The tick size represents the minimal incremental price movement change of a company that can be allowed by the Exchange. Prior to the upgrade, ADX had three tick size categories: 0.01 for securities within the price range from AED 0.01 to AED 10 and 0.05 for the price range between AED 10.05 and AED 100, and 0.10 for securities from AED 100.10 and above.

ADX launched its technical short selling service as the first market in the region to offer this service, in line with its strategy to increase liquidity levels as well as diversify investment and hedging instruments in order to better attract domestic and foreign investors. The market already successfully attracted more investors, as by the end of the first half of 2018 the number of investors registered in ADX totaled around 966,000, with 60 percent being Emiratis and 40 percent non-Emiratis. In addition, more than 7,900 local and foreign investment institutions are operating on the Exchange, where 2,008 are local and 5,913 are foreign. The market capitalization of the listed companies reached AED 485 billion at the end of the first half of 2018 compared to AED 455 billion in the same period of 2017, resulting in an increase of 6.5 percent.

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