RIYADH: The Saudi Capital Market Authority has begun consultations that could change how closing share prices are calculated and how long-listed firms can trade with large accumulated losses, part of a drive to tighten standards in the market.
Saudi Arabia, home to the Gulf Arab region’s largest stock exchange, has been slowly amending its regulatory framework to bring it closer to international standards; market participants hope this will allow the bourse to open to direct investment by foreigners, a step which authorities are considering.
CMA chief Mohammed bin Abdulmalik Al Al Sheikh, who was appointed in February, said last week that the regulator was trying to limit “high levels of speculation” in the stock market and encourage more investment by institutions rather than individuals. The CMA is discussing with industry participants a proposal to calculate a stock’s closing price using the average price in the last 15 minutes of trading, weighted by volume, instead of simply the price of the last trade, it said in a statement on Monday.
The consultation will close on May 31, and follows a study recommending the move that “included global benchmarking and consultation of industry experts”, the CMA added.
A second proposal would begin sanctioning listed firms if their accumulated losses exceeded 50 percent of their capital, as opposed to the current regulation which does so when they hit 75 percent. Reuters
