ADX Hosts Orientation Presentation On New Trading Mechanism

31/12/2012

Abu Dhabi Securities Exchange (ADX) organized a presentation on its new and upcoming trading mechanism for media personnel.

The implementation of the new trading mechanism known as “Call Auctions”, which is used in several other countries, will begin from January 2. Mr. Abdullah Salem Al Naimi, manager of market surveillance at ADX conducted the orientation session. The new mechanism will be based on calculating the closing prices and its shift to a new Free Float Index. The migration from the current system of Volume Weighted Average Price (VWAP) will help ADX operate more seamlessly with global systems.

There will be a pre-closing auction session from 1:50pm to 2pm. During this period, brokers will be allowed to enter orders of buy or sell into the automated system as well as change them but without executing them.

Rashid Al Baloushi, CEO of ADX, said earlier: “ADX has opted to adopt Call Auctions to determine closing price for a stock, especially that the closing price of securities is widely used by market participants as a benchmark for portfolio valuation as well as index calculation”.

Al Baloushi also said that ADX shift to a Free Float Index will take into consideration only the free float market capitalization. “We have opted for this shift because a Free Float Index construction takes into consideration only the free-float market capitalization of a company for the purpose of index calculation and assigning weight to stocks in the index.”