Bahrain Bourse Implements Smaller Tick Size Framework

Wednesday, May 22, 2019
In accordance to the best international standards & global practice, and as part of its efforts to enhance market liquidity, Bahrain Bourse announced the implementation of a new tick size framework which aims to unify all categories of listed financial instruments (excluding Debt and T-bill securities) at BD 0.001 & USD 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 revitalize companies with lower market capitalization and help incentivize 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 on this occasion, Abdulla Janahi- Director of Trading Operations stated, “The new tick size which came into effect on the 19th of May 2019 will allow the unification of the security tick size movements for all the securities traded in BHB’s market (excluding Debt and T-bill securities). 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 (excluding Debt and T-bill securities) traded on Bahrain Bourse 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 capitalization, for which a price change by BD 0.001 (or US$ 0.001 for companies traded in USD) represents a major percentage change in value.