BHBNewsLetter June 2019

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Issue 20 - JUNE 2019
BAHRAIN CLEAR JOINS BENEFIT’S EFTS SYSTEM
BAHRAIN BOURSE IMPLEMENTS SMALLER TICK SIZE FRAMEWORK
Bahrain Clear (‘BHC’), a fully
owned subsidiary of Bahrain
Bourse signed a cooperation
agreement with “BENEFIT”, the
leading electronic transactions
company, under which Bahrain
Clear will join the Electronic
Fund Transfer System (EFTS).
The agreement was signed by
Vice Chairman and Managing
Director of Bahrain Clear Sh.
Khalifa bin EbrahimAl-Khalifa, and
BENEFIT’s Chief Executive
Officer (CEO), Abdulwahed
In accordance to the best
international standards & glob-
al practice, and as part of its ef-
forts to enhance market liquidity,
Bahrain Bourse announced the
implementation of a new
tick size framework which
AlJanahi. The agreement allows
investors, brokers, custodians and
issuers to pay fees and commissions
of all services provided by
Bahrain Clear, smoothly and in
a secure manner. The service will
be available to the public through
Fawateer’s service on all e-banking
p l a t f o r m s . Th r o u g h o u t
t he ag re ement , BENEF IT
seeks to provide ancillar y
services for the financial sector
in the Kingdom of Bahrain.
BENEFIT was established in
November 1997 by 17 commercial
banks as the National ATM and
Point of Sale switch of Bahrain.
It was initially licensed by the
Central Bank of Bahrain (CBB)
to be ‘the provider of ancillary
services for the financial sector. It
specialises in the development of
innovative e-payment solutions,
and provision and management
of multiple electronic channels
for payment and settlement
of dues, bills and transfers.
It is worth noting that Bahrain
Clear was established in June
2017 as a clearing house licensed
by Central Bank of Bahrain.
Bahrain Clear is a fully owned
subsidiary of Bahrain Bourse with
a disclosed capital of 5 million
Dinars, and a paid up capital of
1 million Dinars. Bahrain Clear
offers pre and post trade services
to investors as well as a range of
services including transactions
depository, clearing, settlement,
central registry and registration.
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 compa-
nies traded in USD) represents a
major percentage change in value.