Tadawul has introduced new amendments to equity tick sizes and stock split procedures, framed as part of broader efforts to modernize market infrastructure and align with international best practices.

#1- Smaller tick sizes will now apply to a wider range of securities, with a new tier for securities priced at SAR 500 or above, according to a statement (pdf). The revisions — designed to ensure consistent spread levels across different price bands — apply to securities listed on both the main market Tadawul and the parallel market Nomu, excluding debt instruments.

SOUND SMART- Tick size refers to the smallest allowable increment by which the price of a listed security can move. It plays a critical role in determining market liquidity and trading dynamics.

The rationale: The amendments seek to enhance the precision of the price discovery mechanism, improve overall market efficiency, and ease constraints on price spreads, ultimately contributing to lower transaction costs for investors.

Here’s the breakdown:

  • A tick size of SAR 0.01 will now apply to securities priced up to SAR 24.99, with no minimum price threshold;
  • A tick size of SAR 0.02 will apply to securities priced at SAR 25.00-49.98;
  • A tick size of SAR 0.05 will apply to securities priced at SAR 50.00-99.95;
  • A tick size of SAR 0.10 will apply to securities priced at SAR 100.00-249.90;
  • A tick size of SAR 0.20 will apply to securities priced at SAR 250.00-499.80;
  • A tick size of SAR 0.50 will apply to securities priced at SAR 500.00 and above, with no upper limit.

#2- Changes to share quantities and prices will now be reflected in investor portfolios immediately after a stock split, with adjusted shares available for trading starting from the first session following approval, Tadawul said in a separate statement (pdf). The amendment aims to give investors faster access to updated holdings, supporting more timely and informed decision-making.

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