Abu Dhabi Securities Exchange (ADX) will start implementing new big blocks market from March 3 to enforce transparency and demonstrating the depth of the market.
Rashed Al Baloushi, Deputy Chief Executive and Director of Operations, said that some trades with large volumes which may be for strategic reasons, are often pre-arranged deals due to their size and nature. Trading them through the regular market may not reflect their actual prices and circumstances. Hence, ADX decided to facilitate these type of transactions to improve transparency and disclosure which ADX gives a high priority.
Rashid Al Baloushi explained that in order to qualify, big block trades must meet four conditions: The number of shares to be traded must not be less than (1%) of the capital of the company; the initiator of the trade must be one person only while the counter-parties could be numerous, not exceeding 10 investors; the price of the transaction should not differ by more than (25%) of the previous closing price; and big blocks trades are subject to the transparency and disclosure rules applicable on the ADX.
Al Baloushi added that this step would create momentum hoping to move forward the development of more products. ADX has adequate resources in term of technology and human capital to enable the successful development of the services provided to investors to be in par with international standards .
Big blocks will be traded through brokers during normal trading hours and will be displayed in a separate market watch however, big block prices will not affect the closing price of the security nor will they be included in the index or high and low statistics. The Emirates Stocks and Commodities Authority (ESCA) was consulted before granting the approval.