Saudi Exchange lowers tick sizes to cut investor costs, boost trading efficiency

27/06/2025 04:05 AST

In a move aimed at enhancing market efficiency and reducing trading costs, the Saudi Exchange has revised its tick size structure-the minimum price increments at which securities are traded.

The update, announced on June 26, 2025, applies to both the Main Market and Parallel (Nomu) Market, excluding debt instruments.

For GCC and UAE-based investors active in Saudi markets, this change is expected to offer better pricing, smaller spreads, and lower overall trading costs, especially for high-volume or large-value transactions.

What's changed?
The Saudi Exchange has expanded the use of smaller tick sizes, meaning prices can now move in smaller increments for a wider range of securities. An additional tick size band has also been introduced for stocks priced at SAR 500 and above, ensuring more accurate pricing at higher values.

This brings the Saudi market more in line with global best practices seen in developed markets like the US and Europe, where highly liquid assets often trade with very narrow price steps.

Why does tick size matter?
Tick size determines the minimum price movement of a security. For example, if the tick size is 0.10 SAR, a stock can only move up or down by that amount. A smaller tick size allows for finer price adjustments, improving liquidity and price discovery-two essential elements for active traders and long-term investors alike.

In practice, smaller tick sizes reduce the bid-ask spread, which in turn lowers transaction costs for investors.

What it means for GCC investors
For investors from the UAE and across the Gulf, these changes bring:

Lower trading costs when buying or selling Saudi-listed stocks
More precise pricing on higher-value stocks
Improved alignment with global exchanges, supporting cross-border investment strategies
Enhanced appeal of Saudi Arabia as a regional trading hub
According to Mohammed Al-Rumaih, CEO of Saudi Exchange:

"These enhancements to tick sizes are the result of our close engagement with market participants and ensure that the Saudi Exchange remains highly competitive and attractive to investors around the world."

Part of a bigger vision
The move is in line with the Financial Sector Development Program (FSDP) under Saudi Vision 2030, which aims to make the Kingdom's capital markets globally competitive and accessible to both domestic and international investors.

The update also reflects broader efforts by the Saudi Tadawul Group and its subsidiaries to modernise trading infrastructure and deepen market participation.

Gulfnews