The Kuwaiti Stock Exchange may divide the market into several markets so that each market includes a number of listed companies according to the criteria set by the stock exchange, as follows:
- The First Market: It is the market that includes stocks that are characterized by market value and high liquidity, and which meet the requirements set by the stock exchange.
- The main market: the market that includes stocks that have a market value or medium liquidity, and are less than those that must be available in the first market.
- Auction market: It is the market that includes stocks with low liquidity.
Companies may apply for listing on the Stock Exchange in the first or the main markets, and it is not permissible to list initially in the auction market. However, the Stock Exchange may transfer the listed companies from the first and main market to the auction market, in accordance with the rules and standards set forth in the rules of the Kuwaiti Stock Exchange. As for the funds, they are listed in Its own panel is separate from other markets.
Powers of the Stock Exchange regarding market division
The Stock Exchange has the right at any time to reduce the classification of any company listed in the First Market and list it in another market in accordance with the rules of the Kuwaiti Stock Exchange, in the event of repeated violations, especially those violations that result in the suspension of trading in the securities issued by it.
Annual review of listed companies
Boursa Kuwait conducts an annual review of the listed companies in accordance with the following provisions:
- The Stock Exchange conducts an annual review of all companies listed in the various markets on the Stock Exchange (the first market, the main market, the auction market) in terms of liquidity, market value or any other requirements stipulated in the law establishing the Capital Markets Authority and regulating securities activity, its executive regulations or the stock exchange rules Kuwaiti.
- Listed companies are reclassified after conducting the annual review in accordance with the provisions contained in the rules of the Kuwait Stock Exchange.
- Companies that have been listed on the Stock Exchange for a period of less than six months before the time of the annual review are excluded from the provision of Clause No. (1), provided that they are subject to the next annual review, and in the event that one year has not passed since the company’s listing before the time of the review, the liquidity is calculated in proportion to the period for which was included in it.
The mechanism of calculating the stock market’s requirements
In terms of liquidity
- Liquidity is calculated based on the average daily value traded for the listed company over the year preceding the annual review period conducted by the Stock Exchange. (average daily traded value)
- The minimum liquidity specified by the stock exchange for market segmentation is the sum of the average daily traded value of all companies listed in the markets over the previous two expiring years, calculated each year separately.
In terms of market value
The required minimum market value depends on the following factors:
- Trading days during the year.
- The average daily value traded in the stock exchange for two years.
- Annualized Turnover Ratio on the stock exchange calculated annually for two years.
The market value is calculated according to the following equation:
|Market Capitalization =||Trading days X Average Daily Traded Value|
|Annualized Turnover Ratio|
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