Kuwait's stock market has announced plans to segment into three in a bid to increase liquidity and improve the issuer's base.
Boursa Kuwait said it will be made up of a Premier Market, Main Market and Auction Market and is conducting tests with relevant stakeholders before it officially launches the plan.
Market segmentation is a common practice worldwide, with many reputable world exchanges such as the London Stock Exchange, Deutsche Börse and Nasdaq having similar markets.
It said in a statement that the new basis of segmentation will be based on certain criteria related to liquidity, market capitalisation, price to par ratio, years of operations plus disclosure and compliance with the terms and conditions of listing.
The Primer Market forms the elite category, which will be occupied by high calibre companies with high liquidity and medium to large market capitalization requirements. Companies in this segment are subject to annual reviews to prove its powerful performance throughout the year to be able to remain in the segment.
Premier Market listed companies are also requested to hold quarterly analyst conferences and are required to disclose in both Arabic and English.
Main Market companies will need to maintain minimum level of liquidity in and are also subject to annual reviews.
The Auction Market will include companies with low liquidity regardless of its market capitalisation. Trading in the Auction Market will trade following an auction trading mechanism with no continuous trading.
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