Kuwait Stock Exchange. New Changes and Implementations

Kuwait Stock Exchange New Changes and Implementations May 2012

Table of Contents 1. Old and New systems 4 2. New Trading System X-stream 8 3. Sector Classification 11 4. Kuwait 15 Index 13 5. New Website 15 Appendix A. Securities on the Main Market 19 B. KSX15 25

1. Old and New Systems New system will be in effect on 13th May

Differences between the Current System (KATS) and the New System (X-Stream) The following information is general for all market participants and investors Quantity Units will be eliminated and the minimum tradable unit will be one share, therefore eliminating the Odd-Lot Market. After eliminating the Odd-Lot Market and integrating it with the Regular Market, the minimum commission value in the Market will become 2 KD and the commission ratios will remain as follows: (0.125 %) for traded values up to KD 50,000 of the total value of the client s trades. (0.1 %) for traded values above KD 50,000 of the total value of the client s trades. The clearing commission (500 Fils per each trade) will not be charged for trades with a value less than KD 50. Similar to the current opening auction, an auction will be held at the close of trading with a pre-auction period (without matching) of two minutes, where orders cannot be cancelled or modified. Auctions will use the common "Price/time" priority rather than the current "time/price" priority for matching during the auctions. The current 5 minutes waiting time for order modification and cancellation during continuous trading will be eliminated. Having a new feature of increasing the order quantity which will result in losing the order time priority. 4 Source: Kuwait Stock Exchange

Differences between the Current System (KATS) and the New System (X-Stream) (Cont d) The following information is general for all market participants and investors Having a new feature of entering orders with Duration Conditions as follows: Good for session (Continuous Trading) Good till Cancel (GTC) Good till Date (GTD) After eliminating the Quantity Units, the maximum limit on order size will be 5,000,000 shares. In addition to the current Market by Price (MBP) order book, there will be a new Market by Order (MBO) order book where individual orders are provided. In the new system, the Forward Market will be an order-driven market instead of the current behavior where Market Makers enter quotes. Forward Market trades will be executed at the best price for the investor rather than being executed at the price chosen by the broker as it is currently. After eliminating the Quantity Units, the minimum and maximum quantity limits on Forward trades will be as follows: Min Forward trade Qty = 5,000 shares Max Forward trade Qty = 100,000 shares In the new system when there is a corporate action on a security, all pending orders (with duration GTD/GTC) will be cancelled automatically by the system at the end of the day. 5 Source: Kuwait Stock Exchange

Differences between the Current System (KATS) and the New System (X-Stream) (Cont d) The following information is general for all market participants and investors In the new system, the Previous price is changed when the Reference price is changed (due to a corporate action for example), and there is a new price named the Unadjusted Previous price which is fixed. Orders with duration good till date or good till cancel that are outside the price limits on the next day will not be accepted into the order book and will be as unplaced orders. Such orders will remain unplaced with their original priority until the reference price moves and the order price becomes within the limits. An unplaced order can also be cancelled or modified by the broker at any time. In the new system the Price Index Values will be shown with 2 decimal places, however in the current system it is shown with only one decimal place. In the new system the Forward Market Prices will be shown with 3 decimal places, however in the current system it is shown with only one decimal place. In the new system when suspending a security, the existing orders for that security will remain in the order book and the broker has the ability to cancel his orders, however in the current system all the orders available for a suspended security will be cancelled by the system. 6 Source: Kuwait Stock Exchange

2. New Trading System X-Stream

New Trading System X-Stream The new trading system "X-stream" is one of NASDAQ OMX's products which have been operated in more than 15 countries worldwide. Properties of the new trading system "Board Lots" and the "Odd-Lot Market" will be eliminated and the minimum tradable unit will be one share. The maximum limit on order size will be 5,000,000 shares. The minimum commission value in the Market will become 2 KD and the commission ratios will remain as follows: (0.125 %) for traded values up to KD 50,000 of the total value of the client s trades. (0.1%) for traded values above KD 50,000 of the total value of the client s trades. An auction will be held at the close of trading with a pre-auction period (without matching) of two minutes, where orders cannot be cancelled or modified. Auctions will use the common "Price/time" priority for matching. 5 minute waiting time for order modification/cancellation is eliminated. Introduces a new feature of increasing the order quantity (which will result in losing the order priority). When there is a corporate action on a security, all pending orders (with duration GTD/GTC) will be cancelled automatically by the system at the end of the day. Forward Market trades will be executed at the best price for the investor rather than being executed at the price chosen by the broker. After eliminating the Quantity Units, the minimum and maximum quantity limits on Forward trades will be as follows: Min Forward trade Qty = 5,000 shares Max Forward trade Qty = 100,000 shares 8 Source: Kuwait Stock Exchange

New Trading System X-Stream (Cont d) X-stream provides investors with various time spans that can be applied to orders. The below table lists the available order duration Order Duration Description Day The order is valid throughout the trading day on which it was entered. Session Good till Cancelled (GTC) The order is good only for the current trading session. The order is cancelled at the end of the current session and it is only supported during the Continuous Trading session. The order is good until a cancellation is submitted or until 90 days have passed whereupon the order is automatically deleted. Good till Date (GTD) Immediate or Cancel (IOC) The order is good until the end of the last session on the specified date whereupon it is automatically cancelled. The maximum duration of a GTD orders is 90 days from when entered. The order must execute immediately and fill as much as possible or it is cancelled. 9 Source: Kuwait Stock Exchange

3. Sector Classification

Sector Classification The charts in this template have been created with the correct default settings and can be reused by changing the datasheet. Refer to the Shape Gallery within the (Tools) menu for a list of predefined charts. Number Sector Name Sector code Industry Name Industry Code 1 Oil and Gas 0500 Oil and Gas 0001 2 Basic Materials 1000 Basic Materials 1000 3 Industrials 2000 Industrials 2000 4 Consumer Goods 3000 Consumer Goods 3000 5 Health Care 4000 Health Care 4000 6 Consumer Services 5000 Consumer Services 5000 7 Telecommunications 6000 Telecommunications 6000 ICB The system for classifying stocks that has been chosen by KSE is the Industry Classification Benchmark (ICB). The Industry Classification Benchmark (ICB) is a definitive system categorizing over 70,000 companies and 75,000 securities worldwide. The ICB classification method allocates each company to a classification according to the nature of its business, which is determined by its source of revenue or where it derives the majority of its revenue. ICB has four levels, of which KSE shall publish the top two. In accordance with the launch of X-stream with a base value of 1,000 for price weighted Sector Indices and 500 for market weighted Sector Indices. 8 Utilities 7000 Utilities 7000 9 Banks 8300 Banks 8000 Sector Breakdown According to Number of Companies 10 Insurance 8500 Insurance 8000 11 Real Estate 8600 Real Estate 8000 12 Financial Services 8700 Financial Services 8000 13 Investments Instruments 8980 Investments Instruments 8000 14 Technology 9500 Technology 9000 15 Parallel 9900 Parallel 9000 11 Source: Kuwait Stock Exchange

4. Kuwait 15 Index

Kuwait 15 Index The KUWAIT 15 index is the KSE Flagship Index. The KUWAIT 15 index is reviewed periodically to cater for the demands of index stability, invest ability and low transaction costs, while maintaining a high correlation with the underlying market The KUWAIT 15 index is a market capitalization weighted index The index includes the 15 highest ranked companies according to liquidity and size The index constituents are reviewed and selected semi-annually to reflect the most liquid and highest market capitalization values in the market The index can serve as a basis for index linked products such as index derivatives, indexed funds, exchange traded funds (ETFs) and structured products The index is highly correlated with KSE all-share market capitalization index Selection process of the Kuwait 15 Index Constituents: Select the 50 most traded companies by turnover according to measured liquidity These companies are then ranked by market capitalization The 15 highest ranked companies in step 2 are selected to the index for the next coming period At the time of the periodic review, KSE publishes a reserve list of three to five ranked companies General Informati on: Ticker Code: KSX 15 Index Universe: KSE Allshare Index Index Launch Date: In accordance with the launch of X-stream Base Value: Currency: 1,000 Kuwaiti Dinar Review Dates: May and November Index Rules: Will be available shortly 13 Source: Kuwait Stock Exchange

5. New KSE Website

New KSE Website The new KSE Website is a completely new platform for KSE to communicate with all market participants. It facilitates both free and paid-for services and can support more sophisticated data exchange mechanisms Benefits of the new KSE Website: Ease of saving and retrieving information and data, from anywhere in the world Increased data and information security Will support different service levels for different users and subscribers Greater potential for more sophisticated support for investors To access the new website prior to KSE going live with the new Trading System, please use the link below: http://webtest.kuwaitse.com 15 Source: Kuwait Stock Exchange

New KSE Website- Snap Shots The new KSE Website is a completely new platform for KSE to communicate with all market participants. It facilitates both free and paid-for services and can support more sophisticated data exchange mechanisms 16 Source: Kuwait Stock Exchange

New KSE Website- Snap Shots The new KSE Website is a completely new platform for KSE to communicate with all market participants. It facilitates both free and paid-for services and can support more sophisticated data exchange mechanisms 17 Source: Kuwait Stock Exchange

Appendix A. Securities on the Main Market

Securities on the Main Market 19 Source: Kuwait Stock Exchange

Appendix B. KSX15

KSX15 Kuwait 15 30/11/2011 KSX15 Ticker Sec ID Liquidity Market Capital Market Cap Liquidity Weighted Cap Weighted Weighted to Weighted to Rank Rank Liquidity Total Market Cap Total Market Liquidity NBK 101 205,550,600 4,511,806,630 1 1 23.79 18.76 16.18 9.65 ZAIN 605 146,607,500 3,919,856,542 2 2 20.67 13.38 14.06 6.88 KFIN 108 139,925,475 2,420,136,612 3 3 12.76 12.77 8.68 6.57 GBK 102 48,158,450 1,329,082,254 4 12 7.01 4.39 4.77 2.26 BOUBYAN 109 30,209,950 1,031,458,836 5 18 5.44 2.76 3.70 1.42 CBK 103 23,421,650 979,457,206 6 24 5.16 2.14 3.51 1.10 NMTC 613 15,275,700 957,662,244 7 36 5.05 1.39 3.43 0.72 ALMUTAHED 105 20,776,000 912,778,209 9 26 4.81 1.90 3.27 0.98 BURG 107 64,084,650 684,199,749 10 9 3.61 5.85 2.45 3.01 MABANEE 413 60,716,300 488,950,836 12 10 2.58 5.54 1.75 2.85 AGLTY 603 85,393,230 403,032,133 13 6 2.12 7.79 1.45 4.01 KPROJ 205 36,526,900 388,242,889 14 14 2.05 3.33 1.39 1.71 NIND 501 93,749,170 356,151,996 15 5 1.88 8.55 1.28 4.40 CABLE 505 12,759,300 310,698,339 17 46 1.64 1.16 1.11 0.60 KIB 106 112,747,860 274,891,568 18 4 1.45 10.29 0.99 5.29 Total 15 1,095,902,73518,968,406,043 100.00 100.00 68.02 51.43 BPCC 514 47,534,550 271,656,000 19 13 ALAFCO 642 67,960,200 257,324,618 20 8 ALQURAIN 526 33,910,680 239,800,000 21 15 Reserve Companies 25 Source: Kuwait Stock Exchange

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