False Alarm with the Kuwait Stock Exchange

At times of great emotional stress, the mind tends to overlook certain important criteria causing an overall incorrect conclusion to be drawn from a situation in which one is placed.

A couple of days ago I posted about the Odd lot market on the Kuwait Stock Exchange (link) being scrapped. I then proceeded to act as follows:

crazy-cat

Error on my part, for in my rush to condemn the act of scrapping the odd lot market, I did not perceive the substitute put forward by the good people at the KSE.

And let me tell you, it is good!

Properties of the new trading system (link):

1. “Board Lots” and the “Odd-Lot Market” will be eliminated and the minimum trade-able unit will be one share.
2.The maximum limit on order size will be 5,000,000 shares.

GLORY HALLELUJAH!

For the non-finance savvy, in Laymen’s terms:

Previously the odd lot market was a sellers market, meaning the seller’s dictate the pace, they put their number of shares up for sale and the buyers have to buy that amount, they cannot by less or more of one share.

So let’s assume for example that someone wanted to buy 100 shares of company X’s stock. There was a seller selling 150 shares of company X’s stock. The buyer would have to purchase those 150, as they are the shares currently available for sale.

Now however, the markets have been unified, giving both buyers and sellers leverage, as a buyer, I can now directly ask to buy 100 shares of company X’s stock, anyone seeking to sell would then have the ability to do so.

No harm, no foul.

Tis a joyous day indeed!

August 2011 ( View complete archive page )

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