The Qatar Stock Exchange (QSE) has introduced a randomised uncrossing mechanism for its opening and closing auction sessions to curb potential attempts to manipulate share prices at critical stages of the trading session and enhance market fairness and transparency in price discovery.
The measure was announced on Sunday as part of the QSE's commitment to maintaining fair, orderly and efficient markets, in line with international best practices and the principles of the International Organization of Securities Commissions (IOSCO) on market integrity and transparent price formation.
Financial expert Ramzi Qasimia told Qatar News Agency (QNA) that trading on the QSE begins at 9.30am, with the first trades executed at the start of the session and trading ending at 1.15pm. The closing price is determined based on supply and demand.
He said the importance of the new mechanism lies in making the exact timing of auction execution unpredictable to traders, thereby reducing opportunities for speculation or manipulation in the final seconds of the auction while preserving the existing price-discovery mechanism based on supply and demand.
He explained that under the randomized timing mechanism, the auction is not executed at a fixed minute or second each time. Instead, the trading system randomly selects the execution time within a predefined window.
Qasimia added that this mechanism is used in several financial markets worldwide and is primarily designed to curb attempts to manipulate opening and closing prices by preventing traders from knowing the precise moment when the price-discovery process will begin or end.
Under the new mechanism, each listed security remains in the auction phase until the trading system randomly selects an execution time during the final minute of the auction session. Eligible orders are then matched and executed, and the auction price is determined in accordance with the applicable auction rules.
Qasimia explained that the opening auction could be executed at any point within a defined window, such as between 9.29am and 9.31am, ensuring that traders cannot anticipate the exact execution time and attempt to influence prices immediately beforehand.
He said the same principle applies to the closing auction, with the order book closing and the closing price being determined at a randomly selected point within a defined window before trading resumes at the closing price.
He stressed that the change affects only the timing of execution, not the method used to determine prices. Prices will continue to be determined through supply and demand and based on orders in the market.
He added that the primary objective of randomized timing is to enhance market integrity and curb practices aimed at influencing share prices at critical points, particularly at the opening and closing of trading.
