What is an opening auction?

An opening auction for the Tadawul exchange is a mechanism that determines the opening price of a security or stock for the trading day. It is a period of time where buy and sell orders for securities are collected and then matched to find an opening price that clears as many orders as possible.

During the opening auction, buy and sell orders are entered into the market system by market participants, including individual investors, institutional investors, the market makers. These orders are aggregated and matched based on a set of rules, with the aim of determining an opening price for the security. Once the auction is completed, the opening price is established and trading in the security can begin at the price.