Iraqi Securities Commission 2022 Regulations: Electronic Trading Rules for the Iraq Securities Market

Iraqi Securities Commission Regulations for the Year 2022 Electronic Trading Rules in the Iraq Securities Market

Article (1)
Miscellaneous
Working Hours.
The automated trading system operates on two types of sessions:
a. Pre-opening session: Orders are entered during this session, and the opening price is calculated at its end. b. Continuous trading session: The electronic trading system can be used starting from 9:30 AM until 12:00 PM every working day. The pre-opening session runs from 9:30 AM to 10:00 AM, followed immediately by the continuous trading session which ends at 12:00 PM.

Article (2)
Covering Sold Orders.
Before accepting any sell order, the automated system verifies the availability of a stock inventory to settle the transaction, and then reserves the specific shares in the order to prevent double usage. A sell order will be rejected if there is no stock inventory in the relevant account at the moment of order entry.

Article (3)
Trading Unit and Price Change Unit.
The trading unit is a regular trading unit (quantity unit) consisting of a number of shares. The price change unit is the minimum value by which the price can change (up or down). a. The trading unit used is one share for all stocks. b. The price change unit used for shares is (10) fils.

Article (4)
Pre-opening Session
Order Queue.
Before trading begins, there is a pre-opening period during which orders can be entered or modified without being immediately processed by the automated trading system. The purpose of the pre-opening session is to determine the opening price for each security. The following observations should be taken into consideration:
a. Orders entered during the pre-opening session are queued but not executed upon entry. Orders entered in the continuous trading session, which starts after the opening price is calculated, are handled accordingly. b. Orders with special conditions, which include specific execution conditions, can be entered into the system but will not be included in the opening price calculation. They are processed at the beginning of the continuous trading session.
c. Market orders are not allowed to be entered during the pre-opening session (see Article 12).
d. The opening price is recalculated every time orders are entered during the pre-opening session, while the final opening price is calculated at the end of the pre-opening session. e. The trading unit and price change unit specified by the market are effective during the pre-opening session.

Article (5)
Calculating the Opening Price.
Each company's share has only one opening price. Orders trading at the opening in the market are traded at this price. The opening price is calculated based on the orders available in the regular conditions register. To determine the opening price, the following criteria are used:
a. The quantity of shares available at each price. b. The remaining quantity of shares after potential matches.
c. The net change in the closing price from the previous continuous trading session.
d. The share price.

Article (6)
Displaying Price Data.
The price of an order entered in the pre-opening stage is considered confidential information. For this reason, some orders are displayed in the market at prices different from their actual prices (at the calculated opening price). The purpose of not disclosing the actual order price in the pre-opening stage is to verify that the company's share opens at the fairest possible price, based on market supply and demand conditions, taking into consideration:
a. The calculated opening price may change during the pre-opening session with the entry of new orders into the trading system. b. During the pre-opening session, orders with prices better than or equal to the opening price are queued at the calculated opening price, regardless of the actual order price. The actual prices cannot be viewed except by market regulators.
c. Orders with prices lower than the opening price are queued at their actual prices during the pre-opening session and after the market opens (e.g., a buy order price lower than the best available buy order price).

Article (7)
Time Priority for Orders Entered After the Pre-opening Stage.
Time priority applies to orders entered during the pre-opening session based on the actual time of entry. For orders not fully executed during the transition period between the pre-opening session and the continuous trading session, that time priority is maintained throughout the trading day.

Article (8)
Continuous Trading.
When the allocation of opening quantities is completed, the market opens and continuous trading activity begins.
Order queueing and fulfillment: The system may reject any valid order entered into the trading system, execute it partially, execute it fully immediately while queuing the remaining amount, execute it partially while rejecting the remaining amount, or queue it fully. If an incoming order does not match any other order immediately in whole or in part, the matched quantities are queued in the market. When there are several diverse orders queued in the market, the priority in queueing and thus in trading is based on the following:
a. Price: A market order queued at a specific price is treated like a limit order with the same price (see Article 12). b. Regular condition orders take precedence over special condition orders, but special condition orders are eligible to match with orders in the regular conditions register.
c. Time stamp, where the order entering the system at a specific time indicates its entry time.
When calculating queue priority, the following criteria are taken into consideration:
a. Price has precedence in queueing:

• Buy orders and sell orders are considered separately.
• A buy order with a higher price takes precedence over other buy orders with lower prices.
• A sell order with a lower price takes precedence over other sell orders with higher prices.
  b. Regular condition orders are given priority over special condition orders at the same price level. Special condition orders with the same specified price are queued based on time priority among themselves.
  c. If several entered orders have the same price level and the same special conditions, queue priority is then determined using time as the final tie-breaker, applying the "First In, First Out" principle.
• Orders with an earlier time stamp have precedence over orders with a later time stamp.
• Changing a previous order's special condition may place a new time stamp on the order and thus may change the queue priority for that order (see Article 14).

Article (9)
Special Condition Orders with a Price Better than the Best Market Price.
The trading system works to maximize trading matching by attempting to trade special condition orders that have a better price in the market. After an incoming order is traded or queued in the market to become dormant, the trading system attempts to identify other orders capable of trading, especially special condition orders that were previously queued:
a. After each trade, any special condition order with a price better than the best market price becomes active and attempts to trade. b. When special condition orders exist on one side of the special conditions register, priority becomes active for those orders based on price in descending order, i.e., highest price first, continuing until all orders with a price better than or equal to the best price in the market are processed.
c. If there are several special condition orders on one side of the market (either the sell side or the buy side) with the same price, the orders become active under the "First In, First Out" principle for price.
d. Once the price level in the special conditions register is equal to or better than the best price in the market, orders in the regular conditions register take precedence over orders in the special conditions register. e. When orders exist on both sides of the special conditions register and at a price better than the best price in the market, priority in selecting the active order is implemented under the "First In, First Out" principle, such that buy and sell orders with the best price are compared.

Article (10)
Special Fulfillment Conditions.
All or Nothing: This order is fulfilled on the condition of selling/buying the entire quantity or nothing. a. "All or Nothing" orders can trade with more than one counterparty simultaneously. b. The order is rejected if the entire quantity is not executed at the specified price. Minimum Execution: When this condition is selected, the trade must meet the minimum number of shares assigned. a. The first trade on this order must be in a quantity equal to or greater than the minimum. b. If a quantity of shares remains unfulfilled in the first trade, it is automatically listed in the regular orders register. Minimum Group: When executing an order with the minimum group condition, all trades executed on it must fulfill the listed (assigned) unit of shares until the entire order is fulfilled.

Article (11)
Types of Orders
Limit Order: It is an order to buy or sell a number of shares at a specified price, or a better price. The limit order must be priced based on the price change unit specified in Article (3) of these Rules.

Article (12)
Market Orders and Price Protection.
Market Order: It is an unpriced order to trade a security immediately at the best available price in the market. The market order becomes a priced limit order once the price is calculated. The system automatically determines the price for the market order based on the formula specified for price protection. The price protection feature is used to set limits on the movement of market order prices. This limit reduces the volume of risk the trader faces when entering orders. a. A market order can trade at a series of prices better than or equal to its specified price. b. Market orders are allowed to be entered during the continuous trading session only.
c. A market order is rejected if there are no orders on the opposite side.
d. The specified price for a market order is equal to the best price in the market.

Article (13)
Modifying a Previous Order: The "Modify Previous Order" feature is used to make modification(s) to the properties of an order in the system. a. The "Modify Previous Order" feature cannot be used to change the type of stock chosen by the trader, the type of market, or the type of order. In any of these cases, the order must be cancelled and re-entered. b. The original order that used the "Modify Previous Order" feature receives a new time stamp and new queue priority if the modification feature is used on the price, investor account number, or adding/removing a special condition.
c. At the stage of selecting or filling out the "Modify Previous Order" form, the order is not removed from the orders register, and thus trading for the order may occur.
d. If the status of an order changes or it is partially executed according to paragraph (3) of Article 13 in the period between entering the "Modify Previous Order" feature and sending it to the system – pressing the enter key – the trader is then notified and must re-confirm the "Modify Previous Order" feature.

Article (14)
Cancel Order: The cancellation feature transfers a valid or suspended order to a cancelled status. Once the cancellation feature occurs, the original order cannot be retrieved in the system. a. The cancellation feature is used to cancel an existing order in the system. b. The cancellation feature is rejected if the order has been traded.
c. The cancellation feature is rejected if the order number is incorrect.
d. If the order is cancelled before receiving confirmation that the order has been partially fulfilled due to trading in the period between entering the cancel order feature and sending it to the system, another confirmation of the trader's desire to cancel the remaining amount of the order will be required.

Article (15)
Suspend/Resume Order
The suspend order is used to transfer a valid order to a suspended status. This order is issued by the market regulator or the owner of the original order, and the resume feature returns the original order to a valid status. The following observations should be taken into consideration:
a. The suspend feature is used only to suspend an existing order. b. The trader can use the "Modify Previous Order" feature with the suspended order.
c. The trader can cancel a suspended order.
d. Suspended orders do not enter trading. e. The suspended order can be re-entered into the register using the "Resume" feature. If the order is resumed, it is treated as a new order, thereby giving it a new time stamp and new priority.

Article (16)
Flash Sell Order: It is a limit order to sell the entire available quantity, to a buy request with the best price in the market, and does not include the quantity offered by a flash sell order buying any quantity of a special condition buy order, even if the special condition order has a better price than the regular conditions register, by executing the flash sell order with the best price order. Note that the flash sell order is automatically updated by the system if the best price in the market changes and the flash sell screen is active. The following observations should be taken into consideration:
a. If there are orders in the regular conditions register on the buy side of the market, the total quantity in the flash sell order screen will include the quantity with the best bid price, located in the regular conditions register only. b. If there are no orders from the regular conditions register on the buy side of the market, but there are special condition buy orders, the total quantity in the flash sell order screen will include only the quantity with the best bid price from the special conditions register.
c. If the best price in the market changes in the time between pressing the enter key on the order screen and the time the system needs to stamp the order with the entry time, the flash sell order is then rejected. The reason is that the flash sell order is essentially an all-or-nothing or cancel order.
d. The trader may change the attributes of the flash sell order (amount, company share, price) before sending the order to the automated trading system. e. If the quantity of the flash sell order can be fulfilled in whole or in part with a special condition order at a better price, the system automatically executes the flash sell order with the special condition order.

Article (17)
Flash Buy Order: It is a limit order to buy the entire available quantity with the best ask price in the market for a specific company's share, and execute the order within the order entry screen itself. a. If there are orders in the regular conditions register on the sell side of the market, the total quantity in the flash buy order screen will include the quantity with the best ask price, located in the regular conditions register only. b. If there are no orders from the regular conditions register on the sell side of the market, but there are special condition sell orders, the total quantity in the flash buy order screen will include only the quantity with the best ask price from the special conditions register.
c. If the best price in the market changes in the time between pressing the enter key on the order screen and the time the system needs to stamp the order with the entry time, the flash buy order is then rejected. The reason is that the flash buy order is essentially an all-or-nothing or cancel order.
d. The trader may change the attributes of the flash buy order (amount, company share, price) before sending the order to the automated trading system. e. If the quantity of the flash buy order can be executed in whole or in part with a special condition order at a better price, the system automatically executes the order with the special condition order.

Article (18)
Order Properties
Order Validity Time.
Traders can enter a specific period of time during which the order is valid until the end of that period. The system provides mechanisms to ensure that time constraints for orders are not exceeded. The available order validity time properties are as follows:
a. Day: The order is valid until the close of trading on the day it was entered. b. Fill or Cancel: This order must be executed in whole or in part as soon as it enters the market. If immediate trading is not possible, the order or the remaining quantity is automatically removed from the system. The following observations should be taken into consideration:

• All orders with time constraints are automatically removed from the trading system when their validity expires.
• If no time constraint for order validity is entered, the order is treated as a day order.

Article (19)
Closing
Closing Status.
The closing status is at 12:30 PM, after the end of the continuous trading session, and no orders can be entered or modified at this time. However, reports on entered orders and executed trades can be printed.

Article (20)
Closing Price
After the end of the continuous trading session, the system calculates the closing price for each security. The closing price is the weighted average of all transactions that took place that day.