Night trading halted from 6 p.m. Sept. 23 to 6 a.m. Sept. 24
Move aims to manage investor risk from price swings over long holiday
Korea Exchange will suspend derivatives night trading for a day ahead of the extended Chuseok holiday. The move is meant to prevent night-session positions from being exposed to risk over an extended period amid possible sharp price swings during the holiday.
The exchange said Wednesday that it would suspend derivatives night trading set to run from 6 p.m. Sept. 23 to 6 a.m. Sept. 24.
Night trading in derivatives is settled together with the regular session that immediately follows. As a result, if night trading proceeds as scheduled on Sept. 23, those trades will be settled together with the regular session on Sept. 28, after the Chuseok holiday ends.
The exchange explained that running night trading right before an extended holiday could leave market participants' night-session positions exposed to risk for a prolonged period. It said client risk from unfilled orders, offsetting trades or a lack of liquidity was one factor. The heavier burden of managing risk from sharp price swings during the holiday also weighed on the decision.
The suspension covers all products traded during derivatives night sessions. These include futures on the KOSPI 200, Mini KOSPI 200 and Kosdaq 150, as well as options on the KOSPI 200, Mini KOSPI 200, Kosdaq 150, KOSPI 200 Weekly and Kosdaq 150 Weekly. Futures on the US dollar, three-year government bonds and 10-year government bonds will also be suspended.
Major Asian exchanges, including the Hong Kong Exchanges and Clearing and the Taiwan Futures Exchange, also suspend night trading the day before long holidays. Korea Exchange has followed the same practice for major holidays since introducing derivatives night trading in June last year.
The suspension comes as Korea Exchange prepares to expand stock market trading hours. Starting Monday, the exchange will operate an after-hours market on the KOSPI and Kosdaq that allows real-time trading from 4 p.m. to 8 p.m. It will scrap the existing single-price after-hours session, which ran from 4 p.m. to 6 p.m. It will also introduce continuous after-hours trading that executes orders immediately once buy and sell prices match. This marks the biggest overhaul of Korea Exchange's trading-hour system in a decade. The regular market's closing time was last changed in August 2016, when it was pushed back from 3 p.m. to 3:30 p.m.
"Going forward, we plan to actively support market participants' risk management by continuing to suspend night trading the day before long holidays," an exchange official said.
hajun825@heraldcorp.com
