Korea Exchange launches after-market trading Monday

The Korea Exchange's after-market opens at its Yeouido headquarters in Seoul on Monday. Korea Exchange will operate the after-market for Kospi and Kosdaq from 4 p.m. to 8 p.m. [Yonhap]
The Korea Exchange's after-market opens at its Yeouido headquarters in Seoul on Monday. Korea Exchange will operate the after-market for Kospi and Kosdaq from 4 p.m. to 8 p.m. [Yonhap]

A series of system failures struck major domestic brokerages Monday morning in connection with the pre-market session — running from 8 a.m. to 8:50 a.m. — operated by alternative trading system Nextrade (NXT).

Mirae Asset Securities users experienced delays in checking the execution status of buy and sell orders placed on NXT's pre-market through the brokerage's home trading system (HTS) and mobile trading system (MTS).

The user-facing disruptions cleared up when the pre-market session ended, and trading during the regular session proceeded normally. However, the smart order routing (SOR) system — which distributes orders between Korea Exchange and NXT — remained restricted.

Mirae Asset Securities said in a notice that due to SOR system maintenance, SOR orders would be routed to Korea Exchange for the regular session, and to NXT from 3:30 p.m. to 4 p.m. or to Korea Exchange from 4 p.m. to 8 p.m. for the after-market.

A source familiar with the matter said the root cause appeared to be a problem with the SOR system provided by NXT.

Samsung Securities users also encountered trading issues during the pre-market session. In a notice titled "Emergency cancellation notice due to SOR failure," the brokerage said cancellation orders had not been processed normally due to the SOR failure and had been rerouted to Korea Exchange, asking clients to manually cancel any orders that remained open.

Samsung Securities later issued a follow-up notice advising clients to select NXT when placing after-market orders between 3:30 p.m. and 4 p.m. due to the SOR failure, and saying that exchange (automatic) orders placed between 4 p.m. and 8 p.m. would be processed as Korea Exchange orders.

The SOR system automatically routes a client's stock order to whichever exchange offers the most favorable conditions — comparing price, fees, costs, order size and the likelihood of execution — when the client does not specify a particular exchange.

With the system failing to function normally, both Mirae Asset Securities and Samsung Securities appeared to have been left with no choice but to route orders to only one of the two exchanges — Korea Exchange or NXT.

An industry official said the launch of Korea Exchange's after-market had extended the SOR application window from 3:30 p.m. to 8 p.m., prompting brokerages to scale up and modify their SOR-related systems. The official said the confusion Monday may have stemmed from those changes being applied for the first time.

Meanwhile, Korea Exchange launched its after-market Monday, allowing investors to trade shares in real time from 4 p.m. to 8 p.m. The exchange scrapped the existing after-hours single-price auction system in favor of continuous real-time trading.

The move significantly expanded the range of tradable securities and broadened investor choice. However, given that NXT had already been running an after-market until 8 p.m., the practical impact on ordinary investors may have been limited.


hss@heraldcorp.com