VI triggers surge to 4 times regular-session rate

Mid- and small-cap stocks see thin order books

Korea Exchange says overall price formation was stable

The closing Kospi level and won-dollar exchange rate are displayed on the dealing-room board at Hana Bank's headquarters in Jung-gu on Tuesday. [Yonhap]
The closing Kospi level and won-dollar exchange rate are displayed on the dealing-room board at Hana Bank's headquarters in Jung-gu on Tuesday. [Yonhap]

Korea Exchange's newly launched after-hours market was swept by intense volatility from its opening session, with circuit breakers firing more than four times as often as during regular trading hours as thin order books — concentrated in mid- and small-cap stocks — sent some share prices surging more than 20 percent on small orders alone.

Static and dynamic volatility interruption mechanisms, known as VI, were triggered a combined 1,637 times on the Kospi and Kosdaq during the KRX after-hours market's inaugural session Monday, which ran from 4 p.m. to 8 p.m., according to Korea Exchange. That was more than four times the 400 triggers recorded during the regular session, which runs from 9 a.m. to 3:30 p.m.

The VI mechanism temporarily switches individual stocks to single-price auction trading for about two minutes when prices move sharply in a short period. The dynamic VI activates when a price moves more than 3 to 6 percent from the most recent execution price, while the static VI kicks in when a price deviates more than 10 percent from the single-price reference.

Many of the stocks with the highest VI trigger counts had market capitalizations of around 30 billion won ($22.3 million). SG Healthcare was a notable case: the stock closed at 1,787 won during the regular session Monday, then climbed to 2,080 won — a gain of 16.85 percent — around 4:20 p.m., shortly after the after-hours market opened, briefly recovering a high it had last reached about a month earlier.

The number of stocks available for after-hours trading expanded to 2,459 with the KRX after-hours market launch, up from the 606 previously accessible through the NXT after-hours platform.

With trading extended to a broader range of mid- and small-cap stocks and relatively few market participants, the gap between regular-session and after-hours prices jumped more than 20 percent even on small orders.

Some investors voiced concern that price volatility could worsen going forward, while others complained about the inconvenience of the KRX after-hours market. One source of friction is the different opening times: the NXT after-hours session begins at 3:40 p.m., while the KRX session starts at 4 p.m.

Korea Exchange issued a press reference note Tuesday afternoon, saying that while volatility had risen for some stocks, "prices were formed stably overall."

By stock-level high-low volatility, the Kospi's regular session came in at 4.1 percent versus 2.9 percent for the after-hours market, while the Kosdaq showed 5.8 percent in the regular session and 4.6 percent in after-hours trading, the exchange said.

Excluding cases where static and dynamic VI triggered simultaneously, the exchange counted 391 VI activations during the regular session and 1,112 during the after-hours session Monday.

"After-hours markets generally apply more relaxed trigger thresholds than regular sessions because liquidity is lower and volatility can be higher, but we set the same standards as the regular session to ensure stable operations," Korea Exchange said.

The exchange added that it would "closely monitor market conditions, actively gather market feedback, and focus on ensuring the after-hours market takes firm root."


th5@heraldcorp.com