Nine-member team to cover monitoring, prevention and short selling

Integrated analysis of regular and after-market trades to build nighttime surveillance infrastructure

Korea Exchange's Yeouido office in Yeongdeungpo-gu, Seoul [Korea Exchange]
Korea Exchange's Yeouido office in Yeongdeungpo-gu, Seoul [Korea Exchange]

Korea Exchange (KRX) said Monday it will operate a special after-market surveillance task force through the end of the year.

The task force, made up of nine members — three each covering monitoring, prevention and short selling — will be dedicated to overseeing the after-market and responding to unfair trading activity.

The move follows the launch of the KRX after-market on Sept. 14, the first such session in the exchange's history. The after-market runs from 4 p.m. to 8 p.m.

The exchange said the task force is intended to guard against unfair trading in the early days of the new market and to analyze market trends.

KRX will also build a nighttime surveillance infrastructure, including integrated analysis of transaction data from both the regular and after-market sessions. The task force is set to run through year-end, with the option to extend it depending on market conditions.

In the after-market's first week of operation — Tuesday through Friday — average daily trading volume came to 54.85 million shares, with average daily turnover reaching 1.1 trillion won ($795 million). That figure represents 4.6 percent of regular-session turnover.

By investor type, individuals accounted for 90.4 percent of turnover, foreign investors 6.7 percent and institutions 2.6 percent. Of the 2,763 listed securities, 2,379 — or 86.1 percent — recorded actual trades, broadening investor choice.

Over the same period, the after-market of rival alternative trading system Nextrade (NXT), which had been operating before KRX's launch, posted average daily turnover of 1.45 trillion won. On that basis, KRX's after-market reached roughly 80 percent of Nextrade's after-market turnover.

KRX has applied the same volatility interruption (VI) mechanism used in the regular session to the after-market and is running a market-maker system. VI activations numbered 1,112 on the first day but declined steadily, falling to 553 by Friday.

Despite after-market volume representing just 6.1 percent of regular-session volume, the number of VI activations slightly exceeded the regular market's daily average of 494 this year.

"The number of VI activations does not so much reflect market volatility as it does the effect of preventing abnormal price executions and discovering a consensus price through single-price auctions, thereby dampening market swings," KRX said.

The exchange added that the high-low volatility indicator — which measures the gap between intraday highs and lows — came in below the regular-session level for five consecutive days.


jiyun@heraldcorp.com