KRX Aftermarket Debut Sees Mass Triggering of Volatility Interruption Mechanisms

"VI Triggered 1,637 Times" on First Day
Small and Mid-Cap Stocks Rattled by Supply-Demand Imbalance
KRX: "Core Price Discovery Function at Work"

On the first day that the Korea Exchange (KRX) launched its aftermarket session operating until 8 p.m., price volatility surged and a large number of Volatility Interruption (VI) mechanisms were triggered.

On the 14th, the aftermarket opened at the Korea Exchange in Yeouido, Seoul. Yonhap News Agency

According to the exchange on September 15, between 4 p.m. and 8 p.m. the previous day, a total of 1,637 static and dynamic VI triggers were recorded on both the KOSPI and KOSDAQ markets. This figure is more than four times higher than the 400 VI triggers that occurred during the regular trading hours of 9 a.m. to 3:30 p.m. The VI mechanism is designed to prevent excessive volatility by temporarily switching to single-price auction for about two minutes if the price of an individual stock changes drastically in a short period of time. A dynamic VI is triggered if the transaction price fluctuates by ±3% to ±6% from the previous price, while a static VI is triggered if there is a fluctuation of ±10% based on a single price point.

A significant number of stocks with the highest number of VI triggers were small caps with market capitalization near 30 billion won. SG Healthcare, with a market cap of 21.5 billion won, was the most frequent with 19 triggers, followed by Daehospecialsteel (18), Innoax and Hanchang Paper (15 each), and NE Neungyule, Mobidays, and TechL (14 each). Korea Special Steel, with a market cap in the 60 billion won range, and IMT (14) were also among the top list. In the case of SG Healthcare, the stock closed at 1,787 won in the regular session the previous day but surged to 2,080 won (up 16.85%) at around 4:20 p.m., right after the aftermarket opened, briefly recovering its peak from about a month ago.

The backdrop to this surge in VI triggers is a structural supply-demand imbalance in the market. The number of tradable stocks increased significantly, but the inflow of capital was relatively modest, resulting in quotation gaps particularly among small- and mid-cap stocks. As a result, concerns are mounting among investors over the risks associated with heightened volatility.

The exchange explained, "To ensure market stability and a smooth opening, we strengthened volatility control by applying the same VI activation criteria in the aftermarket—which has low liquidity—as in the regular session." The KRX added, "The frequent VI triggers on the first day actually demonstrate that the core price discovery function performed properly, preventing sharp price swings and helping market participants find reasonable prices." The KRX further noted, "Unlike NextTrade (NXT), which focuses on highly liquid stocks, the KRX aftermarket allows trading in most listed stocks, including those with low liquidity, which resulted in a higher frequency of VI triggers. In reality, however, overall volatility for all stocks was lower than in the regular session, and the market remained generally stable." The exchange concluded, "We will closely monitor market conditions, actively gather market feedback, and dedicate our efforts to ensuring the successful settlement of the aftermarket."

This content was produced with the assistance of AI translation services.