Nextrade Tightens Pre-Market Trading Rules After SK hynix Glitches
Nextrade (NXT), South Korea's alternative trading system (ATS), has announced a temporary ban on limit-up and limit-down orders during its pre-market session after two separate incidents involving erroneous opening prices for SK hynix raised concerns over market stability.The company said the me
South Korean alternative trading system Nextrade has implemented a temporary ban on limit-up and limit-down orders during its pre-market session following two incidents involving SK hynix shares. The ban, effective from August 12 to September 14, aims to prevent abnormal trades caused by erroneous opening prices resulting from order-entry mistakes.
The move comes after a 30% drop in SK hynix shares during pre-market trading on August 6, which was initially accepted as the official opening price due to Nextrade's continuous auction process. A similar incident on July 28 saw a single share of SK hynix traded at the daily lower limit, leading to a 17.9% decline in a related perpetual futures contract.
Nextrade's pre-market session, known for lower liquidity and higher vulnerability to "fat finger" errors, is particularly susceptible to such issues. The company has previously restricted market orders during pre- and after-hours sessions, allowing only limit orders. Nextrade is also working on a new static Volatility Interruption mechanism, expected in September, which will halt immediate executions if orders exceed a certain price range and conduct a two-minute auction to determine a more balanced market price.
Market participants and industry analysts view the latest measure as a response to the growing popularity of extended-hours trading and the need for stronger safeguards to prevent pricing errors from causing disproportionate market impacts.
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