 |
Photo = Yonhap news |
[Alpha Biz= Paul Lee] Nextrade (NXT), Korea’s first alternative trading system (ATS), has been unable to operate its bulk and basket trading market due to a "system deficiency." The issue arose when a pre-launch inspection revealed that the circuit breaker (CB) mechanism was not functioning properly.
A circuit breaker is a market mechanism that temporarily halts trading in stages when an index drops by 8%, 15%, or 20% compared to the previous day's closing price.
According to a News1 report on Friday, Nextrade initially planned to launch its bulk and basket trading market on the 4th, but the opening has been postponed.
Nextrade is divided into three markets: the regular market, which operates from 8 AM to 8 PM; the closing price trading market, which matches trades at Korea Exchange's (KRX) closing price from 3:30 PM to 4 PM; and the bulk & basket trading market, which allows trades at pre-agreed prices and volumes between specific parties from 8 AM to 6 PM. However, only the regular market and closing price trading market have been launched so far.
The delay stems from a simulation conducted on March 3, just before the launch. During the simulation, KRX activated a circuit breaker due to a stock price decline, but Nextrade continued executing bulk trades, revealing a critical flaw in its system.
According to Nextrade’s operational regulations, if KRX triggers a circuit breaker in the KOSPI or KOSDAQ market, Nextrade must implement the same measure.
When a circuit breaker is activated, KRX suspends trading for 20 minutes, followed by a 10-minute period for order collection before resuming trading via a single-price auction. Considering this process, Nextrade is required to resume trading via continuous auction 30 minutes after the halt.
Upon discovering the issue, KRX immediately raised objections, insisting that "trading must be halted immediately." Nextrade accepted the concerns and decided to postpone the launch of its bulk and basket trading market.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
