Alternative trading system (ATS) NextTrade announced on the 21st that it will strengthen its self-monitoring regarding the occurrence of cases recording upper and lower limits (price restrictions) even with a trading volume of one share in the pre-market (8 a.m. to 8:50 a.m.).
According to NextTrade, from the 5th to the 20th, there were a total of 18 instances among 14 stocks where the initial price in the pre-market was executed at the upper or lower limit based on one share. When the initial price records upper or lower limits, a volatility interruption device (VI) may be triggered, halting trading for two minutes. This inevitably increases confusion among investors.
NextTrade saw the cause of this issue as stemming from the Korea Exchange's method of determining initial prices based on single-price trading, while NextTrade's pre-market is different due to access trading. This indicates that investors who are accustomed to single-price trading may have submitted their orders without realizing this.
NextTrade has also opened the possibility of intentional orders to create upper and lower limits with a small quantity during time periods with low liquidity. In fact, investor A submitted orders for buying at upper limits or selling at lower limits of one share each across seven stocks in 10 instances from the 18th to the 20th. NextTrade has requested the brokerage firm through which the orders were submitted to warn A and shared the relevant information with related agencies such as the Korea Exchange's Market Surveillance Committee.
NextTrade stated that as the number of stocks available for trading increases, it will strengthen its self-monitoring to prevent intentional upper and lower limit issues. Additionally, it plans to continue cooperation with participating brokerages and the Korea Exchange's Market Surveillance Committee.
NextTrade will increase the number of stocks available for transactions from 110 this week to 350 on the 24th. From the 31st, trading will be possible for 800 stocks.