Since July, volatility in Korea's stock market has surged, and the number of sidecar (program trading halt) triggers has exploded. More than 30% of all sidecars this year were concentrated in July alone. In the market, critics say the sidecar, which should cool overheating and sharp drops, has failed to do its job and degenerated into a broken alarm.
According to the Korea Exchange (KRX) on the 28th, over 18 trading days since July, sidecars (program trading halts) were triggered 12 times on the main board and 9 times on the KOSDAQ market. In particular, from the 10th to the 25th, sidecars were triggered for 10 consecutive trading days, producing a distorted roller-coaster session with buy and sell swings.
There have been 66 sidecars in Korea's stock market this year. The annual record during the 2008 global financial crisis (45) was handily (?) surpassed in just seven months, setting an all-time high.
As the domestic market, which had been soaring throughout the first half, began a correction in July, volatility widened and sidecar triggers increased further. In fact, 29% of this year's main-board sidecars and 36% of KOSDAQ sidecars were concentrated in July.
The sidecar system, also called the "temporary suspension of program trading quotes," is a volatility-control device introduced when the futures market was created on the main board. It was first introduced on the main board in 1996 and on the KOSDAQ market in 2001.
A main-board sidecar is triggered when the KOSPI200 futures index moves ±5% or more from the previous close and the move lasts for 1 minute. On the KOSDAQ market, program trading is halted for 5 minutes when the KOSDAQ150 futures index surges or plunges ±6% or more from the previous close, or when the cash index moves ±3% or more and the move lasts for 1 minute.
Sidecars were introduced to prevent sharp moves in the futures market from spilling over into the cash market. Another volatility-control device, the circuit breaker, halts all cash-market trading, while a sidecar only pauses program trading temporarily.
The problem is that the current sidecar trigger conditions and framework have remained unchanged for 24 years since the 2002 overhaul. With trading in 2026 driven by ultra-fast algorithms and leveraged ETFs, a 20-year-old system has failed to keep up, and the sidecar, which should be a market safety net, has instead turned into an alarm that amplifies volatility.
Nahyun-seung, a professor in the business administration department at Korea University, said, "Recently, as market volatility has become extreme, sidecars have been triggered frequently," adding, "When a system operates too often, it can create market inefficiencies, so it is time to reexamine the trigger conditions."
Ahn Hee-jun, a professor in the business administration department at Sungkyunkwan University, said, "In the United States, the sidecar system was abolished a long time ago," adding, "The sidecar system is related to program trading, but recently high-frequency trading (HFT) has increased and individual investors frequently do short-term trading, so the market environment has changed a lot and the expected effects have not materialized." He added, "In today's market, participants do not react sensitively just because a sidecar has been triggered."
Accordingly, experts say that to improve the effectiveness of sidecars, the uniform "5% movement" standard should be abandoned in favor of variable operation aligned with average market volatility, or the trigger threshold itself should be raised.
Lee Jun-seo, a professor in the business administration department at Dongguk University, said, "The sidecar system itself is sufficiently valid, but much time has passed since its introduction, and with volatility now elevated, it seems necessary to reflect the changed market," adding, "The current band is around 5%, but the trigger conditions should be broadened."