The Korea Exchange (KRX) will suspend overnight derivatives trading immediately before the Chuseok holiday to help market participants manage risk.
The exchange said on the 9th that it will halt overnight derivatives trading scheduled to run from 6 p.m. on the 23rd of this month to 6 a.m. on the 24th. The measure is intended to preempt risks from settlement failures or sharp price swings, given that the regular market will be closed for an extended period during the Chuseok holiday.
Overnight derivatives trades are cleared together with the regular session that immediately follows. Had overnight trading proceeded as usual on the 23rd, just before the holiday, those trades would have been cleared alongside regular trading on the 28th, after the holiday ended. That would have left open positions exposed for an extended stretch during the holiday, making it harder to respond to market moves. The exchange said it decided on the suspension in light of those risks and to ease the risk-management burden on market participants.
The suspension covers all products traded in KRX overnight sessions. These include equity derivatives such as KOSPI 200, Mini KOSPI 200 and KOSDAQ 150 futures and options, as well as FICC derivatives such as U.S. dollar futures and three-year and 10-year government bond futures.
The exchange has suspended overnight trading ahead of traditional holidays since introducing its own overnight derivatives session in June last year. Other major Asian exchanges, including the Hong Kong Exchanges and Clearing (HKEX) and the Taiwan Futures Exchange (TAIFEX), also close overnight sessions on the day before extended holidays.
"Going forward, we plan to continue supporting risk management for market participants by suspending overnight trading ahead of extended holidays such as traditional festivals," the exchange said.
