Several small- and mid-cap stocks swung sharply within minutes on the 14th, the opening day of the Korea Exchange's new after-market session. Real-time trading is now possible after the regular session closes, but price volatility widened significantly in stocks where trading volume and resting orders had not built up enough.
Starting on the 14th, the Korea Exchange began operating an after-market session from 4 p.m. to 8 p.m. that allows real-time buying and selling of KOSPI and KOSDAQ stocks after the regular session ends. The previous system, which pooled orders and matched them at a single price every 10 minutes after the close, has been abolished. In its place, the exchange introduced continuous auction trading, under which buy and sell orders are executed immediately when they match, as in the regular session.
One of the most closely watched stocks on the first day was Hanwha Galleria. Its shares climbed quickly in the after-market session amid talk that Galleria Department Store's Time World branch in Daejeon could be sold. Retail industry officials said the management planning office at Galleria Time World recently held a briefing on the matter for employees. Hanwha Galleria had held slightly higher in the regular session, but around 4:20 p.m. it rose as high as 3,070 won, up 15.4% from the regular session close.
As buy orders piled in at once, volatility interruptions were triggered one after another. The Korea Exchange activated static volatility interruptions on Hanwha Galleria at 4:13 p.m. and 5:13 p.m. A static volatility interruption switches trading to a single-price auction for about two minutes when a stock moves beyond a set range from its reference price, easing abrupt price swings.
The rally did not last long. Hanwha Galleria had retreated to 2,635 won by around 7:50 p.m. The gap between the session's high and low in the after-market came to 19.2%.
A similar pattern appeared among KOSDAQ small caps. PonyLink surged to 3,150 won around 4:09 p.m., up 29.90% from its opening price, while Valofe jumped to 2,990 won at the same time, up 30.00% from its open. The two stocks swung 32.35% and 32.01%, respectively, during the session.
Yuhwa Securities, HL Science, LS Tirayutec and KNN also saw prices move rapidly early in the after-market session, with intraday swings of 28.15%, 27.92%, 25.16% and 23.08%, respectively.
Many of the early gainers, however, gave back most of their advances as the session went on. As of 7:50 p.m., PonyLink had fallen to 2,435 won, down 22.7% from its high, while Valofe slipped to 2,370 won, down 20.74%. Yuhwa Securities and HL Science also eased to 3,050 won and 5,290 won, respectively, posting slight declines.
The Korea Exchange attributes the wider price swings to a shortage of participants in the early days of the after-market, which means even small orders can move prices sharply. The KRX after-market also covers far more stocks than rival NXT, so gaps in the order book can be more pronounced in thinly traded small caps.
Separately, order systems at some brokerages malfunctioned during the pre-market session in the morning. At Mirae Asset Securities, some investors trading in the NXT pre-market experienced delays in retrieving execution records on the firm's home trading system and mobile trading system between 8 a.m. and 8:50 a.m.
Mirae Asset Securities rerouted smart order routing orders to the KRX from 8:50 a.m., after which trades were processed normally. The disruption was resolved before the regular session opened at 9 a.m. Samsung Securities also reported errors, including pre-market orders being executed even after they had been canceled or amended, and available order amounts showing as zero despite customers holding cash balances.
