Volatility break triggered 1,637 times on first day of aftermarket trading
On the first day of the Korea Exchange's extended trading hours (aftermarket, additional trading from 4 p.m. to 8 p.m. after the regular session closes) launched on the 14th, the volatility interruption (VI) mechanism was triggered a total of 1,637 times, exposing concerns about market stability. According to the financial investment industry on the 18th, some thinly traded stocks saw 'quote gaps' where buy and sell orders dried up, along with abrupt price swings, with some stocks briefly hitting the daily upper price limit before giving up most of their gains. Confusion also arose as some brokerages' smart order routing (SOR) systems experienced delays in order cancellations, modifications, and execution inquiries.
The exchange says it is too early to conclude that the market is unstable. It explained that on the first day of aftermarket trading, intraday high-low volatility stood at 2.9% for KOSPI and 4.6% for KOSDAQ, lower than in the regular session. The exchange plans to monitor liquidity, price movements, and system operations while making improvements as needed during implementation.
Due in part to last year's system outage, the Korea Exchange saw its management evaluation grade fall two notches from S to B. The Financial Services Commission maintains that management evaluations are not decided by any single issue but are based on a comprehensive assessment of overall management activities. Chairman Yun's term runs until February 14 next year.
The follow-up task of shifting the stock settlement cycle to T+1 — shortening the settlement period from two business days after the trade date to one — was proposed by Chairman Yun in March with an October 2027 transition date, but actual implementation falls outside his term. This is because not only the exchange's and Korea Securities Depository's systems, but also the settlement systems and business processes of brokerages, asset managers, and custodian banks must be comprehensively overhauled, and coordination with overseas financial institutions is needed to shorten currency exchange and settlement processes for foreign investors.
An official from a securities industry union said, "Shortening the settlement cycle to T+1 is a different order of challenge from extending trading hours," adding, "It requires overhauling brokerages' entire settlement-related IT systems, and since foreign investors are involved, it is a large-scale project that also requires system coordination with overseas financial institutions." He continued, "While we agree with the direction, it is not something that can be completed by preparing only the domestic market, so a sufficient preparation period is needed. The industry sees it as a task that could take more than a year."
The union official pointed out that since the extension of trading hours, existing staff have been assigned to shift work and other duties, increasing workloads, and that significant manpower is also being devoted to T+1 development. He added, "Rather than pushing forward multiple institutional reforms at once, it is necessary to prioritize stability and proceed step by step."
With T+1 followed by a 24-hour trading system and expanded ETF trading hours, much of the major market infrastructure overhaul is unlikely to be completed within the current chairman's term. The extension of trading hours is Chairman Yun's signature project, implemented after being postponed once amid industry concerns.
