1,112 VI Activations on Aftermarket’s First Day; Exchange Says Volatility Was Lower Than in Regular Session

[Financial News] On the first trading day of the Korea Exchange (KRX) aftermarket, the number of volatility interruption (VI) activations rose sharply compared with the regular session, prompting concerns that the mechanism may have been triggered excessively. The exchange explained that actual stock-price volatility was lower than in the regular session.
According to the Korea Exchange on the 15th, VI was activated 1,112 times on the aftermarket’s first trading day, about 2.8 times the 391 activations recorded during the regular session. The exchange attributed the figure to the application of the same VI thresholds used in the regular session, even though aftermarket liquidity was only about 7% of regular-session levels.
VI thresholds are generally set differently depending on liquidity and volatility levels, as well as the stock group or trading session. The exchange also applies different VI thresholds during the regular session to constituents of the KOSPI 200 Index and other stocks. However, to enhance market stability during the aftermarket’s early stages, it applied the relatively stricter regular-session thresholds without modification.
The exchange said the high number of VI activations should not be viewed as a sign of market instability. Actual high-low volatility by stock was lower in the aftermarket: 2.9% versus 4.1% during the regular session for the KOSPI Composite Index, and 4.6% versus 5.8% for KOSDAQ (Korea Securities Dealers Automated Quotations). Although volatility increased for some stocks, prices were formed more stably overall than during the regular session, the exchange explained.
The exchange also said that the aftermarket’s more frequent VI activations reflected the mechanism’s price-discovery function. VI prevented the immediate execution of sharply rising or falling prices and gave market participants time to seek appropriate prices.
Regarding the higher number of VI activations than on NextTrade (NXT), the exchange cited differences in the range of tradable stocks. NXT trades only 604 highly liquid stocks, while the KRX aftermarket covers 2,472 stocks, including low-liquidity issues.
The Korea Exchange plans to maintain the current VI thresholds for the time being while monitoring market conditions.
A Korea Exchange official said, "We plan to closely monitor market conditions, actively gather market feedback, and focus on establishing the aftermarket."
[email protected] Bae Han-geul Reporter