Iran Tensions Trigger 829 Daily Trading Halts on Average

Volatility in the domestic stock market surged amid the Iran crisis, triggering more than 3,000 volatility interruption (VI) mechanisms on the KOSPI market alone over four days from the 3rd to 6th.

According to the Korea Exchange's information data system on the 8th, 3,314 VI triggers occurred on the KOSPI market during this period. This figure includes stocks, beneficiary certificates, exchange-traded funds (ETFs), and exchange-traded notes (ETNs). The VI mechanism switches individual stocks to single-price trading for two minutes when prices fluctuate sharply.

With an average of 828.5 VI triggers per day, the surge is evident compared to January and February this year, when daily averages on the KOSPI market were 134.3 and 183.4 respectively—a more than fourfold increase. ETF and ETN volatility was particularly pronounced, accounting for more than half of all KOSPI VI triggers at 2,172 cases over the four days. The KOSDAQ market recorded 3,294 VI triggers during the same period.

The most frequently halted product was the "N2 Monthly Leveraged Defense Industry Top5 ETN," which triggered VI 83 times during this period. This ETN tracks the "iSelect Defense Industry Top5 TR Monthly Leverage Index" at 2x leverage. Other top VI triggers included "N2 Defense Industry Top5 ETN" (42 times), "Kiwoom Leveraged K-Defense TOP5 ETN" (35 times), "N2 Inverse 2X KOSDAQ150 Futures ETN" (33 times), "Korea Investment Inverse 2X KOSDAQ150 Futures ETN" (31 times), and "Hana Leveraged K-Defense TOP10 ETN" (27 times).

This week, the domestic market also saw sidecar mechanisms (temporary suspension of program trading orders) and circuit breakers (20-minute trading halts during sharp price swings) activated alongside VI triggers. The KOSPI triggered buy sidecars once and sell sidecars twice, while the KOSDAQ activated buy and sell sidecars twice and once respectively. On the 4th, when selling pressure intensified sharply, Stage 1 circuit breakers were triggered once on each market.