SK hynix (000660.KS) again hit its lower price limit at the opening on extremely thin trading volume in the pre-market session of alternative trading system Nextrade (NXT).
According to the financial investment industry on the 6th, SK hynix traded at 1.168 million won, down 29.97% from the previous session's closing price of 1.668 million won, on just 11 shares right after the pre-market session opened, which runs from 8 a.m. to 8:50 a.m. A volatility interruption (VI) was then triggered, switching trading to a two-minute single-price auction. After trading resumed, the decline immediately narrowed to 3-4%.
This is not the first time SK hynix has hit the lower limit due to a trade executed on a tiny volume. SK hynix also recorded a lower-limit price in the pre-market on the 28th of last month, when just one share was executed right after the open.
That price was reflected as the reference price for SK hynix perpetual futures products on an overseas cryptocurrency derivatives exchange, triggering forced liquidations of about 83 billion won. TradeXYZ, which designed the SK hynix perpetual futures product, said it would fully compensate for the liquidation losses but made clear that this compensation was a one-time measure. In response, some in the domestic securities industry pointed out that markets should prepare for the possibility of forces seeking perpetual futures liquidations targeting domestic pre-market opening prices.
The pre-market operates on a continuous auction system in which trades are executed immediately when bid and ask prices match. Because liquidity is insufficient right after the open, prices can move sharply on just a single share traded. In the previous session, Samsung Electro-Mechanics and Alteogen formed opening prices at their upper limits compared with the previous day's close on a single share executed.
To reduce such abnormal execution cases, Nextrade plans to introduce a static VI starting on the 14th of next month. If an order is received at a price deviating more than 10% from the previous session's closing price or the reference price, it will not be executed immediately but switched to a two-minute single-price auction. Under this method, orders are collected over two minutes to calculate an equilibrium price before trading resumes.
