SK Hynix shares plunged to the daily lower limit on South Korea's alternative trading platform, Nextrade (NXT), in pre-market trading after just 11 shares changed hands. This resulted in a 29.97% drop from the previous close, with the stock executed at 1,168,000 won. This incident, which marked the second such extreme move in recent weeks, highlighted vulnerabilities in NXT's continuous matching system, where thin liquidity can lead to outsized price swings from even small orders or input errors.
The initial drastic price drop triggered a dynamic volatility interruption, shifting trading to a two-minute call auction, after which the decline narrowed to the 3% to 4% range, eventually settling at about a 2% loss by the end of the pre-market session. A similar event occurred on July 28, where a single share of SK Hynix traded at the lower limit in NXT's pre-market, causing an overseas crypto derivatives platform to trigger forced liquidations of long positions valued at about $57.4 million.
To address these recurring issues and prevent future market disruptions, Nextrade plans to introduce a static volatility interruption (VI) mechanism starting September 14. This new rule will block any order that deviates by 10% or more from the previous close or a designated reference price from immediate execution, instead redirecting it into a two-minute call auction to establish an equilibrium price. This measure aims to prevent extreme opening prices, as the current dynamic VI only activates after a rapid move from the last traded price, allowing aberrant prices to be recorded initially.
