Nextrade (NXT), South Korea's alternative trading system (ATS), has announced a temporary ban on limit-up and limit-down orders during its pre-market session after two separate incidents involving erroneous opening prices for SK hynix raised concerns over market stability.
The company said the measure will take effect on Aug. 12 and remain in place until Sept. 14, when a new static Volatility Interruption (VI) mechanism is scheduled to be introduced.
Under the temporary rule, investors will not be allowed to submit buy or sell orders at the daily upper or lower price limits during the pre-market session, which runs from 8:00 a.m. to 8:50 a.m. The move is intended to reduce the risk of abnormal trades caused by order-entry mistakes and to improve price stability during low-liquidity trading hours.
The decision follows two unusual trading incidents involving SK hynix that occurred within about a week.
On Aug. 6, SK hynix shares opened nearly 30% below the previous day's closing price during pre-market trading after only 11 shares were executed at the lower price limit. Because Nextrade determines its opening price through a continuous auction rather than a call auction, the erroneous trade became the official opening price.
Although a dynamic VI was immediately triggered and the stock quickly recovered after a two-minute auction, the sharp initial decline created confusion among investors, many of whom were already concerned about weakness in global semiconductor stocks.
A similar incident occurred on July 28, when a single share of SK hynix was executed at the daily lower limit immediately after the market opened. While the stock price in the cash market quickly normalized, the abnormal price was incorporated into the pricing oracle of Trade.xyz's SK hynix perpetual futures contract.
The erroneous reference price led to an approximately 17.9% decline in the derivative contract and reportedly triggered the liquidation of long positions worth about $57.4 million (approximately KRW 81.5 billion), highlighting how pricing errors in the equity market can spread rapidly into related financial markets.
Market participants have pointed to the structural characteristics of Nextrade's pre-market session as a contributing factor. Compared with the regular stock market, pre-market trading typically has much lower liquidity, making prices more vulnerable to so-called "fat finger" errors—large or incorrect orders entered by mistake. With relatively few buy and sell orders available, even a small erroneous transaction can significantly influence the opening price.
To strengthen market safeguards, Nextrade has already restricted market orders during its pre- and after-hours sessions, allowing only limit orders. The company has also been working with member brokerage firms to introduce the static VI system.
Once implemented in September, the static VI mechanism will temporarily halt immediate executions whenever orders exceed a predetermined price range. Instead of allowing trades to occur instantly, the system will conduct a two-minute call auction to determine a more balanced market price before trading resumes.
Industry analysts said the latest measure reflects the growing need for stronger safeguards as extended-hours trading becomes more popular. While longer trading hours provide greater flexibility for investors, thinner liquidity outside regular market hours increases the risk that order-entry mistakes or price manipulation attempts could have disproportionate effects on market prices.
The issue has also drawn attention because stock prices are increasingly used as reference data for derivatives, algorithmic trading systems and digital asset products. As a result, even small pricing anomalies in the underlying equity market can trigger significant ripple effects across interconnected financial markets.
Nextrade said it will continue to closely monitor unusual trading activity and work with financial regulators and brokerage firms to strengthen market surveillance and maintain orderly trading conditions as it prepares for the introduction of the new volatility control framework.
