Thursday November 12 2015
News Source: Global Exchanges
Focus: Stock Exchange Corporate Governance
Type: General
Country: Korean Republic
Link: http://eng.krx.co.kr/coreboard/BHPENG09004/view.jspx?bbsSeq=20376&secretYn=N
Korea Exchange (KRX) will introduce the market maker system for low liquidity stocks and trade stabilization measure to prevent large losses caused by erroneous trades. On 4th November 2015, the Financial Service Committee has authorized the revision of relative regulations of KOSPI and KOSDAQ markets.
Additionally, the KRX will improve the regulation related to the temporary overheated issue, which has overlapping functions with the volatility interruptions, and abolish the reporting of the position of arbitrage trades as it could cause market disruptions by its inaccuracy.
In the current stock markets, most liquidity is concentrated on large-cap stocks and trades of small- and medium- cap stocks are inactive. There is a limit in improving the liquidity by the voluntary efforts of listed corporations and it is likely that the low liquidity situation continues.
As a result, the KRX decided to introduce a market maker system for a low liquidity stock and apply a single price auction to stocks with excessively long transaction intervals among the low liquidity stocks in order to induce a stable price formation through the liquidity concentration.
Click on the link above for further details.