Exchange Announces Amendment to Enforcement Rules for Managing High-Speed Algorithmic Traders

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[Asia Economy Reporter Minji Lee] The Korea Exchange announced on the 6th that it will revise the enforcement rules of the securities and derivatives market regulations. This is a follow-up measure to the prior notice of regulation amendments aimed at establishing management measures for high-speed algorithmic traders.

The enforcement rules will undergo a public consultation process with market participants until the 13th and are scheduled to be implemented in conjunction with the launch of the Exchange's next-generation system planned for January next year.

To establish management measures for high-speed algorithmic traders, the Exchange defined detailed provisions including registration requirements and procedures, members' risk management obligations, and the provision of risk management devices for high-speed algorithmic traders.

The complex single-price trading system, which causes confusion among investors, was also reorganized. In the past, when there were no executable bids for low-liquidity items such as preferred stocks, ELWs, domestic and foreign price options in the derivatives market, or near-month contracts, the single-price trading was extended. However, going forward, extensions will not be made, and trading will switch to continuous trading until the initial price is determined.

The call auction system was also improved. When the opening price is determined at the upper or lower limit price, the later-order buyers or sellers have no way to secure priority through price, so the executed quantity is allocated according to the principle of quantity priority. Currently, quantity allocation occurs in six stages: 100 shares → 500 shares → 1000 shares → 2000 shares → half of the remaining quantity → remaining quantity. In the future, this will be shortened to three stages: 100 shares → half of the remaining quantity → remaining quantity. Since allocation to investors will be completed within 100 shares, the Exchange plans to eliminate complex steps and simplify the system.

In the securities market, the large-volume trading method was also restructured to allow the existing K-Blox method using the internet and the quote message method to operate in parallel. The quote message method refers to a method where quotes are entered directly and trades are executed if the counterparty member number, account number, and negotiation completion time match.

Additionally, while the derivatives market currently imposes excessive quote burden fees per account, going forward, these fees will be imposed per trader for high-speed algorithmic traders.

This content was produced with the assistance of AI translation services.