Exchange: "Cause of System Failure Due to Mid-Price Quotes"

The Korea Exchange announced on the 18th that the temporary suspension of trading in the KOSPI market during the day was due to the newly introduced midpoint order price.

Korea Exchange, Yeouido, Seoul. Photo by Jinhyung Kang aymsdream@

The exchange explained that the introduction of the midpoint order price conflicted with the existing self-match prevention (SMP) conditional order execution logic, causing a system malfunction. In the case of Dongyang Steel Pipe, the calculation of the trade execution quantity for SMP orders was delayed due to the omission of the midpoint order quantity. SMP (Self Match Prevention) is a mechanism that prevents trades from being executed between orders with the same trading ID.

An exchange official explained, "This was an error that could occur when the price unit is 1 won (for stocks priced below 2,000 won) and the bid-ask spread is 1 tick (1 won), causing the midpoint order price to be truncated."

From 11:37 a.m. to 11:44 a.m. on that day, a system malfunction occurred in the KOSPI market, delaying stock trade executions. As a result, price checks and order executions through securities firms' home trading systems (HTS) and other trading systems were not possible.

The exchange took prompt action for other stocks except Dongyang Steel Pipe, and trades were executed normally within minutes. However, for Dongyang Steel Pipe, trading resumed from 5 p.m. after identifying the cause and completing corrective measures.

After market close, the exchange held a company-wide inspection meeting to verify that there were no other issues with the system's execution logic and confirmed that no additional problems existed.

An exchange official stated, "As the number of NextTrade (NXT) trading stocks will expand to 800 by the end of this month, we plan to conduct joint inspections with NXT every weekend until the end of April to prevent similar incidents."

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