KRX activates sell-side sidecar for KOSPI on sharp fall
SEOUL — South Korea's bourse operator has repeatedly activated sell-side sidecars for the benchmark KOSPI index on days of sharp declines, temporarily suspending program trading.
A sell-side sidecar is triggered when the KOSPI 200 Futures Index falls 5 percent or more for at least one minute, according to the Korea Exchange (KRX). When activated, program trading in KOSPI-listed shares is suspended for five minutes.
The mechanism has been triggered multiple times in recent sessions as the KOSPI fell sharply, with Yonhap News reporting activations on several occasions.
On one occasion, the sidecar was activated around 11:13 a.m. after the KOSPI shed 451.34 points, or 5.08 percent, to 8,438.23, as investors dumped large-cap technology stocks.
The falls have been driven by various factors. In some sessions, escalating tensions in the Middle East weighed on sentiment. In others, investors sold off technology shares after recent rallies, locking in profits.
On June 23, the KOSPI fell 340.22 points, or 3.73 percent, to 8,774.33 as of 11:54 a.m., with Yonhap reporting the sidecar was triggered around 11:40 a.m. as investors tracked an overnight slump in U.S. tech stocks.
A separate incident saw the index fall nearly 5 percent as of 11:25 a.m., following escalating tensions in the Middle East. On another occasion, the index shed 451.29 points, or 5.08 percent, to 8,428.60.
The declines were often led by losses in technology stocks. In one case, investors locked in profits after Samsung Electronics Co. released its preliminary second-quarter earnings estimate, with the chipmaker forecasting operating profit of 89.4 trillion won (US$58.4 billion) for the April-June period, according to Yonhap.
Tech stocks also came under pressure from an overnight slump in U.S. technology shares, with program trading suspended for five minutes around 11:40 a.m. on one occasion as the KOSPI fell 3.73 percent.
Market participants also pointed to escalating tensions in the Middle East as a factor weighing on sentiment. On one trading day, the sidecar was activated in morning trading after escalating tensions in the region, while another instance was attributed to investor profit-taking following sharp gains.
Retail investors were also identified as sellers in at least one session, offloading large-cap stocks. The KOSPI 200 Futures Index serves as the benchmark trigger for the sidecar mechanism.
The activation of sell-side sidecars is a standard market safeguard, designed to provide a brief pause in program trading during periods of sharp downward movement.
Source: Yonhap News — English coverage of KRX sidecar activations across multiple trading sessions.