Yoon Ja-young is in charge of articles translated by a generative AI system and edited by The Korea Times. She is interested in improving the newspaper through AI.
KRX to cancel 'fat finger' trading errors
By Yoon Ja-young
Starting next year, stock investors will be allowed to cancel trades in the event of significant ordering mistakes, the country’s stock market operator said Monday.
The Korea Exchange (KRX) is preparing measures to rescue large investors in the main bourse, the KOSPI, and the tech-loaded KOSDAQ market in case of big ordering errors.
There now is a rescue program only for derivative investors, adopted last year following HanMag Securities’ “fat finger” mistake.
The small-scale brokerage specializing in futures sustained 46.2 billion won, or $40.6 million, in losses after an employee wrongly exercised options exceptionally higher or lower than market prices on the KOSPI200 index market in December 2013.
KRX covered the loss from its reserves for emergency settlements and sought reimbursement from HanMag.
Some brokerages paid back their gains from the trading error, but a U.S. hedge fund refused to return 36 billion won it had gained.
HanMag went into bankruptcy early last year.
To prevent such severe consequences, a rescue program was adopted for the derivatives market for ordering errors resulting in a loss of 10 billion won or more.
“The mistake by HanMag rattled the whole market,” said Kim Ki-kyung, a KRX manager in charge of stock market regulation.
“Because the daily stock price movement limit doubled to 30 percent from 15 percent in June, there has been demand that such a rescue program should be adopted for stock investors as well.”
He said the KRX was working on details of the program, which was likely to be implemented in the first half of next year.