The Korea Exchange issued buy-side sidecars to temporarily halt trading on the KOSPI and KOSDAQ markets following a sharp rebound in futures prices.
These volatility-control mechanisms are designed to prevent panic buying or selling by pausing the market, allowing investors to absorb new information and stabilize price swings. Such interventions are rare and typically signal extreme short-term volatility in the derivatives market.
The trading halts occurred on March 18, 2024 [4], during the opening bell of the South Korean markets in Seoul. The Korea Exchange (KRX) triggered the sidecars after futures prices surged beyond the exchange's established thresholds.
Specifically, KOSPI 200 futures jumped more than five percent [2] from the previous close. Shortly after, the KOSDAQ 150 futures index rose more than six percent [3]. These rapid movements automatically activated the buy-side sidecar, which restricts the ability of traders to place new buy orders for a set period.
Buy orders on the KOSPI were suspended for five minutes [1]. A similar halt was applied to the KOSDAQ market minutes later to maintain order and prevent an uncontrolled price spiral during the morning session.
The KRX manages both the Korea Composite Stock Price Index (KOSPI) and the KOSDAQ, which focuses more heavily on technology and small-cap stocks. The simultaneous surge in both indices indicated a broad-market rebound rather than a sector-specific event.
“KOSPI 200 futures jumped more than five percent from the previous close.”
The use of sidecars demonstrates the KRX's reliance on automated circuit breakers to manage high-frequency volatility. By pausing buy orders specifically, the exchange attempted to cool an overheated market surge, ensuring that the rebound remained orderly and did not lead to an unsustainable bubble or a subsequent flash crash.
