Exchange "Preventing Unfair Trading through Market Alerts and Disclosure Requests"

The Korea Exchange's market alert designation and the inquiry disclosure request system for stocks with rapid market changes have been found to have the effect of calming sharp rises in stock prices.

On the 24th, the Korea Exchange evaluated that the market alert system and the inquiry disclosure request measures in response to rapid market changes contributed to the prevention of unfair trading.

The market alert is a system that notifies investment risks for stocks with potential unfair trading, such as concentrated trading in a few accounts or rapid price increases over a certain period. It is divided into three stages: Investment Caution → Investment Warning → Investment Risk.

The rate of price change on the day before and the day after designation as a market alert stock decreased from 5.6% to 0.2% for Investment Caution stocks, from 12.7% to -3.8% for Investment Warning stocks, and from 15.4% to -1.3% for Investment Risk stocks.

The Korea Exchange analyzed that for ultra-short-term rapidly rising stocks, the pursuit of herd trading (trading by following others) sharply decreased after the Investment Warning designation, which helped prevent unfair trading and minimize investor damage.

Inquiry disclosure is a system where the exchange requests a listed company to disclose whether there is important information related to company management when the market situation of a specific stock changes rapidly. Comparing the rate of price change on the day of the inquiry disclosure request and the following day, the price change decreased from 21.3% on the day to -4.4% the next day, showing price stabilization.

Last year, the number of market alert designations totaled 2,062, a 21% decrease compared to the previous year (2,599 cases). The number of inquiry disclosure requests related to market fluctuations was 41, down 73% from 150 cases the previous year. This is interpreted as an effect of reduced trading activity due to market contraction following interest rate hikes.

The Korea Exchange stated, "To strengthen preemptive activities against unfair trading, we will closely monitor changes in the market environment and continuously analyze operational effectiveness to actively reflect them in system management."