Nextrade (NXT) will introduce a static volatility interruption (VI) to prevent sharp stock price swings in the premarket caused by small orders. It will also replace the practice of temporarily halting trading when a VI is triggered with a call auction that collects orders to determine a price.

Nextrade said on 31 it revised related operating rules to curb market volatility and will introduce the static VI from Sept. 14.

Nextrade currently operates a dynamic VI that activates when a tentative execution price at a given quote moves sharply from the previous execution price. It is triggered when KOSPI 200 issues move by plus or minus 3 percent and other issues by plus or minus 6 percent or more.

The newly introduced static VI will activate when the price of a given issue rises or falls by 10 percent or more from the previous call-auction execution price or the reference price.

In particular, if the first premarket price moves 10 percent or more from the previous day's close, trades will not be executed immediately. Orders will instead be collected for 2 minutes and the price will be determined through a call auction.

The measures follow recent cases in which some issues were executed at upper or lower price limits in the premarket on small-volume orders.

On July 28, 1 share of SK Hynix was executed at the lower limit, and on Aug. 5 Samsung Electro-Mechanics and Alteogen each hit the upper limit on a trade of 1 share.

On Aug. 6, 11 shares of SK Hynix were executed at the lower limit. Nextrade has said some cases at the time were believed to have stemmed from errors during order processing.

The way trading resumes after a VI is triggered will also change. Previously, when a dynamic VI was triggered, Nextrade halted trading for 2 minutes and then resumed continuous trading, but from Sept. 14 it will collect quotes for 2 minutes and determine the price through a call auction for both dynamic and static VIs.

It will also apply a call auction when trading resumes after a market-wide temporary halt or a halt in trading of an issue. After a circuit breaker (CB) is triggered, it will collect quotes for 30 seconds after a 30-minute halt, and after a trading halt due to disclosure of material information it will collect quotes for 30 seconds after a 40-minute halt to determine the price.

Nextrade also plans to pursue a measure to determine the first premarket price itself through a call auction.

A Nextrade official said, "In addition to expanding call auctions, we will push measures such as determining the first premarket price through a call auction to ease market volatility and work to become a trusted market suited to quantitative growth."