SK Hynix Plunges to Limit Down in Pre-Market Trading; Nextrade Announces Introduction of Volatility Circuit Breaker

At 8:00 a.m. on Thursday, SK Hynix’s stock price instantly hit the 30% decline limit shortly after the start of pre-market trading on Nextrade, South Korea’s alternative trading platform. According to Bloomberg, only 11 shares were traded at 1.168 million South Korean won per share, representing a drop of approximately 30% from the previous trading day’s closing price of 1.688 million South Korean won.

Subsequently, the Volatility Interruption (VI) mechanism was triggered, switching trading to a two-minute pre-market opening session. After trading resumed, the decline rapidly narrowed to between 3% and 4%. By the end of pre-market trading, SK Hynix’s stock price had ultimately fallen by only about 2%, recovering the vast majority of its earlier losses.

How Could Just 11 Shares Trigger a Limit Down?

The root cause lies in the mechanistic characteristics of pre-market trading.

Nextrade’s pre-market trading (daily from 8:00 a.m. to 8:50 a.m.) employs a continuous auction system—buy and sell orders are executed immediately once matched. In the early stages of the session, market participation is extremely low, and liquidity is severely insufficient. In extreme cases, a single transaction is enough to establish the prevailing “market price.”

This differs from the call auction mechanism used during regular trading hours. During normal market opens, a large volume of orders accumulates, allowing an equilibrium price to be calculated through matching, resulting in more robust price discovery. In contrast, pre-market continuous trading lacks this buffer; if someone places an order at an extremely low price and it executes, that price becomes the real-time reference price.

According to Yonhap News Agency, on the same trading day, Samsung Electro-Mechanics and Alteogen also saw their opening prices hit the upper limit based on single-share transactions in pre-market trading—the same mechanism, but in the opposite direction.

Previous Limit Down Triggered 83 Billion South Korean won in Forced Liquidations

This is not the first time SK Hynix has encountered such a situation.

According to Yonhap News Agency, on the 28th of last month, SK Hynix triggered a limit down in pre-market trading after just one share was traded. This abnormally low price was subsequently adopted by an overseas cryptocurrency derivatives exchange as the reference price for SK Hynix perpetual contract products, thereby triggering forced liquidations totaling approximately 83 billion South Korean won.

TradeXYZ, the designer of the perpetual contract product, stated that it would fully compensate for the losses incurred from this liquidation, but explicitly clarified that “this compensation is a one-time measure.”

Following the incident, securities industry insiders in South Korea pointed out that the market needs to be vigilant against the possibility that powerful entities might deliberately exploit pre-market opening prices to trigger forced liquidations in perpetual contracts.

Nextrade: Static VI Mechanism to Be Introduced Starting September 14

In response to successive abnormal trades, Nextrade announced that it will officially introduce a static Volatility Interruption (VI) mechanism on September 14.

According to Bloomberg, the trigger condition for this mechanism is as follows: if the declared price deviates by 10% or more from the previous trading day’s closing price or the reference price, the system will not execute the trade immediately. Instead, it will automatically switch to a two-minute pre-market opening session, during which orders will be collected and an equilibrium price calculated before trading resumes.

The logic behind this mechanism is similar to a “mandatory cooling-off period”—pausing immediate execution when prices show abnormal deviations, giving the market time to rediscover reasonable prices, thereby preventing single extreme quotes from directly becoming executed prices.