The Korea Stock Exchange (KSE) has announced amendments to the securities market business regulations, which will apply to trading on the Korea Exchange (KRX).
These changes include the price ranges for block trading and basket trading, increased coverage for short selling and introduction of USD payment for margin requirements for futures and options trading.
The price range for block trading and basket trading in both the before hours session from 07:30 to 08:30, and after hours session from 15:10 to 16:00, will be increased from within 7% of the closing price (within the range of the day’s highest and lowest prices) to within the range of the day’s highest and lowest prices.
Block Trading and basket trading would be introduced in the regular session from 09:00 to 15:00. Orders will be executed within the range of the day’s highest and lowest prices. Additionally, in case where there is no risk of settlement failure, short selling will be allowed. E.g. short selling is allowed if securities are available due to DR cancellation, i.e. conversion of DR into underlying share, by settlement of a sell transaction.
The above three items will be effective March 28, 2005.
The changes will also allow for USD payment for margin requirements. Currently, KRW payment, or substitute securities may be provided to meet margin requirements for futures and options trading.
Finally, if members of KRX are involved in unfair trading, their membership will be suspended for 6 months or their actions may lead to expulsion of membership from KRX as the severe punishment. This will be effective from January 26, 2005, the date of registration of the KRX.