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|
 Trading
on the KSE |
To buy or sell stocks listed on the KRX, investors
place orders through securities firms. Investors
can place orders by phone, in writing or online.
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All orders including bids and offers for an
individual issue are forwarded to the KRX.
However, the KRX plays no role in market-making.
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Trading on the KRX is executed by member firms on behalf of their customers, having no obligation
to present quotations or to buy or sell on
their own account for the purpose of market-making.
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| Trading
Session |
The KRX has
two trading sessions: regular session and
off-hours session. The KRX opens
the market five days a week, Monday through
Friday. It is closed, however, on the last business day of the calendar
year and on national holidays(including Labor Day on May 1)
In addition to the regular trading session, the
KRX operates off-hours sessions where
investors can trade securities for 50 minutes
after the closing of the regular session and for one hour before opening of the next day.
In the offr-hours sessions, customer orders
are executed at the closing price and certain
block orders may be executed within five
ticks from the closing price or the day's volume weighted
average price.
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[Trading Hours]
| Days |
Regular Session |
Off-Hours Sessions |
| Monday - Friday |
9:00am - 3:00pm |
7:30am - 8:30am 3:10 - 4:00pm |
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| Types
of Transaction |
| Transaction
on KRX, depending on the time interval between
contract and settlement dates, is categorized
into two types: |
， Spot transactions :
settlement is generally made on the day of the contract
， Regular-way transactions : settlement
is due on the second business day following
the contract date (T+2). |
| Trading
Units and Minimum Variation in placing an
order |
| Trading is executed
in lots of ten shares for stocks, beneficiary
certificates and foreign DRs. However, odd lots of shares can
be traded when the share's market price exceeds 100,000won, or trading takes place
during off-hours sessions.
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[Minimum Stock Price Variation]
| Stock Price per Share |
Unit of Minimum Price |
lower than 5,000
5,000 - 9,999
10,000 - 49,999
50,000 - 99,999
100,000 - 499,999
500,000 or higher |
5
10
50
100
500
1,000 |
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| Trading
Procedures |
The KRX is a typical order-driven market where
bid and offer orders compete for the best price.
Throughout the trading session, customer orders
are continuously matched at a price satisfying
both parties.
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At the market opening and closing , however,
customer orders are pooled over a certain
period of time and matched at a single price
that minimizes any imbalance between the buying
and selling parties.
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(a) Order-routing
Currently, all orders are transmitted via
the screen-based trading system from the brokers'
offices directly to the KRX. For the majority
of stocks, trading is fully automated via
the KSE's Stock Market Automated Trading System
(SMATS). When an order is placed through the
system terminal by a broker, the system automatically
checks whether the deposit requirement has
been fulfilled before processing the order. |
(b) Execution
of Orders
Orders are executed on the KRX by individual
sequential auction, either by single-price
auction during the trading session or multi-price
auction at after-hour session and the last
10 minutes before afternoon session closing.
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(c) Auction Principles
The following are the principles observed
(shown in sequence) pertaining to the matching
of orders on the KRX.
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，
Price priority:
The highest bid and the lowest offer take
precedence. |
，
Time priority:
When bids or offers are made at the same price,
preference is determined on a first-come,
first-served basis. |
，
Size priority:
For simultaneous bids and offers at the same
price as a customer's orders, precedence is
given
to the larger order. |
，
Customer priority:
When bids and offers of the same price are
received simultaneously, a customer's orders
take precedence over those of members. |
| Commission |
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In 2000, commission rates were liberalized.
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，
Generally, the commission rate on stocks transactions,
determined by securities companies, is 0.3 to
0.5 percent of the total transaction amount,
while online trading commission rate is 0.024 to 0.2 percent.
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In addition to brokerage commissions, securities
companies are required to charge a securities
transaction tax equal to 0.3 percent of the
sales value. |
| Margin
Transaction |
Resident individual investors may buy listed
securities on credit extended by a securities
company or the Korea Securities Finance Corporation.
Margin trading is a form of securities transaction
that permits the acquisition of securities
by depositing only an initial margin.
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Another form of margin transaction, short
selling, is prohibited to insiders and available
only for designated securities. Stocks ineligible
for margin trading include stocks under surveillance
and stocks designated as administrative issues.
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One of the functions of margin transaction
is to stabilize stock prices by creating a
temporary supply and demand for stocks. The
amount of credit to extend for margin trading
is determined by the securities firm. |
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