The Zhitong Finance App learned that South Korea's alternative trading platform Nextrade announced on Friday (August 7) that it will temporarily ban orders placed during the pre-market trading period at the limit price of 30% of the day during the pre-market trading period to prevent serious price distortions caused by “Fat Finger” misoperation. This emergency measure directly targets the recent “11 share flash crash” incident where SK Hynix (SKHY.US) occurred twice in a row during pre-market trading — small transactions of only 11 shares or 1 share triggered a 30% intraday drop limit, which in turn triggered the forced liquidation of nearly 60 million US dollars of long positions in the cryptocurrency market.
Two “ghost trades”: how can 11 shares and 1 share break through a 30% drop?
First time: On July 28, 1 share triggered a serial liquidation of 83 billion won
On July 28, after SK Hynix opened pre-market trading on NextTrade, only 1 share was traded at a price about 29% lower than the previous closing price, which instantly triggered a fall to a standstill. This abnormally low price was immediately adopted by the overseas cryptocurrency derivatives exchange Hyperliquid as the reference price for SK Hynix perpetual contracts, causing long positions of about 83 billion won (about 60 million US dollars) to be forcibly closed within two minutes. Blockchain data platform Allium said the incident affected about 960 accounts. TradeXYZ, which designed the contract, later stated that it would pay full compensation for liquidation losses, but at the same time made it clear that this was a “one-time measure.”
Second time: On August 6, 11 shares dropped again and the movie stopped
At 8 a.m. on August 6, SK Hynix traded 11 shares at 1,168,000 won per share before the NexTrade market, a sharp drop of 30% from the previous day's closing price, once again hitting the drop limit. The Volatility Interruption Mechanism (VI) is triggered, and the trade is switched to a two-minute collective bid. After resuming trading, the decline quickly narrowed to 3% to 4%, with a decline of only about 2% at the end of pre-market trading. On the morning of the same day, SK Hynix's stock price fell 9.8% during the regular trading session on the Korea Exchange.
According to data from crypto analysis firm Allium, the second flash crash only triggered a forced liquidation of around $230,000 on Hyperliquid. Elton Shehdula, head of research at Allium, explained, “Most of the leverage has been removed from the previous liquidation.”
Mechanistic Anatomy: Why “One Stock Can Shake the Market”?
The root cause of the two flash crashes was the design of a special mechanism for Nextrade's pre-market trading. Launched in March 2025, Nextrade is Korea's first alternative trading system (ATS), providing a 12-hour trading service from 8 a.m. to 8 p.m., including three periods: pre-market (8:00-8:50), regular (9:00-15:20), and post-market (15:30-20:00). Its pre-market trading uses a continuous bidding system — as soon as the offer is matched, it is immediately closed, and collective bidding during unconventional trading hours.
At the beginning of the opening, there were very few market participants, and liquidity was seriously insufficient. Under extreme circumstances, a single transaction was enough to form the “market price” at the time. Nextrade admits that unlike major exchanges, “price discovery functions (such as determining opening and closing prices) are essential, while alternative stock exchanges place more emphasis on trade execution.”
This “flash crash” revealed a fundamental flaw in Nextrade's market design. Unlike mainstream exchanges such as the Korea Exchange (KRX), Nextrade uses continuous order matching during the pre-market period rather than collective bidding, and relies only on a single source of price. During the pre-market period when liquidity is extremely weak, a very small sell order can be traded at a reduced stop price, instantly anchoring the reference price for the entire market.
On the same trading day, Samsung Electric and Alteogen also used only single share transactions to form opening prices before the Nextrade market — the same mechanism, in the opposite direction. South Korea's domestic securities industry insiders have warned that we need to be wary of the possibility of forces deliberately using pre-market opening prices to trigger forced liquidation of perpetual contracts.
Nextrade's defense against this is: “Unlike major exchanges, alternative stock exchanges place more emphasis on trade execution.” However, the line between “emphasis on execution” and “abandoning price discovery” is being clearly drawn by SK Hynix's two flash crashes — when a transaction of less than 10,000 dollars can instantly dominate the market, the market's price discovery function is already dead.
What is even more disturbing is that the impact of this unusual pricing has already spilled over the Korean stock market. The flash crash on July 28 was cited by the Hyperliquid perpetual contract operated by Trade.xyz, and long positions of nearly $60 million in about 960 accounts were forcibly closed within two minutes. Although the second flash crash on August 6 only triggered a liquidation of about $230,000 because early leverage had already been cleared, Shehdula's warning went straight to the core: “Nexttrade has expanded access and competition, but it has also introduced new market structural risks. The consequences now surpass Korean stocks because these prices may be anchored in overseas derivatives, which are subject to different rules and may not reverse losses due to incorrect prices.”
Nextrade's response: a two-pronged approach of temporary injunction+permanent mechanism
Faced with successive abnormal fluctuations, Nextrade adopted a “temporary+permanent” two-step coping strategy:
Provisional measures (starting August 12): It is prohibited to place orders during the pre-market trading period at the maximum price of 30% of the price increase or decrease of the day. The restrictions only apply during the pre-market period and will last until September 14.
Permanent mechanism (from September 14): Static Volatility Interruption (SVI) was officially introduced. If the declared price deviates 10% or more from the closing price or reference price of the previous trading day, the system will not immediately match the transaction, but will automatically switch to a two-minute collective bid. After collecting orders and calculating the equilibrium price during this period, the transaction is resumed. The purpose of this mechanism is to provide a “mandatory cooling-off period” for the market to prevent a single extreme offer from directly forming a transaction price.
Resonance between market pressure and institutional flaws
SK Hynix's pre-market crash was not an isolated incident; it resonated with the background of the overall pressure on the Korean market. On August 6, SK Hynix closed down 10% during the regular trading session of the Korea Exchange, and the KOSPI index fell about 5% on the same day. The weakness of the semiconductor sector, questions about the sustainability of AI capital expenditure, and concerns that the memory chip cycle is peaking have left the market in a tight state.
Société Générale strategist Manish Kabra pointed out in a report to clients that the Korean market's “biggest deleveraging phase is nearing completion” — but Nextrade's structural problems amplified market anxiety during the period when liquidity was weakest. As one market watcher said, the key point is that “SK Hynix instantly 'depreciated 30%, but instead of a weak pre-market transaction on the trading platform, it can still send a strong signal to markets with a larger trading volume elsewhere.”