http://www.econovill.com/news/articleView.html?idxno=220320
September 15, 2014
Right after KRX releases its new reformed error relief system, there was an error trade on KOSPI200 Call Strike 230 for October during closing auction. Despite KRX new real time price band that was implemented in Sept 1, it is disabled during opening and closing auction (8:00-9:00 KST; 15:05-15:15).
302 lots of 201JA230 got filled at 66.80 in the closing auction. Before the closing auction, only 2 lots got filled throughout the day and the price was 30.00 and 31.05 each.
KRX has rejected to bust this trade as some of conditions are disqualified for the bust rule. So, the only way they can try is finding counter parties and negotiate with them. With simple calculation, it may cause USD4-5M of loss.
It has now been known to be an Israel client of Hyundai Securities. Currently the client has defaulted and the position is still in the market. Hyundai Securities for now paid on behalf but will inevitably sue the client, perhaps once the position is settled more details will emerge.
It is unfortunate because KRX just came out with their new error trade rules for September 1, but the trade did not qualify due to the amount. (Minimum is around USD 10MIL, and will be an adjustment of price-not a bust cancellation)
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