KRX New Error Trade Relief System

Error Trade Relief System

New relief system, no need for agreement of counterparties

To meet requirements of error relief:

1. Need to request for relief within 30 minutes of initial error trade
2. Series/consecutive quotes need to be entered after initial error trade and the quotes have been continuously filled
3. Accounts: The error triggered account 1 (in case same Member, but different account but same holder as the error account, this other account will not be accounted for)
4. Error trade price: prices that exceed error relief levels
5. Loss amount has to be more than 10,000,000,000 KRW per product (similar underlying asset and trading method of all products that error trades resulted will need to sum amount of expected losses. In case error trades buy/sell trades both happen, will calculate separately and add absolute value of each loss amount) Calculation for error trade amount: Σ (Error Relief Price- Reference Price) * Lots* Multiplier

**Exempt: Global trades/block trades: CME within 8 minutes need to request for relief; EUREX within 30 minutes (for prenegotiated trades)

Member should compile report request for relief

KRX will then register the request and will send out a notice to all members.

Then will also send the Member of the counterparty of the error traded related product fill number detiails

Once the error trade happens, the last traded fill price before the error trade will be applied. If that price is not appropriate according to market standards, then that point FV will be applied as reference price

KRX after confirming reference price, will notify error relief member and counterparty members on the relief trade product, reference price.

The error trade counterparty account should consider/note KRX error trade whether relief will happen or not, relief price, and relief timing, so that the KRX relief system will not give any damange to the counterparty, should cope with market situation change by making decision on reducing timing and price on current open interest.

Members should always remind existing clients and also incoming new clients that according to the KRX regulations, when error relief takes place, the fill price of one’s trades can be modified without client’s request. And members need to keep record of this