Circuit Breakers is a system that can halt entire market temporarily to provide a certain period of time for investors’ rational investment decision at a time when the stock prices decline rapidly because of the internal and external factors. The prior notice of trading halt can be issued when KOSPI declines more than 8%/15%/20% of the previous day’s closing value, respectively, and if this condition lasts for 1 minute, trades of all products are halted.

When KOSPI declines more than 8% of previous day’s closing value, phase 1 CB starts. After that, if KOSPI once again declines more than 15% of previous day’s closing value and 1% additional decline occurs compared with the index value where phase 1 CB was started, phase 2 CB is triggered. If the phase 1 or 2 CB is implemented, the receipt of orders in the KOSPI market and the receipt and transaction of orders in the futures and options market that are linked to the spot market except bond market are halted for 20 minutes.

During the trading halt, it is not possible to place a new order but it is still possible to cancel orders submitted prior to the halt.

The implementation of the each phase is limited to one time in one day and to secure the time for determining closing price, the halt does not take place 40 minutes before the closing time of the market.

After phase 2 is implemented, if KOSPI still declines more than 20% of previous day’s closing value and 1% additional decline occurs compared with the index value at which phase 2 was brought about, all trades in the KOSPI market are halted. When phase 3 CB takes place, no orders can be placed including the cancellation of existing orders. Such phase 3 is possible to be implemented even after 40 minutes before the market closing.