How the KOSPI Sidecar Mechanism Reveals Queue Dynamics in a Market Crash
Research preview
South Korean equities tumbled sharply, triggering the Korea Exchange’s sidecar mechanism for the KOSPI index. The episode offers a concrete view of how order‑book depth and execution priority can amplify price moves when liquidity evaporates. The trigger: a sidecar activation in a falling market When a major index breaches pre‑set thresholds, the exchange may invoke a sidecar circuit breaker. The tool temporarily halts trading for the index while allowing a limited set of “sidecar” orders to clear, preventing a disorderly collapse. In the recent plunge, the KOSPI sidecar was engaged after the index fell beyond its daily limit....
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